Election time is here again, which means that proverbial "dirt digging" is back in fashion for every politician out there, left, right and center. One such "dirt digging" campaign is getting a lot of attention. The case of Nathan Deal who is running for governor in Georgia is being branded with the big "B" which stands for bankruptcy. We've talked a little bit about why it really shouldn't matter whether is candidate files for bankruptcy or not; but we want to discuss exactly why he and other parents should avoid the actions that brought him to the juncture.
Mr. Deal is like most parents, he wanted to help his kids...his adult kids and extended his good credit by co-signing loans worth $2.3 million dollars.
"I believe that one of the responsibilities of parents is to help their children," Deal said. "And several years ago our middle daughter and her husband who had both been traveling all across the country on their jobs wanted to be closer to home since they had our youngest of our grandchildren. My wife and I decided we would help them in that venture."
Stop the presses; while it is the responsibility of parents to help their children, it is also their responsibility to protect their own finances, good credit and future.
Below are two reasons why parents should avoid extending any help to their adult children that could imperil their own financial future:
- If your adult children have trouble getting traditional bank loans it is for a reason. Most likely they've had trouble paying back loans or may have even filed bankruptcy recently. As Murphy law states: "What can go wrong, will go wrong." If you make a loan to your financially troubled adult children, there is a high probability you won't get that money back and that's something you can count on. Making large loans that could bankrupt you is just foolish.
- When parents make loans to their financially troubled adult children they are taking a chance of reducing their own security in the future. Remember, when you take out a loan, you are borrowing from the future. And for parents with adult children, we're talking about their retirement. If their children fail to repay the loan, the parents could be stuck with the bill well into their golden years.
Right now Deal says that he has no intention of filing bankruptcy; but unless he is filthy rich, he may have no other choice.