Let them know you don’t want to be the bad guy, but that you and mom have been looking at the money situation and things just don’t add up. It also wouldn’t be a bad idea if mom did a lot of the talking. Let her tell the kids that you’ve both decided it’s time to make the money behave and that this will mean some lifestyle changes.
Listen to reasonable input from them and let them know that their thoughts and feelings matter. But they also need to understand things are going to be different, and this part needs to come from mom. Otherwise, they’re likely to see you as the wicked stepdad.
Q: My husband is into estate investment properties. He’ll buy a run-down house for very little money, fix it up and then rent it out. The debt we’re racking up makes me nervous. Each house has a loan, but he says it’s OK because we can sell them. Can you give me any advice?
A: I went broke years ago doing exactly what your husband is doing right now. I’ve known several others who went broke doing it, too. Lots of folks in real estate tend to believe that debt is OK as long as the property is worth more than the debt, but there are several down sides to that kind of thinking.
In the end, the borrower is always slave to the lender. And I’m afraid your husband may be on that path.
At best, this kind of thinking will make for lots of uncertainty. The worst case scenario has you guys ending up bankrupt, just like we did. My experience way back when is proof that things like this can quickly escalate out of control when you make debt one of your building blocks.
There’s nothing wrong with investing in real estate, but I recommend that he do it much more slowly – and with cash.
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