Borrowing From Junior
Dawn is faced with a tough choice that involves borrowing from the savings account of her kids. Is it wrong to do that to pay off debt?
QUESTION: Dawn is paying off her debt. Should they borrow the $2,000 from their kids’ savings account to pay on their $17,000 in debt, and then pay them back? They make $75,000 a year. There are a couple of things to consider here, but Dave says taking that money isn’t needed to solve the problem.
ANSWER: First, money that the kids have is actually your money. You put your own money in there. Second, it feels unclean to take money like that which you have allocated for your kids’ future. You guys just need to quit spending money you don’t have. Get on a budget and clean up this mess. If there was $80,000 in the kids’ names, I’d write a check and pay the debt off.
You’ve got enough money to clean this up. What you get in money, it is balanced by the fact that you feel unclean about taking money that is earmarked for your kids. I’d leave it alone on that basis, but there is no set rule here. Stick with your debt snowball and stay away from that money.