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How Can I Help My Adult Child Get Out of Debt?

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Most parents feel a natural inclination to help whenever they see their child struggle. This instinct doesn’t go away once a child enters adulthood, but it may become more complicated as they age and take on more responsibilities.

When it comes to money, if your adult child has been struggling with significant financial burdens, you may feel compelled — or even obligated — to help. However, before tackling your adult child’s financial troubles, make sure you're ready for what that entails — and that you aren’t sacrificing your own financial security in the process.

Consider alternatives to paying off your adult child’s debt

The first thing to consider is whether there may be alternatives to taking on your adult child’s financial burden in its entirety. Determine the type of debt your child has. If they are struggling with mortgage debt, for example, you may only be able to offer moral support — it’s up to your child and their lender to come up with a payment plan or other solution. If you want to pitch in, though, you could help your child organize the mortgage paperwork and reach out to the lender. Then, your child and the lender can discuss payment options or alternatives, such as a loan modification or a short sale.

If your adult child asks you for help with their student loan debt, do some research before simply taking over the payments. Start by exploring programs that might help your child with their student loan debt, such as the Public Service Loan Forgiveness (PSLF) Program. You can also consider student loan counseling from a nonprofit credit counseling agency that can talk with you and your child about repayment options.

Think twice before paying off your adult child’s credit card debt

If your adult child is struggling with credit card debt, ask yourself whether it’s a good idea to help them pay off the debt before deciding to open your wallet. Is your name associated with the debt in any way? If so, your credit scores could be negatively impacted if your child doesn’t pay the bills. In this case, you might want to take over the payments to ensure they’re made on time and your own credit history doesn’t suffer. You could then close the account or ask the bank to lower the credit limit so your child doesn’t get overwhelmed with debt in the future.

If the debt is not associated with you, meaning you’re not a cosigner or joint account holder, proceed with caution. If your child got into debt once, they could go down that path again and expect you to foot the bill a second (or third or fourth) time. In this case, helping your child learn how to properly manage their money would be a better solution than paying the debt on their behalf.

Is helping your child financially something that you can do?

No matter what situation your child is facing, it’s important to ask yourself whether you can afford to help without jeopardizing your own financial security. If the answer is no, then you must stay firm and offer a different type of support.

If your child is a new parent, for example, you may be able to lend a hand by offering your grandchild a place to stay while your own child is at work. This could save your child a tremendous amount of money on expensive daycare or after-school programs. Although caring for your grandchild is a big responsibility and a significant time commitment, it’s also a great way to assist your adult child without breaking your own bank.

If helping your child catch up on bills and other debt means risking your home and retirement savings, it’s not a good solution. Instead, focus on maintaining your own financial stability so that you’re able to offer guidance and moral support to your adult child.

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