How to Help a Son or Daughter out of Debt

It's natural for a parent to want to reach out and help a child who's in debt. In doing so, make sure you are helping him or her curb any unhealthy spending habits, and be sure to protect yourself.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Calculators
• Accounting Services
• Banks
• Credit Counseling Services
• Loans

1. Offer to help your son or daughter out of debt.
2. Make sure he or she wants your assistance.
3. Determine how much money your son or daughter needs to get out of debt.
4. Determine how much money you can afford to loan or give.
5. Decide whether you wish to loan or give the money.
6. Consider giving them something of value that they can sell to raise money.
7. Consider giving them a portion of their inheritance in lieu of a loan.

Tips & Warnings

• Consider paying creditors directly rather than giving money to your child.
• If you loan money, write a promissory note to legitimize the transaction and to have a record for tax purposes.
• If you give them money, keep a copy of your cancelled check. If you give more than $10,000 per year, look into tax implications.
• Take steps to confirm that your child will not go right back into debt once you help him.