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! 

Bum Spends More on the Other Child  

Bum is spending approximately $1,000-$1,200 per month on the Other Child for residential rent, office space rent, student loan payments, car insurance, food, gas, cell phone etc…  It started with $500-$700 and now it is almost double.  So, readers who predicted the Other Child will really benefit from this move were correct.  The Other Child is benefitting like crazy.  Its entire lifestyle is subsidized by Bum. 

Bum is Saving More

But, Bum is also saving money.  In fact, Bum already has my payment of $5k saved up that is due on March 31.  I think the high interest credit card debt was a huge burden on Bum and making it all go away in one swoop was a good thing and it is enabling Bum to save more (and spend more on the Other Child).  So, right now things are looking good but nothing is final until the $5k hits my bank account on the 31^st. 

So, in this transaction everyone wins except for Bum. 

• The Other Child gets more financial support and can continue working on its entrepreneurial venture. 
• The credit card companies got their payment. 
• I will (likely) get all my money back and I am expecting a little extra in the form of a gift. 
• Bum gets to continue supporting a grown adult, live an even more frugal lifestyle, work harder and longer, forego fully contributing to the 401(k) etc…  Poor Bum.   

And on top of all this, I went to visit Bum this past weekend and dropped a huge bomb about my career.  More to come on that.

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. 

 (1)    I would regret not helping Bum

I knew I could never forgive myself if I stood by and didn’t help Bum in Bum’s hour of need.  Thirty-years from now when I look back I knew for sure that I would regret not loaning Bum the money. I have to take some responsibility for the debt that Bum is in because I spent Bum’s money without care and did not take the adult decision of letting go of the financial umbilical cord when I was capable of doing so.

 (2)    I wouldn’t have my current savings without Bum

I wouldn’t have the hefty savings that I have now if not for Bum’s help with expenses my first year of law school that included everything except for tuition and rent such as groceries, eating out, cell bill, textbooks and supplements, clothes, gas, car insurance etc…  My second year, Bum helped me with all this plus rent.  Bum had easily spent $15k on me in the last two years while all the money I earned working during the summer went straight to my savings untouched.  September 2009 was the first time in my life when I had paid for 90% of my expenses.  Bum still pays for my cell because I am in the family plan and Bum has paid for my car insurance up to February 11.      

 (3)    I am Bum’s Safety Net. 

The Other Child’s safety net was Bum.  But, Bum’s safety net is me.  And my safety net is my savings.   Bum knew that I was sitting on some significant savings and we both looked at it as an emergency fund  that could be tapped if necessary.  I encouraged this view in some ways and have always told Bum that I would support Bum if some form of emergency came up.  I was thinking it would be in the form of some terrible accident and not credit card debt. 

 I know that Bum’s retirement savings are nowhere near robust as I would like them to be because Bum helped with both of our educational and living expenses instead of maxing out retirement contributions.  Although Bum has never asked me for this nor hinted at it, I expect and will provide no-strings-attached financial support for Bum in the future.  I wasn’t expecting the opportunity to arrive so soon. 

 And as Bum’s financial back-up, safety net, personal bank etc… I wrote the check for $15k and established a schedule for payment. 

Now that Bum doesn’t have a credit card balance due everymonth, do you think Bum will put that money towards paying back the loan or will it go towards the  Other Child?  Let me know. 

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?

It turns out that it was us.  (1) Me and (2) the Other Child.   Before September Bum helped me with my expenses such as my rent, food and other incidentals.   While I paid most of my rent for my 1L year and part of my 2L year I started to turning to Bum for help.  I have always told Bum that I would stop asking for financial help if Bum would stop financially supporting my elder sibling–the Other Child.  The Other Child despite being 2 years older and intellectually more capable than me has never held down any kind of a job thinking itself to be too good for small jobs.  I felt the best way to get Bum to stop supporting the Other Child was to impose a double tax of a sort where if Bum was paying for the Other Child then Bum should pay for me too.   I never really realized that it was actually putting Bum in financial strain. 

Well, how much credit card debt do you have?

Bum was vague.  Bum couldn’t just give me the figure outright because there was more than one and Bum wasn’t entirely sure of the amount.  But, it was definitely in the teens. 

Next question:  Why didn’t you tell me about this before? 

Turns out that Bum didn’t want to worry me about things like money when I should be concentrating on my academics.    For example, for rent for me one month Bum took a cash advance on one of the credit cards without telling me.

Okay, Bum.  Why the heck would you take out a cash advance from your credit card for my rent?! 

This is beyond ridiculous because Bum knows that I have money saved up that I can easily use.  Sure, I always say that Bum should be supporting me if Bum was still supporting my elder sibling.  What’s fair is fair.  But, it was time to change my tone. 

I stop asking Bum for money. 

Right after I heard about the credit card debt I decided that I’ve been immature about demanding Bum to support me just because Bum was helping out my elder sibling who is perpetually chasing entreprenuership dreams with little income coming in.  Instead of saying, I deserved a cut too  I decided to become independent and tried to manage my personal finance.  That was right about the time I started this blog. 

Next:  Bum asks for a huge loan and I respond as any attorney-to-be.

I love my Bum.  Bum loves me.  Bum is smart, hardworking and kind.  Bum has been there for me all my life.  I share my Bum with the other child, er, sibling.  I don’t like my sibling.  I do not yet have a pseudonym for the other child so we shall refer to this genderless solo sibling as that “Irresponsible Get Rich Quick A—hole” until I come with another name.  Or maybe, I will just call it the “Other Child.”  I think that will work too. 

I keep telling myself this sibling of mine is really adopted, but so far all evidence has been to the contrary.  For one thing, the sibling looks just like Bum.  Bum really likes science and math and the Other Child likes and excels in all that too unlike to me.  Bum and the Other Child are both concerned about how they are perceived by others whereas I am not.  Once, I wore sweat pants everyday to law school for one entire semester.    

That’s it.  That’s my family.  Now, you know that if I am talking about my family and since this is a personal finance blog the next post will be about me lending money to one of these two characters in my life.  Guess which one?