How to cut your adult child off financially
By Erica Sandberg
January 20, 2015
When I was in college and a young adult, I worked hard for everything. My daughter is just out of college, and I am paying for everything of hers when I can barely afford things of my own. I just recently lost my job, and am working part time until I can find another full-time job. I am also in credit card debt. My daughter is taking everything I give her for granted. I want to help her get a job so she can pay for everything herself, but I don't know where to start. I do know I have to get out of debt as fast as I can. –Margaret
It's going to be a challenge to instill the value of hard work and sacrifice when so much time has gone by. Your daughter has gone soft. She's become accustomed to turning to you for everything, so she hasn't developed the muscles necessary to overcome hardship. That's bad for her, but worse for you as you're obviously suffering under the strain.
First, figure out your own finances. What does it take to meet your basic expenses and debt payments? Develop a budget that does not include supporting your daughter.
List every expenditure you have and what each costs. Be comprehensive, taking care to project for those that come up every once in a while, such as car repairs and home maintenance. They tend to be ones people charge because they've cut their budget too close and didn't account for them. Therefore, if it takes $1,000 per year to keep your house running right, that's $83 monthly. Calculate all the periodic costs this way. Open a savings account where you can park this money.
Subtract the total of your bills from your monthly income. I presume you may have extra funds by not supporting your daughter any longer (I'll get to that).
Prioritize your credit cards by cost, then create a fixed payment schedule so you can know exactly when you'll be debt-free. Let's say you have $500 remaining after paying essentials. These are your two credit cards:
Card A has a balance of $2,000 and an APR of 18 percent.
- Minimum payment = $60
- Finance fees = $35
Card B has a balance of $5,000 and an APR of 20 percent.
- Minimum payment = $150
- Finance fees = $83
Clearly B is more expensive, so concentrate on driving that one down first.
The total for the minimum payments is $210. Subtract that figure from the $500 and you have $290. Apply that figure to Card B, increasing your fixed payment to $440. Send the minimum to the other card. In just over a year, B will be at a zero balance. Then, add what you were sending them to A until that, too, is at a zero balance.
What do you have? A healthy personal cash flow plan. Once in place, you'll be sure that you have enough money for your budget, while also escaping the bonds of debt quickly. When your net worth is positive, you can relax and enjoy life more. You deserve it.
As for your child, let her grow up! For some reason you've wanted to shield her from becoming independent by picking up the financial slack every time she cries for help. The fact is, you can't afford to keep going this way and she needs to learn how to make it on her own. As a college graduate, she can find a job, live with a bunch of girlfriends, eat a lot of ramen and make it all work.
Don't delay. Kindly and firmly talk with your daughter and explain what you will do. Tell her you have faith that she will not just survive, but (eventually) thrive. Then, cut the cord.
Got a question for Erica? Send her an email.