Confessions of a Laid-off Lawyer

Just Your Average Joe Blogging Away His Debt—In One Year or Less

Oh, Mother!

with 22 comments

Total Black: $6.71
Total Red: $245,701.55

Palm to face!  It is with a heavy heart that I write today’s post. 

My mother took matters into her own hands.  Out of sheer frustration with her own bank and the over three weeks it’s taken to extend an existing line of credit on her house, she turned to her IRA and withdrew approximately seven thousand dollars.  Back in The Parent Trap I expressed my appreciation for her help, and noted that my family has a history of helping each other out financially as well as all other ways families help each other.  In that post, I also noted my frustration with commenters’ assertions that I was pilfering from her retirement.

Well, this time—though not through my own doing—in a sense, I am.

Then later today when she telephoned the bank to inquire as to the status of her application, she learned that they had approved the additional $15,000 credit she requested, but they’re requiring her pay off a $9,000.00 credit card, $8,000 of which pretty much really my balance, something acknowledged back in Day of Accounting.  A banker she spoke with wanted said he was going to seek a $25,000 total credit line increase, $10,000 of which would pay off that credit card and $15,000 of which would be available for her use.

I was dumbfounded because she had insisted–vociferously—just a few days earlier that she would not take money out of her IRA.  And had she spoken with me beforehand, I would have pleaded with her not to obtain the money that way.  Strategically, this may all make sense.  She’d effectively be effecting a balance transfer.  And supposedly her interest rate would drop to 3% for the line of credit.  I doubt the credit card is that low.  In theory, paying less interest—and to only one creditor—is better than paying multiple creditors at higher interest rates.  But I’m apprehensive that my mother is in a panic mode of sorts, caused by worry over my situation.

I’ve heard Suze Orman’s advice that you’re swapping an unsecured debt—credit cards—with a secured one—your home.  But, of course, I can’t control her.  So I can’t literally take responsibility for her actions.  We’re two separate people.  But, of course, I still do.  And I am troubled by the extent to which, like the Gulf Coast spill, my financial spill is starting to stretch too far.

Ultimately, in the end, this all may work out somewhat for the better because had she received approval only for $15,000, with the proviso that she use $10,000 of it to pay off a credit card—she’d effectively be left with only $5,000 for use.  That would have been pointless at the end of the day since I need $7,100 for the IRS and another $3,500 for the car.  But if $7,000 comes from her IRA, and then only $3,500 from the line of credit—that’s not too bad.  Perhaps I can borrow a bit more to—as noted in Breakdown—that if I eliminate a credit card (or two) I significantly free up monthly income.  With freed-up income, I can send her more money.

I wish I were getting paid already.  I don’t understand why any employer thinks it’s acceptable to keep you unpaid for nearly two months.  But that’s another story.

Written by Laid-off Lawyer

June 29, 2010 at 21:56

22 Responses

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  1. This is sad to read. Your mother loves you and wants to help. Since she cashed out the IRA and was getting a credit line, it doesn’t look like she’s independently wealthy with resources to fully bail you out and is putting her own financial future at risk.

    Unless you’ve told her the full extent of your financial woes, you should consider not asking to borrow any more money, a bank would not lend you money, your mother should have at least as much information as a bank when lending money that she will need in the future. Even though you intend to pay her back, she will never be able to get than money back in her retirement, so there are real consequences to this. Transactions with family members are not arms length, you shouldn’t be dumbfounded that she took drastic measures to help you.

    I hope this works out.

    govtlawyer

    June 30, 2010 at 07:41

  2. Was your mom’s withdrawal penalized?

    Bouard

    June 30, 2010 at 07:48

  3. No—just to be clear, she didn’t cash it out, per se. She still has money left in her IRA. She just withdrew seven thousand. I don’t know how much she has in there though. Much more than that, for sure.

    She’s 69 years old. So next year she’ll be obligated to start receiving payments. I don’t think she was “penalized”; she did have to pay tax on it, of course.

    Like I said above, I never expected this, given that her tone the other day was defiant almost about her IRA. She says she’s happy she’s done this and wishes she had just done this a week or more ago.

    Go figure.

    Laid-off Lawyer

    June 30, 2010 at 08:03

  4. You’d better get a two bedroom and a real plan B, cause it looks like mama is moving in. One family member needing to be on the dole is bad, but two family members is more than twice the bad. It

    set me up

    June 30, 2010 at 08:42

  5. I’d like to say I can’t believe you’re putting her future at serious risk because of your own poor choices and debt mismanagement. But I can, because you’ve proven your willingness to do so time and time again. This is just incredibly sad.

    Anon

    June 30, 2010 at 09:07

  6. Oh man…

    I’d say try to cancel that transaction, but once you withdrawal from an IRA, you can’t put it back 😦 Unless it is in “processing” I guess it is a done deal, which is unfortunate.

    On the other hand, if your mom likely has more money than she needs for retirement (not at all sure about that since she has the home equity line, but maybe she’s just taking advantage of the low rates and doesn’t need it…) then sometimes it can be smart to gift it to beneficiaries while still alive rather than wait until you pass, especially if they really need it.

    However, it sounds like this was an emotional decision by Mom, and it is practically never good to make a financial decision like this based on emotion. An irreversible emotional decision makes it even more unfortunate.

    Unless the above is true in your mom’s case (more $$ than she needs, so gift it now rather than will it later), I really think you need to (how?) force her to promise not to give/loan you another cent, for best interest of both of you.

    I was afraid of all of this when you first mentioned the possibility of the two possible clerkships. And that was without knowing that one of them was USVI based, which just makes things more complicated and expensive.

    No normal mother can be blamed for wanting to help a struggling child, but this is (and likely has been for a long time) enabling behavior. Intentions…good. Results…likely bad for both.

    Sorry, but I have no solutions to offer at this point other than going off the grid. Sucks.

    T

    T-Bag

    June 30, 2010 at 09:15

  7. Sorry but your mother is an enabler – she is not helping you in the long run.

    Re the salary situation, why dont you enquire as to whether your employer can let you have some on account?

    Joker

    June 30, 2010 at 10:02

  8. If his mother wants to subsidize his lifestyle, who cares? Her money and she can do what she wants.

    At 69 she’s collecting social security (not a full time job I know) but also sounds like she has the means to have a good retirement.

    anon

    June 30, 2010 at 10:14

  9. Wow…thats pretty sad. The oil spill analogy is pretty apt. Keep plugging along though.

    Shannon

    June 30, 2010 at 11:52

  10. Have you contacted the IRS and inquired about a payment plan?

    Ripley

    June 30, 2010 at 14:44

  11. He set up a payment plan but is late making the first payment and has chosen to ignore the IRS in the meantime. Another disastrous decision.

    Anon

    June 30, 2010 at 18:10

  12. I’m not “ignoring” them. Let’s be real and not bombastic. I think it makes more sense calling them on Friday to say “Sorry I’m late, but I paid the amount requested” rather than to have called them on Monday to say “Sorry I can’t pay today and I’m not quite sure when I will have the money. Maybe Friday?”

    It’s easier to ask for forgiveness—isn’t that the old saying?

    Laid-off Lawyer

    June 30, 2010 at 18:28

  13. Not sure if that old saying applies to the IRS though!

    T

    T-Bag

    June 30, 2010 at 18:35

  14. @T-Bag: Too late to cancel it. I already asked her about that And yes, I think it clearly was a maternal/emotional decision.

    @Joker: My family has a history of helping each other out. You can call it enabling. But then the bulk of Americans would have to fall under that label anytime we help each other out financially. Tough love, I believe, has no place at the financial table. Unless you’re dealing with an addict or someone clearly irresponsible with income. The bulk of my debt is tax and student loan, not consumer. And besides that, Americans have been steered towards consumerism for nearly forty years. Any looked at the advertising aimed at teenagers? Chickens are coming home to roost; that’s what got a sizable number of people in debt.

    My family has moved from lower middle-class to mid-to-upper middle class. Both of my parents were blue-collar. Both of my grandfathers were immigrants; both grandmothers children of immigrants. And upward mobility requires money. And viewing it in a business sense, I am my parents’ “investment” so it makes sense to ensure I make it through this transition. Clearly the return on this “investment” three years ago, when working a six-figure job, was sizable in that I paid my mother approximately $17,000 post-tax income in two years—$4,000 more than I had borrowed.

    This is a rough spell I’m going through but certainly I’m not doomed to the dole for the next fifty years.

    Let’s keep this all in perspective.

    Laid-off Lawyer

    June 30, 2010 at 18:46

  15. Not doomed eh? I’ll take a wager on that.

    Bouard

    June 30, 2010 at 21:37

  16. I wouldn’t assume she loaned you the money after reviewing her retirement savings and deciding taking $7K out would have no negative impact. That your mother’s got a home and retirement may be in large part the result of not encountering a lay off from a high paying job while deeply in debt rather than stellar financial practices. If you hadn’t been laid off from the firm job, you’d be in a vastly different place financially.

    If you don’t know how much she’s got saved for retirement, there’s no way for you to know that she can afford to lend you money. She wants the best for you, and is acting emotionally rather than financially.

    Its fine to discuss upward mobility, consumerism, and the investment in your education, but the bottom line is a lot of seniors spend their retirements in poverty, don’t let your mother put herself at risk.

    govtlawyer

    June 30, 2010 at 22:40

  17. I bet $250,000.

    Laid-off Lawyer

    July 1, 2010 at 06:33

  18. You are seriously delusional. When dealing with the IRS, don’t ever hide your head in the sand – it will come back to bite you. You need to be honest and up front with them. I foresee a wage garnish in your future.

    Anon

    July 1, 2010 at 09:10

  19. On the positive side, Anon, at least you see a wage in his future.

    Blade

    July 1, 2010 at 09:19

  20. Dude that’s just stupid. And ignorant. What do you hope that comment will accomplish? Seriously? What went through your mind when you resolved to take time out of your day to post that comment on my blog? What? Because I have debt I don’t deserve to work? To be paid? No one should hire me?

    I might just start making people create a profile to comment. I’m tired of being haters whipping post. Constructive feedback is one thing. Sorry attempts at wit that double as veiled attacks are another.

    Laid-off Lawyer

    July 1, 2010 at 09:40

  21. There actually wasn’t any malice intended in that joke. I fully expect your clerkship to lead to full-time employment of some kind when its over. I enjoy taking you to task for your ridiculous spending habits and your unwillingness to take responsibility for the decisions you make (America made me this way!), but I certainly don’t mean to make light of you – or anybody else – being, or potentially being, without a job. Nothing funny about that.

    Blade

    July 1, 2010 at 10:21

  22. Honestly, the reason why you are getting so many people right now is because it’s like watching a train at the moment it derails.

    If you look at how much it cost you to move to VI (apartment, move, car), plus other extravagant expenses (trip to LA), you will never make that back with a 50K clerckship.

    Unless you can cutdown your expenses to 25K a year so you can use 25K to spend on debt, you are screwed. This will mean no eating or drinking out, no cable, no netflix, no trips abroad, eating ramen, trying to find a roommate to live cheaper, etc. You’ve lived the high life for years. Even if you had kept your job you would have ended up where you are now as even then you were not paying off your debts and living about your means (in NYC 160K is not all that much). Seriously dude, you need to follow the Greek route and try austerity. Even if you can live off 25K a year, it will take you more than 10 years to pay everything (because of the interest).

    Honestly, maybe the best choice would be to cut and run. Move in with your mom, try to get a job there, even non law related. At least your living expenses will go way down that way and you can use her car.

    ConsultantZ

    July 1, 2010 at 11:11


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