MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_NextPart_01C97C11.2DA11730" This document is a Single File Web Page, also known as a Web Archive file. If you are seeing this message, your browser or editor doesn't support Web Archive files. Please download a browser that supports Web Archive, such as Microsoft Internet Explorer. ------=_NextPart_01C97C11.2DA11730 Content-Location: file:///C:/AE471901/0812RevTipsonhelpingyourkidsrecoverafterafinancialmistakea.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" Closed-End Funds Raise Awareness

BUSINESS WEDNESDAY, DECEMBER 24, 2008     =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;     TRIBUNE

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<= span style=3D'font-size:14.0pt;font-family:Arial'> Tips on helping your kids recover a= fter a financial mistake

 

 

<= span style=3D'font-size:10.0pt;font-family:Arial'> 

The average college graduate is $20,000= in debt, and today’s young adults are clearly exposed to more opportunit= ies for self-directed financial disaster than any group in history. =

Despite the current credit crunch, cred= it cards are still a common way most young people afford their new adult lifestyle, and rising costs on everything from rent to gasoline presents de= eper challenges.

So it happens. Your kid gets in trouble with those credit cards, loses a job or can’t find a job to pay the s= um total of the rising debt he or she has. What can you do?<= /span>

Make sure you can afford to help:  It’s tough to say no to a financial bailout for your kid, but depending on the level of trouble he or= she is in and your own financial responsibilities, you may need to.  Here are some ideas:

<= span style=3D'font-size:10.0pt;line-height:150%;font-family:Arial'>Both sides sh= ould come clean: Remember that this situation is as much about the relationship as about money. The decision to help a family member with money problems requires understanding -- lecturing tends to work not so well. But it’s right to encourage your kid to take a frank look at their financ= ial situation and if they are in debt trouble of any kind, they should get help. It’s also important that you show confidence that they will make it through this.

 

Consider a joint talk with a financial planner:&nbs= p; A financial planner can look at their financial situation and your own and give you both a road map on how to work through your child’s money problems and set up better money management techniques = for after the crisis.

Should help be considered a gift? Actually, this is a good first question= in any scenario where you offer help to a friend or family member. What happen= s if you don’t get the money back? Would the potential loss of money injure you, and worse, will it injure the relationship? This is why it might be a = very good idea to present this solution as a one-time gift -- and then stick to = it.

But if it’s a loan: You need to structure it professionally with clear consequences if it goes unpaid. Handled correctly, such a solution can offer benefits for the borrower and lender alike. Terms should be at arm’s length to meet IRS rules but it can still be more attractive than the child could obtain in the current marketplace. But there’s the potential for incredible downside. Unclear agreements can lead to missed payments or defa= ult. If the borrower dies suddenly, the lender’s investment may be lost if= the agreement isn’t structured correctly. A properly executed promissory = note is still an obligation of the estate, and may continue to be paid to an hei= r or other person or entity based on the terms as agreed.  It is advisable that the loan agre= ement be in writing and properly executed to meet IRS rules.

<= span style=3D'font-size:10.0pt;line-height:150%;font-family:Arial'>Work with the= m on budgeting:<= span style=3D'mso-bookmark:OLE_LINK3'> It’s not going to be enough to solve the immediate problem. It’s important to set a clear financial course for your child going forward, and you’re going to have to provide guidance. =

<= span style=3D'font-size:10.0pt;line-height:150%;font-family:Arial'> 

<= span style=3D'font-size:10.0pt;line-height:150%;font-family:Arial'>Encourage the= m to start an emergency fund: Even if your child only has a few cent= s in their pocket after settling their troubles, encourage them to start an emergency fund. Optimally, they’ll need to stash away three to six months’ worth of living expenses, and even if it’s just a small start, it’s part of the recovery effort.

 

= REBECCA WARREN
FOR THE TRIBUNE

 

 

 

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