Here’s a twist on the usual theme of kids of any age who borrow from their parents.
Mei is an attractive, petite woman in her late twenties who works in the advertising department of a large retail store. A first generation American-born Asian, she told me about regular loans to her father over the course of nearly her entire life.
Her mother was the primary breadwinner and worked as an administrative assistant; dad was a construction worker. She had a happy childhood, she thought; she was good at school and always had nice clothes and food. Her parents divorced when Mei was almost seven. She understood the concept and it wasn’t a devastating life event.
Mei’s mother enforced good personal finance habits. “Save your birthday and Christmas gift money,” she instructed her only child. Mei saved diligently and at the tender age of seven had amassed a small fortune of $200.
Her dad humbly asked to borrow $100. He was short on cash but vague about the details. She didn’t know why he didn’t explain it. Perhaps he thought it’d be too much information for his young daughter. Or maybe he didn’t have to justify it because he was The Parent.
This was typical of her father’s personality, Mei told me. He did things on the fly, rolled with the punches, and so she attributed his request for cash as “Dad being Dad.” She reasoned that if her dad needed help, she’d help him. Dad said he’d pay Mei back when he got his next paycheck, which he did.
At nine years old, Mei was already a keen observer of how each parent handled their finances. Her mother was deliberate and compared prices for the best buys when she grocery shopped.
In contrast, Dad grabbed anything from the shelves and threw it in the cart. He bought brand name items without glancing at the prices of their generic equivalents. It was obvious that he was horrible at budgeting.
Regular loans from daughter to father
Borrowing money from Mei became a predictable pattern. About once a month, he’d hit her up for $100 or $75 but he always ponied up the cash to repay her. Each time, he was apologetic and ashamed.
“If he were a jerk or abusive, it would have been easier to say no, ” she explained to me. “And it’s a cultural thing. Asians have strong loyalty to family. You don’t turn your back.”
Her mother knew about this odd arrangement; in fact, Mei asked for her permission each time before she loaned any money. Mom was upset with her ex-husband the first time it happened. She told Mei’s dad, “She’s just a kid. Pull yourself together and don’t rely on her.” When precocious Mei was eight or nine years old, she no longer needed her mother’s blessing but she still mentioned the recurrent loans.
By the time Mei was in high school, Dad proudly told her that he wouldn’t need to borrow any more money from her. Had he finally learned from his mistakes, she hoped?
Borrow from the 401(k)
Dad’s bright idea was to borrow against his 401(k) fund. Mei’s mother had taught her about saving for retirement so she understood the basic concept: you put money in, it earns more money, and when you stop working, you’ve accumulated a tidy sum. But you’re not supposed to touch those funds earlier. Her father was blasé about it and told Mei not to worry.
Mei was the first in her family to go to college. She held a part-time job and had to say no when her dad asked to borrow money. After graduation, she got a full-time job and the loans promptly resumed.
Her dad always shrugged everything off and rationalized, “Everybody makes mistakes.” Each time, she wearily responded, “You’re supposed to learn from your mistakes. But you’re not learning.”
Buying a car with bad credit
A few years ago, her father’s old car broke down. Do you think he bought a replacement that was within his budget? Of course not; he didn’t have a budget.
The “pre-owned” car salesman fit the profile of the sleazy used car hawker. He sold Dad an auto he couldn’t afford at an astronomical interest rate because his credit score scraped the bottom of the range. Her uncle stepped in to co-sign. The expense of the monthly payment of $500 forced her father to ask Mei for frequent, larger loans to cover everyday expenses such as gas, food, and lunch money.
When Dad figured out that he couldn’t afford the car, his father told him to give the car back to the salesman. Just like that. As if he were returning an unworn suit that he bought but later didn’t like. It was a misunderstanding because Mei’s grandfather had a leased car, and didn’t know that Dad purchased his on credit.
Dad dropped the car off, told the salesman he didn’t want it, and walked away. The salesman threatened to sue, but dad didn’t care. He heard nothing more about it and thought he got out of his obligation without any consequences.
Six months later, her dad called and was devastated. The car dealership got a default judgment against him and now they ‘d garnish his wages. Dad tried to contest it, but he had no defense. The garnishment gouged his paycheck by 20%. Eventually he paid off the debt but then was fired after yelling at his boss about something trivial.
Dad had no emergency fund or savings, of course. He took the predictable but disastrous route of cashing in the entire 401(k) account balance of $20,000, which quickly diminished to $12,000 after taxes and early withdrawal penalties.
He paid $2,500 that he owed his landlord and bought a used car at a reasonable price, but spent $5,000 on non-essential extras. Mei’s father asked her to front him $300.
She noticed that the numbers didn’t add up and she quizzed him about where the rest of the 401(k) proceeds went.
The last $4,000 was wasted when he gambled it away. Mei patiently told him that it wasn’t such a good move, but inside she was fuming.
She lamented to me, “If he had told me sooner, I could have tried to talk some sense into him.”
What she failed to acknowledge, even now, was that her father was stuck in his irresponsible ways and there wasn’t anything she could have done. He’s operated the same way for over two decades and there’s no reason to think he’d change now.
Fed up, Mei started crying after her father told her about losing what little cash he had left at the blackjack table.
“Why can’t you learn from your past mistakes?” she asked him, knowing he’d have no logical answer. “I can’t always be here to bail you out. I may not be able to. ”
She expected her dad to apologize and act humbly as always.
Instead, his response shocked Mei: “Be thankful you have the ability to help your parents.”
She didn’t know what to say. She told her mother, who said Mei shouldn’t have said anything to her father about the gambling losses. Double shock. She thought Mom would have her back on this one.
Today’s status: Mei’s father is still unemployed and his benefits expire this month. She loaned him $300 for his car insurance, cell phone, and other bills. He won’t be able to pay his rent next month, and she figures he’ll ask to borrow from her. Again. She’ll say yes.
“I don’t have it in me to fight,” she said wearily. “I don’t want to see him not be able to get to work.”
I asked Mei how much her dad owned her. She didn’t know the exact figure but thought it was about $500. “I’ve grown numb to it. It’s been going on for over twenty years now. Nothing is new.”
And why should anything be different?
The pattern has repeated for two decades. Over the course of her entire adult life, and most of her childhood.
But Mei sees an end in sight. She has her own additional expenses because she and her fiancé are saving up to pay for their wedding. After they get married, they’ll have a family. New priorities.
And that’s where she’ll draw the line. It will be easier to say no to dad.
Rely on yourself only
Mei was excited when she told me about her wedding plans. She and her fiancé will foot the entire bill themselves. His family offered to help them with the expenses, but they didn’t want to have other people influence their important day. She told me, “We don’t want to rely on others.”
What a contrast to her own family, where her dad has leaned on her heavily since she was a child.
I’m not Asian, so this family dynamic — where kids support the older generation —is foreign to me. I can appreciate those working adults who help their elder parents.
Yet somehow the idea of a 7-year-old being compelled to fund her able-bodied father’s daily expenses is disturbing.
What do you think? How young is too young to help your parents with their finances?
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