Let him be mad

Dear Dave,

My dad wants me to buy a house on a 30-year loan for him and my mom in my name, and let them make the payments. I’m 24 years old and have a good credit score and a nice apartment, but my job depends largely on how the oil industry is doing. My dad filed bankruptcy nine years ago, and he’s already $150,000 in debt again, so he’s never been very responsible with money. I think this would spell big trouble for me, but I’m sure he will be mad if I say no. What are your thoughts?

Emmanuel



Dear Emmanuel,

Yeah, I think doing something like this would spell big trouble for you. If your dad is irresponsible with money — especially to the point of having to file bankruptcy — what makes you think he’ll make these house payments on time?

I know this would be an uncomfortable conversation to have with your dad, but you need to brace yourself and just do it. Be respectful and explain exactly why you won’t do this. Think about it, Emmanuel. When he doesn’t pay the bill on time, it’s going to screw up your credit score. And when you get ready to buy a house, guess what? You’re going to have trouble qualifying because you already own a house. Most people don’t make enough money to qualify to buy two homes.

Basically, your dad is asking you to not buy a house so they can have one. I can’t tell you how to make your dad okay with saying no to this, but I can tell you that your answer should be no. Let him and your mom know that you love them both, but this is something you just can’t do.

—Dave



Dip in, pay it off!

Dear Dave,

My wife just had our first child. Now, we now have about $3,000 in medical bills not covered by insurance. We’ve got $8,000 in our emergency fund, and I make between $25,000 and $30,000 a year. Should we try setting up a payment plan with the hospital, or is dipping into our savings a better idea?

Matt



Dear Matt,

I’d write a check today and knock out that hospital bill. This falls under the heading of “emergency” in my mind, so pay the bill and jump back into rebuilding your emergency fund.

You’ve done a really good job of saving on your income, but let’s see what we can do about making better money in the future. Extra practical training in your field, or more education in the classroom, could increase your income quickly. Your emergency fund needs to be a little bigger as well, and it’ll be a lot easier to make this happen if you’re making more money.

I’m sure you’re a hard-working guy, but it’s going to be tough for even a small family to make it on what you’re bringing home now. The unexpected can become a common occurrence when there’s a little one in the picture.

Congratulations!

—Dave