Don't Cheat Mom

Travis owes $5,800 to his mom after she bailed him out of a dilemma with VA. He wants to pay her $5,800. She wants him to pay the interest as well. Dave agrees with Travis's mom.

QUESTION: Travis in Tulsa owes a $5,800 debt to his mom after she bailed him out of a dilemma with VA. He wants to pay her $5,800, but she’s paying 28% interest for it on her credit card. She wants him to pay the interest as well. Dave agrees with Travis’s mom since she wouldn’t have this debt otherwise.

ANSWER: You cost her money. It’s either going to cost you money, or it’s going to cost her money. She would not have owed 28% on $5,800 if you weren’t around. So why don’t you owe it?

If there’s a reason I’m missing something—I could be missing something, and I’m not picking on you—the only reason she has this extra debt is because she helped you. Had she not helped you, she wouldn’t have had that problem. In my mind, I think she’s probably right unless there’s a part of this agreement or there’s a part of your discussion with her that wasn’t the same.

If she had the money buried in a coffee can in the backyard and dug it out and it didn’t cost her anything because it would have been in the coffee can anyway, then you’d have a point if she tried to charge you 28% interest. But this is actual, real hard money out of her pocket. It’s $1,600 a year she’s paid.

I don’t think she ought to be out of pocket any money for having helped you because that was your intent to start with. Her goal was not to make money on having loaned you money. Your goal was not to have harmed your mom. All I’m trying to do is break her even, in other words. If there was a different motivation in the story, then you could talk about that. My guess is she was just trying to help you, and she didn’t expect it to cost her any money, you were glad to have the help, and you didn’t expect it to cost her any money. Basically, to rent you some money, she’s been paying $1,625 a year. It just about doubles this deal, doesn’t it? Ouch.

It’s a good one to get rid of quickly and to go ahead and take care of the bill as fast as you can. If you want to, you could split this debt in your debt snowball into two bills. You could say $5,800 on the credit card and pay it off, and then the amount you owe your mom could be a different bill. In other words, she might need to wait a little bit on some of that money, but that’s not hurting her.