28 Sep My mother is bad with money. How can I help?

Q. My mother was never good with money, and she spends and expects I will bail her out. Most recently her basement flooded. She signed contracts with two companies to do the work to the tune of $20,000. The work has to get done but she has no money. I’m furious that she signed without asking me first. I can either put it on credit cards or use my HELOC or borrow from my 401(k). What should I do?
— Trying to help

A. This is a tough situation.

But it’s not good for you or your mother.

First let’s talk about paying to have the basement repaired.

Start by seeing if it may be covered by insurance, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton.

“In some situations, it may be considered a covered expense,” Lynch said.

Next, see if she can finance it on her own.

“It sounds like she owns her home,” Lynch said. “Can she do a home equity line of credit or possibly a reverse mortgage to potentially pay for this expense? Are their financing options available from the companies doing the work?”

Lynch said it’s better if she takes on the financial liability.

But if it has to fall to you, he said he generally prefers a home equity line of credit (HELOC) instead of a credit card for several reasons: you’ll get lower interest rates, HELOCs can be tax deductible and it will look better on a credit report.

“I can’t stress this enough. If your mom never experiences pain from her financial decisions — like having to pay it back — she will continue to do the same things over and over again,” Lynch said. “She needs to understand that you are not responsible for her debts and if she makes bad decisions, she will suffer the consequences.”

“You need to have the `you have to see Jesus’ speech, saying that this is not acceptable and that you are not paying for her expenses,” Lynch said.

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This story was originally published on Sept. 28, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.