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Help me give my dad good financial advice

Home ▸ Archive ▸ Serious Business ▸ Help me give my dad good financial advice
FatHobbit's avatar

FatHobbit

Senior Member

8,651 posts
Jan 17, 2012 11:43 AM
I just talked to my dad and he is meeting with a debt consolidation company this week. I plan to try to talk him out of it tonight. I know he is in a lot of debt right now, but I don't think wrecking his credit is worth taking the easy way out. Can someone give me some good reasons not to use one of the debt consolidation places? All I can offer right now is "that's fucking stupid" and I'd like to have valid unemotional reasons when I talk to him.

And it is his fault he's in debt. He does not live within his means at all. He has nobody to blame but himself and he spends every dime the credit card companies will loan him. But I don't think that is a persuasive argument when someone is living on a fixed income (retired) and someone comes along offering to have all your debt paid off in two years and you will only have to make half the payments you are making now.
Jan 17, 2012 11:43am
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queencitybuckeye

Senior Member

7,117 posts
Jan 17, 2012 11:45 AM
Is he planning on changing the root behavior that got him into his current situation? Without attacking the core problem, any "solution" will be temporary.
Jan 17, 2012 11:45am
FatHobbit's avatar

FatHobbit

Senior Member

8,651 posts
Jan 17, 2012 11:46 AM
queencitybuckeye;1055685 wrote:Is he planning on changing the root behavior that got him into his current situation? Without attacking the core problem, any "solution" will be temporary.
I agree. Even if this gets rid of his debt he will continue to borrow as much as they will loan him.
Jan 17, 2012 11:46am
OneBuckeye's avatar

OneBuckeye

Senior Member

5,888 posts
Jan 17, 2012 11:46 AM
Plan his debt snowball/payoff and budget for him. That all I got.
Jan 17, 2012 11:46am
RedRider1's avatar

RedRider1

Senior Member

3,850 posts
Jan 17, 2012 11:50 AM
^^It's all you can do. If he negotiates settlements with CC companies (which they're only receptive to if he's not been making payments for at least 90 days), that will affect his credit.

I'd see what he could sell to come up with some quick $$$ and start with the smallest amount owed. Snowball it from there.

Hopefully he's open to your help and willing to correct the root cause.
Jan 17, 2012 11:50am
T

thavoice

Senior Member

14,376 posts
Jan 17, 2012 11:52 AM
I think the first step he should do is to contact those financial institutions himself and see what he can get accomplished that way. If he talks to them and goes over the options and lets them know his next step is those debt consolidation company and/or bankruptcy they may be able to lower rates and help him that way. I dont think the financial institutions really 'like' those DC companies as it takes away from their profits so they would prefer to either cut some rates and/or payments with them so they can reap all the $$$.
Jan 17, 2012 11:52am
sleeper's avatar

sleeper

Legend

27,879 posts
Jan 17, 2012 11:52 AM
Depending on the size of the debt, a consolidation company may not be a bad way to go.

Also, why worry about wrecking his credit? He clearly does not how to use credit responsibly, so maybe he shouldn't be allowed to use it in the first place.
Jan 17, 2012 11:52am
Q

queencitybuckeye

Senior Member

7,117 posts
Jan 17, 2012 11:53 AM
FatHobbit;1055682 wrote:I just talked to my dad and he is meeting with a debt consolidation company this week. I plan to try to talk him out of it tonight. I know he is in a lot of debt right now, but I don't think wrecking his credit is worth taking the easy way out.
I'm not sure that not wrecking his credit should be a major concern, as his inability to handle credit responsibly is a big part of why we're having this conversation. In any event, good luck to you.
Jan 17, 2012 11:53am
Raw Dawgin' it's avatar

Raw Dawgin' it

Just Ain't Care

11,466 posts
Jan 17, 2012 11:53 AM
Declare bankruptcy and start over.
Jan 17, 2012 11:53am
FatHobbit's avatar

FatHobbit

Senior Member

8,651 posts
Jan 17, 2012 11:54 AM
thavoice;1055693 wrote:I think the first step he should do is to contact those financial institutions himself and see what he can get accomplished that way. If he talks to them and goes over the options and lets them know his next step is those debt consolidation company and/or bankruptcy they may be able to lower rates and help him that way. I dont think the financial institutions really 'like' those DC companies as it takes away from their profits so they would prefer to either cut some rates and/or payments with them so they can reap all the $$$.
Will that affect his credit?

He really is bad with money and always has been. Last fall I had to talk him out of buying a new truck that would have been $650/month for 15 years. I didn't even know you could get a 15 year loan for a truck???
Jan 17, 2012 11:54am
Q

queencitybuckeye

Senior Member

7,117 posts
Jan 17, 2012 11:55 AM
Raw Dawgin' it;1055697 wrote:Declare bankruptcy and start over.
An option, but without a basic change in attitude/behavior, it's merely treating symptoms. Frankly, without that change, it matters little what he does with the current debt.
Jan 17, 2012 11:55am
FatHobbit's avatar

FatHobbit

Senior Member

8,651 posts
Jan 17, 2012 11:56 AM
sleeper;1055694 wrote:Also, why worry about wrecking his credit? He clearly does not how to use credit responsibly, so maybe he shouldn't be allowed to use it in the first place.
This is true. But so far he has been on time with his payments and had very good credit. I give my mother credit for that but they have been divorced for 6 years and it's starting to catch up to him.
Jan 17, 2012 11:56am
Q

queencitybuckeye

Senior Member

7,117 posts
Jan 17, 2012 11:57 AM
FatHobbit;1055698 wrote:Will that affect his credit?

He really is bad with money and always has been. Last fall I had to talk him out of buying a new truck that would have been $650/month for 15 years. I didn't even know you could get a 15 year loan for a truck???
Just curious, what was the sticker price on this $117,000 truck?
Jan 17, 2012 11:57am
G

gport_tennis

Senior Member

1,796 posts
Jan 17, 2012 11:58 AM
FatHobbit;1055698 wrote:Will that affect his credit?

He really is bad with money and always has been. Last fall I had to talk him out of buying a new truck that would have been $650/month for 15 years. I didn't even know you could get a 15 year loan for a truck???

15 years!!! That is insane
Jan 17, 2012 11:58am
T

thavoice

Senior Member

14,376 posts
Jan 17, 2012 11:58 AM
I dont believe the consolidation companies are all that bad. He should meet with them, see what they can do but dont commit to it, and then contact the places himself to try and work out an arrangement.

About 15 or so years ago I used a CC company and it didnt go too badly. It is the "easier" way to do it in comparision to contacting them himself. I used it for about a year and then worked out some things myself.

Some financial guys have diff views on what to do. Each morning on WLW there is a financial guy on with some tips. He usually says to work on the ones that have the highest interest rates, but it also isnt a bad idea to work on the one with the LEAST debt first and do the min on the others, and then work your way up. That is a way to eliminate one payment a little quicker and mentally give you a boost that you got one paid off.
Jan 17, 2012 11:58am
justincredible's avatar

justincredible

Nick Mangold

32,056 posts
Jan 17, 2012 12:02 PM
FatHobbit;1055698 wrote:Will that affect his credit?

He really is bad with money and always has been. Last fall I had to talk him out of buying a new truck that would have been $650/month for 15 years. I didn't even know you could get a 15 year loan for a truck???
What kind of truck runs $650/month that takes 15 years to pay off? That's $117k.

I thought the $530/month payments I made on my truck for 5 years (at 0% interest) were bad enough.
Jan 17, 2012 12:02pm
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thavoice

Senior Member

14,376 posts
Jan 17, 2012 12:02 PM
FatHobbit;1055698 wrote:Will that affect his credit?

He really is bad with money and always has been. Last fall I had to talk him out of buying a new truck that would have been $650/month for 15 years. I didn't even know you could get a 15 year loan for a truck???
Did he buy a Monster Truck or something????


Will calling and working out something with the banks affect his credit?

It shouldnt as when ya look on the credit report the individuals creditors are listed and it just cares if the payments are on time and in full to what he is supposed to pay.

Even if it has a MINIMAL affect at the onset it would be offset in the long run with getting the finances in line and paid on time.
Jan 17, 2012 12:02pm
Belly35's avatar

Belly35

Elderly Intellectual

9,716 posts
Jan 17, 2012 12:04 PM
What a financial debt consolidation company can do he can do himself with a few phone calls a some commitments.

First call every creditor and explain the situation and "ask" what they can do now to help him.
He must be willing to send something (money) to everyone, something from $5.00 to $500.00 what ever he can afford and start now.
Keep calling the creditor for support showing a interst in solving the problem....


debt consolidation company charge a fee : Why add salt to the wound.. more probelm in paying them off
debt consolidation company no garentee of det reduction : false hope at a cost.

You and your dad start to sell items he has ... be supprised how much money is in junk that never get used...
Jan 17, 2012 12:04pm
sleeper's avatar

sleeper

Legend

27,879 posts
Jan 17, 2012 12:08 PM
FatHobbit;1055702 wrote:This is true. But so far he has been on time with his payments and had very good credit. I give my mother credit for that but they have been divorced for 6 years and it's starting to catch up to him.
His credit score is irrelevant. He needs to get his debt situation under control, period.

People are way too obsessed with their credit score. I'm not saying its not important, it is, but only if you are trying to get more credit. Right now, he should be working on weening himself off of credit, hopefully indefinitely.
Jan 17, 2012 12:08pm
justincredible's avatar

justincredible

Nick Mangold

32,056 posts
Jan 17, 2012 12:33 PM
I agree that hurting his credit should be the last of your worries. He's not good with it so it should negatively affected.
Jan 17, 2012 12:33pm
FatHobbit's avatar

FatHobbit

Senior Member

8,651 posts
Jan 17, 2012 12:37 PM
queencitybuckeye;1055704 wrote:Just curious, what was the sticker price on this $117,000 truck?
justincredible;1055708 wrote:What kind of truck runs $650/month that takes 15 years to pay off? That's $117k.
thavoice;1055709 wrote:Did he buy a Monster Truck or something????
The numbers are approximate, but I don't think they are that far off. It might have been that they tried to get a 15 year loan and the bank came back with a 10 year loan for $650. Either way that is too much money for someone who is now looking at debt consolidation.

The truck was a diesel 4x4 F350 and I think the sticker was just under $70k. It was a really nice truck, but he didn't need it.
Jan 17, 2012 12:37pm
FatHobbit's avatar

FatHobbit

Senior Member

8,651 posts
Jan 17, 2012 12:41 PM
Belly35;1055710 wrote:He must be willing to send something (money) to everyone, something from $5.00 to $500.00 what ever he can afford and start now.
Keep calling the creditor for support showing a interst in solving the problem....
Currently he is able to make all of his payments on time. But he has no money left over after paying his bills and this company makes it sound like they can fix that without any consequences. I think that's not true.
Belly35;1055710 wrote:debt consolidation company charge a fee : Why add salt to the wound.. more probelm in paying them off
debt consolidation company no garentee of det reduction : false hope at a cost.
Agree. It is dumb to pay them to do something he can do himself. I will also make sure to point out that there is no guarantee of debt reduction. That is an important point that I'm sure they will gloss over. They make it sound like he can be debt free in two years and only pay $400/month.
Jan 17, 2012 12:41pm
T

thavoice

Senior Member

14,376 posts
Jan 17, 2012 1:38 PM
FatHobbit;1055742 wrote:Currently he is able to make all of his payments on time. But he has no money left over after paying his bills and this company makes it sound like they can fix that without any consequences. I think that's not true.



Agree. It is dumb to pay them to do something he can do himself. I will also make sure to point out that there is no guarantee of debt reduction. That is an important point that I'm sure they will gloss over. They make it sound like he can be debt free in two years and only pay $400/month.
Maybe look into a consolidation loan? If he is making all his payments on time I imagine his credit is good. If his credit is good he may be able to take out some sort of loan to pay all that stuff off, lower his monthly payment and probably have lower interest rates as well.

Possibility into a home equity loan?

I think some of those debt consolidation companies can do something like this. They negotiate a lesser interest rate from the creditors. When you pay the DC company they do get some sort of kickback but it is STILL better than staying status qou. The whole issue though is to try and get it done himself with his creditors. I know when i used to have trouble I worked with my CC company and when I told them they needed to either lower my rate and montly payment or I would not pay at all. Pretty good chance they have made a fortune on your dad in interest already so it wont hurt them to lower the interest rate if you threaten to go to DC. They would rather lower your rate than have the DC step in and get maybe a lower rate AND take some of the profits.
Jan 17, 2012 1:38pm
LJ's avatar

LJ

Senior Member

16,351 posts
Jan 17, 2012 2:08 PM
How old is your father and what kind of health is he in?

Is good credit really that big of a deal at the stage of life he is in? It's almost better for older people to just say "fuck it" when it comes to their credit and just do whatever they can to make the rest of their lives comfortable.
Jan 17, 2012 2:08pm