See Jane Get Rich

 Recap

In January, I made the decision to lend my parent Bum (who is no Bum!) $15k to pay off some credit card debt.  I believe that since I asked and accepted financial assistance from Bum for my 1L and 2L year for some living expenses I contributed to the debt.  But, the biggest culprit was my older sibling the Other Child who refuses to get a real world job and is going after his entrepreneurial dreams while Bum picks up the check.  I tried conditioning the loan on Bum cutting out the Other Child financially but Bum was having none of that so the $15k was a no-strings-attached unsecured interest free personal loan.

The only drawback to the loan was that I was not willing to wait around for my $15k to be repaid.  I wanted an aggressive repayment plan since Bum wasn’t willing to cut the Other Child out.  I lend the money this January.  I specified that I wanted my first payment of $5k on March 31, next $5k on June 31, and the next $5k on October 31 and oh maybe a nice little “gratuity” in December for being so so considerate. 

At the end of my post I asked my readers whether now that I have paid off the $15k in credit card debt, whether Bum will save the money to repay me or whether the increased cash flow means more money will end up going to the Other Child.   Guess what happened?  Bum is doing both.  Yes, both! 

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Okay, let’s break down why January 2010 was the most expensive month of my life. 

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December 2009

I finish all my exams and arrived home for my winter break.  The very next day, I start my holiday job at the big box retail store.  The Other Child (OC), my older sibling, was back at home because the OC quit a training program/job after six months and was about to launch an entrepreneurial effort.  The OC spend all its time at home researching and doing various things for this new business.  You know, the business that was going to be the one that succeeds.

 Bum my parent and I spoke again about the loan.  Bum was not going to cut off the Other Child completely as I desired before the OC’s business took off…which could be a number of years.  But, after having a $0 tuition bill for the last two semesters I would have to pay $9k in tuition for my final semester of law school.  That was going to hurt me financially.  But, I can’t stand by and do nothing while Bum struggled with credit card debt. 

I decided to help Bum out by giving a loan of $15,000 without any of the earlier conditions  for three reasons. 

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November 2009

I go home for Thanksgiving and my parent Bum and I have a face-to-face talk.  Bum wants a loan to pay off all the credit card debt.  By this time, Bum has estimated the figure to be about $15k and the interest rate are in the high teens but no specific figures are disclosed to me.  I get frustrated about the lack of disclosures provided to me as a prospective lender, but I realize that this was a great opportunity to get rid of the Other Child from Bum’s financial picture once and for all.  

 So, I go in for the (financial) kill:

My Offer to Bum

• (1) $15k loan with no interest rate with repayments according to an agreed schedule. 
• (2) Complete disclosure of all debts and interest rates with documentation.  
• (3) Sign a contract agreeing to the terms. 
• (4) Must completely and utterly stop financially supporting the Other Child. 
  • First violation: Loan will have a 5% interest rate and interest will be immediately due. 
  • Second violation: Interest will increase to 10% and the interest will be immediately due. 
  • Third violation: The loan is in official default and all money must be returned immediately. 
• (5) Every term except for #4 dealing with the Other Child is negotiable. 

Bum’s Response?

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September    

In September, I was talking to Bum about money when Bum just happen to mention Bum has some money on Bum’s credit card that needs to be paid off.

Wait.  Hold up.  Did you just say credit card debt?  Whaaaaaatttttt?

I was blown away.  Bum is not someone I would think of when I think of the stereotypical person with credit card debt.  Bum doesn’t go shopping that much.  Bum eats out once in a while.  Bum’s biggest purchase most recently was a new hybrid paid in full through a HELOC.   Bum makes very good money.  But, Bum has two children who was still relying on Bum for help. 

So, my next question was: What exactly is all this credit card debt from, Bum?

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