Question: K.D. from Oakley: A family member recently asked me for some money help and I’m torn. They haven’t always been the most responsible with their money, but I also want to help. Any suggestions?
A: This is always a tough one. Because while there can a natural desire to help a family member in need, it can be hard to justify any kind of financial assistance if their past decisions and actions don’t warrant such generosity.
First, you need to figure out if you can even actually afford how much they’re asking for. Because if you can’t, then this decision is basically made for you (and it’s OK to be honest with them about this fact). Remember, you shouldn’t be jeopardizing your own financial future just because they’re family. You have a right to be selfish.
If you can afford it (and decide you want to help), try to get some more information from them about their situation. Because, as you allude to, you don’t want to keep enabling someone who perhaps doesn’t have the best history of decision making. Sometimes by saying ‘no’ you’re actually helping. And keep this in mind: Declining to give them money doesn’t mean you’re declining to help at all. Depending on their request and need, you could consider non-monetary assistance. For instance, if they’re unemployed and trying to find a new job, volunteer to babysit their kids so they can go on interviews.
If you do decide to say ‘yes,’ you should technically draw up a contract with clear terms. But be honest with yourself. Are you really going to take them to court if they break it? If not, then you might want to take a more realistic approach and just reframe your thinking: Instead of considering this money as a loan that will eventually be paid back, think of it as a gift – this way, you’re not caught off guard (or disappointed) if you never see the money again.
The Allworth Advice is that family and money can be an emotionally-charged combination. Take your time thinking this through, and be honest with yourself and with your family member about your final decision. Good luck.
Q: Roger in Newport: I thought you might like to know that I recently paid of $5,000 worth of credit card debt! Now, should I close that card?
A: Congratulations! This is something we love to hear. Credit card debt is one of the most expensive kinds of debt there is, so ridding yourself of that burden should help your finances in the long run. You should be quite proud of your accomplishment.
But here’s the thing – in most cases, you shouldn’t close your card! We know it may seem counterintuitive, but doing this can actually hurt your credit score due to a likely increase to your credit utilization and the loss of all the history that’s attached to that specific credit line.
Here’s The Allworth Advice: If you no longer want to use the card at all, just stick it in drawer somewhere and hope the old adage of ‘out of sight, out of mind’ plays out (though you should pull it out a few times a year to buy something small – like a coffee – so the card issuer knows you’re still an active user). However, if you find yourself too tempted to start overspending again, the short-term hit to your credit score might be worth the closure.
If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to email@example.com.
Responses are for informational purposes only, and individuals should consider whether any general recommendation in these responses is suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing, including a tax adviser and/or attorney. Retirement planning services offered through Allworth Financial, an SEC-registered investment advisor adviser. Securities offered through AW Securities, a registered broker/dealer, member FINRA/SIPC. Call 513-469-7500 or visit allworthfinancial.com.
This article originally appeared on Cincinnati Enquirer: A family member asked me for money. What should I do?