Financial fraud in the family
Iím about to graduate from college, and while Iíve been in school my mom has been handling most of my finances. Recently, I discovered sheís been taking my student loan money and spending it on herself. So far, it looks like sheís taken around $12,000, and I have a total of $25,000 in student loan debt. Since I realised this was happening, Iíve been reading your books and learning how to manage my own money. I donít know how to deal with this situation with her, though. She admits she did wrong, but says she canít pay it back. Can you help?
I hate hearing this. Thereís no easy way to deal with these kinds of situations.
The first thing you need to do is take over complete and total control of all your finances. Shut down any accounts that have her name on them, and anything else financially related that she can access. I know this sounds harsh, but she has proven sheís just not trustworthy. Itís a hard thing to hear about a parent, but at this point youíve got to take steps to protect yourself. What she has been doing is theft, and financial child abuse.
One extreme is to press criminal charges. The other extreme is to just forget it, and pay it. In between is a promise from her to repay everything she has taken, but sheís already out of control. Thatís a promise that wouldnít be kept. The problem with prosecuting someone criminally for this type of action ó other than the emotional toll, because sheís your mom ó is the moneyís already gone. Itís doesnít make them magically have the money to repay you. On top of all this, youíd have a really hard time legally getting the student loans removed from your name due to theft.
Honestly, under the circumstances I think youíre probably going to end up eating this. But sit down, and try to have a calm, clear discussion about what has happened, and why it happened. Let her know first, without a doubt, that you will criminally prosecute her if she ever uses your name to put money into her own pocket again. Second, tell her youíre prepared to forgive her and forget about it ó and she pays you back at some point, if she can ó if she agrees to get some financial and emotional counselling.
Try to get her some help, and get her under control, Alan. If you donít, Iím afraid things are only going downhill from here.
ē Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey
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