Teaching a parent financial discipline

DEAR BRUCE: My mother has been having a hard time financially for the past several years, mostly because she continues to spend money she doesn't have. She continues to ask me to bail her out.

It has gotten so bad that every time I see her, she wants to borrow more — but she hasn't even started to repay me. How can I get her to understand how unfair this is? I feel as if I'm raising my mother. — L.Y. in Kansas

DEAR L.Y.: You put it succinctly — you are raising your mother. She doesn't understand fairness, and she most likely does not have the resources to repay you.

You, in turn, are voluntarily enabling her. I don't know whether she's trying to make you feel guilty, but if you are not prepared to stop the payments, you can kiss the money goodbye. Obviously, you are the adult, not your mom, and unless you're willing to change the situation, it will continue.

DEAR BRUCE: My boyfriend's ex-wife stopped paying for a car in her name, and it ended up being repossessed. After that, she filed for bankruptcy. He is now trying to sell his house and discovered that a lien had been put on his property for HER car debt.

Why is he being held responsible for a loan in HER name? She's the one who filed for bankruptcy, not him. Is there any way to make her pay the lien so he can sell his house? — Frustrated, via e-mail

DEAR FRUSTRATED: Without regard to the car title, if the debt was incurred during their marriage, your boyfriend can be held accountable since she discharged her obligations through a bankruptcy filing. The finance company is going to come after the only person left — him. You haven't indicated whether this is a deficiency filing, but as far as responsibility, unless she comes up with the money, they're going to try and get it from him.

That said, it's entirely possible the lender will negotiate for a lower cash payment.

DEAR BRUCE: I just received a 33 percent increase on my insurance premium for my home. The insurance company says it is for additional coverage — but for what, I don't understand. What type of insurance should I consider for my home? — Reader, via e-mail

DEAR READER: Since you didn't provide more details, I don't know enough about the insurance company's "additional coverage" to comment specifically. However, there are basic policies that a homeowner should take into account. For instance, fire on the building, extended coverage for water damage and similar hazards, and coverage on the contents for the value of the contents.

By the way, when discussing "value," we mean REPLACEMENT value, not fair-market value. If you have a five-year-old sofa that is sold at a garage sale, you are going to get very little money for it. If it's damaged in a storm or fire and you have to replace it, it's going to cost today's prices; therefore, replacement value on the contents of your home is imperative.

The same thing can be said for the structure. If something were to happen to an older home worth, say, $150,000, you couldn't rebuild it today for $150,000. If you live in regions subject to hurricanes, mudslides, tornadoes, earthquakes and sinkholes, be certain that this replacement coverage is in order.

In many states, including my home state of Florida, sinkhole and hurricane coverage is difficult to find. Often, you'll have to go to the state or federal government for this coverage — and many times these policies have to be in place a certain amount of time before the loss occurs. For example, in Florida, if a hurricane is knocking at your door and you don't have coverage, no one is going to sell you protection until the hurricane passes. While no one likes to pay premiums, it is surely comforting to have the insurance in place when a loss does occur.

Bruce Williams is a columnist for the Newspaper Enterprise Association. Send questions to Smart Money, P.O. Box 503, Elfers, FL 34680. E-mail to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Personal replies cannot be provided.

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