Create a Personal Budget: When The Parental “Free Ride” Train Breaks Down

Every now and again we at Mint like to remind you why it’s important to be responsible and create a personal budget. It’s something to think about while you read this person’s experiences.

Remember that time when your parents paid for everything? Yeah, that was awesome. Too bad it didn’t come with the warning label: EXPIRES AT THE AGE OF 21. NOT APPLICABLE TO CREDIT CARD BALANCES, REGARDLESS OF PROMISES MADE BY PARENTAL UNIT.

When I was in college, I made the poor decision of believing my father every time he said “just put it on one of your cards and I’ll pay for it.” He was always an advocate for having good credit and using credit cards to your advantage while being very careful to not abuse them, so I trusted him.

Instead of arguing the logistics of displaced responsibility, I just figured my dad knew what he was doing, so I did as I was told. $120 shoes as my birthday present from my dad, $3500 tuition payment from my dad, $1000 down payment on a car from my dad. I informed my dad of every purchase I made with a credit card before I made the purchase, and everything seemed to be just fine.

All nine of my credit card bills were sent to my home address, where my dad received them, reviewed the purchases, and paid them. Living life on the speeding train called “Free Ride” was good and easy. Until it broke down.

Apparently my dad forgot about the second half of his “just put it on one of your cards and I’ll pay for it” motto. After I graduated college and promptly moved to the other side of the country, 3000+ miles away from home, my dad informed me that he “was starting” to lose control of my credit. He “suddenly” wasn’t able to make the payments on my credit cards.

At the time, I didn’t think much of it. I had just turned 22 and was more than willing to take my finances into my own hands and start paying what was left on my credit cards. I knew there was probably a large total balance remaining and I was prepared for it to total about $200 in monthly payments. I went online to register for “online banking” and change my billing information for all of my cards… and that’s when the speeding train called Free Ride crashed. Straight into nine accounts of overdue debt. I needed to create a personal budget.

I noticed late payment warnings on most of my accounts. Some accounts wouldn’t even let me register online, so I had to change my billing info over the phone. My dream of managing multiple online credit card accounts was crushed into a concentrated nightmare of threatening letters and phone calls from scary debt collectors.

I guess my dad’s perception of the words “starting” and “suddenly” vary slightly from the norm. Apparently “suddenly” meant “I haven’t been paying your credit cards for the past four months.” I managed to jump from having no credit responsibilities to being responsible for over $20,000 in delinquent credit card accounts. I researched as much as I could in order to figure out how to tame this beast of a situation, but I was unsuccessful in doing so. I was quite skilled at neatly filing all of the debt collector letters and bills, but unfortunately that didn’t help the real problem… finding the money to actually pay this debt.

It’s now two years later, I turn 24 in less than a week, and while I’ve finally gotten my act together and started savings money to get rid of this debt, I’m still in the midst of sorting out the rightfully angry, honest debt collectors from the downright sketchy, illegal debt collectors. Looking back on how I got myself into this mess, I’m kicking myself for listening to my father in the first place, but at the same time I’m now aware of just how useless it is to have someone else manage your finances. When it comes down to it, you’re still the sole responsible party.

It doesn’t make sense to put all of the work and knowledge into the hands of someone else if in the end, because no matter how many fingers you to try to point away from yourself, it’s still your name and your identity. You’re better off being in control from the beginning: that way you’ll know how to fend for yourself if it all comes crashing down.

Mint’s Take Away: This is a very difficult situation that occurs quite frequently among many young adults in America. Many people may say that the original poster should have taken care of their own finances from the beginning — and we agree; but we also believe that the original poster understands this. Had the story been written with a sense of entitlement, we would have dismissed the story immediately.

For many parents and their children heading off to college, communications regarding finances is incredibly important. If you were to ever promise financial help to your child, make certain they know full well what they will receive from you and what you expect from them.

Although many parents would love to be able to continue to provide for their child’s welfare, it is important to not over extend yourself in your attempts to help your child financially. If you’re not careful, situations like the story above can happen before you know it. Remember, there will always be student loans for your child’s education — but there will never be a loan for your retirement. Lastly, the real shame in situations like these is not the occurrence of financial hardships, but more often the strife that forms between a parent and a child.

Train Wreck Tuesdays are a weekly post of horrible financial mistakes. They are posted anonymously. Submit your story; if you’re selected, you get a free personal finance book. The best comment gets the same prize! Check out past Train Wreck stories here.