“Dear Steve,
My parents have some financial difficulties and I am not sure how to advise them regarding how to get out of debt and stop spending so much from their retirement account. I am living with them but I have credit card debt of about $15,000.
We need to know next step overall- if we should move. and if so to a rental or buy something.
Also what we can do about the timeshare…
We live in a home that is estimated at $520,000 in a neighborhood where property taxes are about $9000 a year.
First they have a mortagage and a loan against it.
The mortgage has a balance of $274,000 and they pay $1500 a month towards it.
The loan has a balance $190,000 and they pay just the interest which is $435.00 a month.
They also have various credit card debt which totals $40,000 and they pay about $1600 each month towards it.
My father does all our bills and he uses his 2 American Express cards which he pays in full each month. Monthy totals on the American Express cards are approximately $5000. Other expense total about $2200 a month. There are also medical bills because various illnesses. (My mother is sick with an autoimmune disease.) Medical bills range from $200 to $1000 a month.
On top of this they are paying for 2 timeshares which they have tried with no avail to sell. They have a balance remaining of $23,000 each. Annual fees combined are $2800 a year and they pay $832 a month on these.
Should they try to refinance these or perhaps even default?
Monthly income from social security $2500 combined and my father has a consulting gig for which he gets paid $2500 a month. They are pulling out about $7000 from their investments but they only have about 300,000 left.
We want to sell this house and find something smaller where we can all live and I can eventually take over payments. Or I would like them to be able to live there for a while and I can live elsewhere until they need assistance.
Please advise what you think the best next course of action is.
Nora”
Dear Nora,
Thank you for contacting me.
I’ve saw and stared at the screen for a while, contemplating your situation. I keep coming back to the same conclusion and I think the answer lies in a tangential area outside of directly dealing with the debt first.
If we want to change the outcome we need to change the equation. So knowing that I need to first ask you and your family to sit down and answer these two questions for me.
- Are you prepared to put everything on the table and make whatever changes it takes to live within your income?
- Do you feel draining the retirement account is a smart thing to do?
Let me know and we’ll take it from there.
Please post your responses and follow-up messages to me on this in the comments section below.

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