There is a disease from which virtually every parent suffers. It is called “Powdered Butt Syndrome.” Simply put, Powdered Butt Syndrome is when your parents have the concept that since they powdered your butt, they don’t want your unsolicited advice about money. I know this is true for two reasons: 1) I have parents and I’ve tried it and 2) I’ve heard about it and seen it before from others. Very scientific of me coming to that conclusion, wasn’t it? I’m commonly asked what you can do if you see your parents misbehaving with money. You’ve probably tried to talk to them about money and offer your advice, and they roll their eyes or glaze over with the look that says, “I’m not listening to you; I still smell the baby powder I put on your butt 35 years ago.” Maybe it’s because you’re totally broke and just think you have all the answers. Or maybe…just maybe…you really do have the answers for your parents’ financial woes! This week, let’s talk about how to handle money with your parents.
First, what’s the antidote to powdered butt syndrome? I know of only one – live out success and then share your story. For anyone to believe you, you have to have credibility. If you don’t walk the talk, why should I believe you? As a financial counselor, if I told you I had $40,000 in credit card debt, three car loans and was recovering from a Chapter 7 bankruptcy (I don’t have any of that, by the way – praise JESUS!), would I have any credibility as a financial counselor? Would you want my advice? I didn’t think so. If you are not in a position to be giving advice to someone about money, don’t be giving them advice! However, if you have become weird and started living on less than you make, paying off your debts like crazy and come to the realization that your FICO score doesn’t determine your value as a person, you might want to start talking to your mom and dad about how you got there. Be careful! They may be skeptical – especially if you tell them something too weird. So just mention your successes. They will be proud of you and might even give you a cookie or something. But they might also start asking you questions about how they might be able to do something differently or better than they are today. As the old phrase goes – “preach a sermon every chance you get. Use words if necessary.” Live out financial success and then talk about it.
There’s another similar question I want to address while we’re on the topic of dealing with your parents’ finances. Kids who see their parents misbehaving with money want to know what it means when their parents die. They wonder if they’ll be responsible for that debt or if it just goes away. They wonder if collectors are going to start harassing them and trying to take their inheritance if there is a lot of debt owed when mom and dad die.
When someone dies, most debts don’t simply go away. Generally speaking, the person’s assets must stand against what was owed at the time of their death. If there are enough assets of value to pay the debts, the debts get paid, and then the heirs receive the remaining as their inheritance. Let’s consider a couple of examples:
- If mom dies and she had $100,000 in assets and $40,000 in debt, taxes, etc., her estate will generally be required to pay the $40,000 and the heirs will get the remaining $60,000 as an inheritance to split up according to mom’s will (hopefully she had one – if not, that is another issue).
- If mom dies with $100,000 in assets and $150,000 in debt, the $100,000 in assets will be used to pay those debts as far as possible and the remaining $50,000 will just have to be written off by the creditor. But this means there is no inheritance.
Here’s the key to it all (and very good news) – unless you are a co-signor on your parents’ debt, when they die, you will not be responsible for the debt. Clear enough? This doesn’t mean you won’t be negatively impacted. In both scenarios above, the inheritance was reduced greatly because mom had debt that had to be paid before the inheritance could be distributed.
For those of you out there who are dealing with this, I’d love to get your input. Do you have a “powdered butt syndrome” antidote story? Maybe you’re struggling and just want some input on this. Leave a comment and share what’s going on with you!
One last thing – I know there are those of you out there who are still waiting for me to answer your question. Sorry, I just can’t do it because YOU HAVEN’T ASKED! Submit your question today and I’ll do my best to answer.