This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
Sometime in the middle of the 40+ hours of studying for a taxation exam I wrote last Thursday I gained a roommate. My sister moved cities and is now living with my wife and I for the foreseeable future as she can’t afford to live on her own due to her finances (debt) being out of control. It seems that in the couple of years since she got out of college she has managed to rack up a considerable amount of debt, to the point that living by herself at and being able to eat is now a choice between the two.
So, I have essentially become a “parent” to a 24-year-old girl. From a financial perspective, it is most definitely not ideal because of the extra cost of supporting another person. It’s nice hanging out with my sister, since the last time we lived together was when she was 11 and I was 18, which meant we really didn’t have much in common, so we have a chance to connect now as adults.
Due to her financial state and the fact that she is now living for free in my house we have essentially taken over running her finances, mostly through setting up “rules” that we expect her to follow. If she doesn’t follow the rules, we’ll give her a couple of months to get first and last month’s rent and she is welcome to live her life how she would like.
So, what are the rules?
1) Pay off the debt as quickly as possible. We looked at her monthly expenses, her wages at her current job, and her debt. We gave her $50 a month to spend on whatever she wanted and told her to the rest needed to go to pay down her debt.
2) Follow Up on progress. We told her that we would like to see a copy of her pay stub and credit card statement to ensure that she was doing what she said she was doing…..We figure if we are going to be supporting a roommate we would like to ensure that she is carrying out her end of the bargain.
3) I’m not the bad cop. Not really a rule, but we explained that we weren’t the bad guys here. What we are intending to do is to help her get out of debt, an opportunity to start fresh – we would prefer that she takes it and not resent us for being the “heavy” in this situation. I’m sure at some point she will, but we thought we would discuss it prior to it happening.
So far (it’s been a week) the arrangement has been agreed to, I’m not sure how it will go over the next year or so she will be staying with us, I guess we’ll have to see. My wife and I understand that someone who has lived with very little financial structure or discipline this will be a big change, but we hope she makes the most of the opportunity.
Have you helped a family member out before? How did it work out?