Q: I'm concerned about the 16 percent interest rate my daughter is paying on a $25,000 loan she took out with her ex-husband; when they divorced, she inherited the debt. Because her monthly payment is so high, after bills she's left with only $400 each month. Should I pay off her loan so she can make much lower monthly payments—with no interest—to me instead? I'm hesitant because my daughter has bad spending habits and I've given her money many times before, but she's distraught and her health is suffering because of the stress.
A: Embrace that hesitancy, Mom—it's telling you exactly how to help your daughter. Don't step in and save the day. Saying no will force her to take responsibility and fix this situation for herself, and maybe help ensure she won't wind up here again.
But there are other ways you can help her. First, sit down together and use the free Expense Tracker on my website (SuzeOrman.com) to get a clear picture of her monthly spending. When she sees everything in writing, she'll discover ways to save more. Next, head to Bankrate.com's Credit Card Calculator section, which will show her how fast she can pay off the debt by making payments above the monthly minimum.
Don't worry that you're letting her down. Even though her ex-husband left her with this debt, we both know she had a hand in creating the mess. Being distraught might just push her to change. Your job is to offer encouragement and support—not a bailout.