Dave Says: In Debt to Your Parents

Dear Dave,

I have $1,000 in credit card debt, a $12,000 car loan and I owe my parents $20,000. The loan from my parents is causing stress because all I can afford to give them is $200 a month. They don't need the money, but they'd like to see it paid off soon. What can I do?

Jacob

Dear Jacob,

If you're not already living on a written, monthly budget, that should be the first step. You say your parents don't need the money, right? So, they're not living on bread and water without your payments. I think the biggest thing causing them stress is the fear that you're being irresponsible and living without a plan.

Make out a simple, realistic budget, and sit down with them to explain what you're doing and how you plan to address things. Start a debt snowball, and begin knocking out your debts smallest to largest. By the time you pay off the credit cards and the car, you'll be able to give them lots more than $200 a month.

Just ask mom and dad to stick with you a while longer. I think it will make them feel better to see that you're serious about getting your finances in order!

—Dave