My father-in-law and mother-in-law are in financial trouble. He has been unsuccessfully running his own company for the last 15 years and refuses to abandon the project even though he effectively makes less than minimum wage. My wife and I gave him a significant amount of money in the past — no loans because we know we won’t get paid back — in order to provide him with the opportunity to change his behavior, but he hasn’t. Now, he’s asking for more money because he claims he can’t cover insurance expenses — or food.
There are a lot of emotions here and I would very much like to hit the guy with a shoe, but I think the more immediate question is how I can ensure that the financial hit my wife and I take because of her father’s irresponsible behavior is effectively minimized? Should I take over life insurance payments? Should I make him a dependent? Is there a government program I should be considering enrolling him in? He’s a poor person who behaves like a privileged person and that makes this all the more challenging. And she doesn’t work and won’t for reasons having to do with disability and personality. How can I make this thing hurt less from a financial perspective? — Andrew, via email
Andrew, I can only imagine the agony you and your wife must feel by essentially serving as her parent’s financial lifeline. But when you peel away the wrenching emotions, the question of how to proceed, I think, is actually pretty clear: You can’t let the handouts continue ad infinitum.
I shared your question with Rick Kahler, a Rapid City, South Dakota-based planner who specializes in the growing field of financial therapy. The field deals with how emotional and psychological factors affect our relationship with money. Interestingly, he saw your current situation as that of an “enabler,” though I suspect you’ve never thought of yourself in that light.
Just as someone can, consciously or not, help perpetuate addiction or other unhealthy behaviors, the willingness to be your in-law’s ATM is keeping their poor financial habits alive and well. And because they’ve benefited from your generosity for so long, they seem to be feeling a sense of entitlement. “It’s typical of someone being enabled,” says Kahler. “It often comes from the experience that the money never runs out.”
In other words? It’s time to finally turn off the spigot. Unless your father-in-law running the next Amazon, 15 years is a long time to get a business into the black. The reality is, if it hasn’t happened by now, it’s not going to. At this point, all you guys are doing is throwing good money after bad, not to mention feeding your in-laws’ fanciful belief that their venture is going to suddenly turn the corner.
One can certainly empathize with your father-in-law’s difficulty waving goodbye to a business that he built from scratch. “For him, it’s a dream,” says Kahler, who is also the co-author of Conscious Finance. “It’s a huge identity crisis to let go of it.”
And yet, giving him a dose of reality about the endeavor is the most generous thing you can do for him. It’ll force him to take on new work that, given his experience, will likely pay much higher than the minimum wage. With the ability to support himself and his wife for the first time in years, he may even start to regain some of the pride that no doubt has been lost due to his business failings.
Should you help make a few life insurance payments to keep his policy active while he transitions to a different job? Perhaps, depending on the type of coverage they have and the age of the policy (taking out a new one might be more expensive at his age). It probably wouldn’t hurt to visit a fee-based advisor who can provide objective advise on that one. But please stop handing over large checks to support his business.
Certainly, putting the brakes on the financial assistance is easier said than done. The key, suggests Kahler, is letting them know that your first obligation is to their daughter. Supporting two households, at least for most of us, simply isn’t sustainable. Tell your in-laws you’re willing to support them emotionally, and even help your father-in-law find other employment, if need be. “It’s not cruel love, but it’s firm,” says Kahler. Unfortunately, it means resisting the urge to club the guy with your sneaker.
As is the case so often, this is an example of where the health of your checkbook and the wellbeing of your most treasured relationships intersect. Talking to a financial advisor who has a therapy background might be worth your while. The Financial Therapy Association and Financial Psychology Institute, for example, are organizations that can connect you with experts who merge those two worlds.
There aren’t a ton of professionals who have this expertise, although some of them work remotely if there aren’t any in your area. Kahler says a typical session will run between $150 and $300 an hour. If it helps point you in the right direction financially – and alleviates some of the stress your dealing with – that might be end up looking like a bargain in the long run.