Paying the Parents

Jacob has $1,000 in credit card debt, a $12,000 car loan, and owes his parents $20,000. The loan from his parents is straining their relationship because they'd like to see it paid off.

QUESTION: Jacob in Los Angeles has $1,000 in credit card debt, a $12,000 car loan, and owes his parents $20,000. The loan from his parents is straining their relationship because they’d like to see it paid off. How should he handle this?

ANSWER: Do a written budget. You say your parents don’t need the money but they need to see you being responsible and that will remove the strain. Right now you’re paying $200 a month to them. Sit down with them and show them your written plan. If you stay on $200 a month they are going to be your largest debt. When all the other debts are cleared, you’ll be able to raise that amount using the debt snowball. That might be $1,000 or $1,500 a month at that point.

But ask that they stay with you until you get to them in the debt snowball and then you clear this up. They just need to see a plan.

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