Dealing with my family’s finances during the pandemic

Photo by Josh Appel on Unsplash

Growing up, I considered myself poor. Although we had a roof over our heads, three meals a day, and enough clothes to get by, we could not pay the mortgage, and our school tuition payments were always late. There was also a time when my parents had no jobs, my father had to settle for direct selling.

We were one of those in an endless cycle of debt, where the only way to pay one is to borrow from another. My parents were stuck in this habit even after all of us children graduated and had jobs.

When I started having money problems of my own and saw how lacking my financial education was, I tried learning how to manage my income. I was lucky enough to have friends who shared their self-help books and taught me some of the basics of saving and investing. But passing this knowledge on to my parents was another mountain to climb, especially when they thought it was none of my business. So started this mission to convince them---it was the only way to protect each family member’s finances and break this cycle of poverty.

It started with a mortgage

My parents got a home loan under SSS in the 80s. It was also the time when my mother had just lost her job. It may have started well, but when hard times struck, my parents gave in to other people's advice and stopped paying the monthly amortization. They must have planned to continue paying, eventually, but never really recovered even through the 90s.

Thankfully, by the early 2000s, all three of us siblings got through college because of scholarships. My mother was also hired back in government service. That decade has been much easier financially, but the dues remained.

Then came a chance to pay off the mortgage in 2011, when my parents received a Loan Restructuring letter from the Social Security System (SSS). The Loan Restructuring Program (LRP) allows Filipinos with unpaid SSS loans to settle their outstanding balance under a restructured repayment term (Moneymax.PH). The LRP waives the penalty fees accumulated over the years so that only the overdue principal amount and its interest need paying.

By then, the younger siblings had graduated, and my parents had jobs. They immediately grabbed the opportunity to restructure the loan. My father got a new 10-year term with a monthly amortization of about four thousand pesos. Considering how long the loan was in arrears, the penalties must have been a substantial amount.

Money problems run in the family

One would think my parents had it easy after the LRP, but it was not the case. Bad spending habits, poor decision-making, and a lack of planning contributed to their continuing debt. Add to that a sibling who mirrored them financially.

"A growing body of research finds parents’ financial beliefs and behaviors often have a profound effect on children’s financial outcomes" (CreditCards.com). Parents display their attitudes about money either explicitly or unconsciously. "Meanwhile, children learn the behaviors that take them into adulthood by observing what parents do" (Boston College Center for Retirement Research).

In my early twenties, my mother taught me what I knew about money, which was limited to maintaining a social security account and participating in a cooperative. But over time, I saw how this corresponded to having an employee mindset. I did not want to be on the same path. Similarly, my younger sister grasped at a young age how broke we were that she learned to be frugal and smart with her earnings.

My brother, on the other hand, was a different story. He became involved in many different failed businesses and several loans. One contributing factor to his seemingly inescapable circumstance was too much support from our parents, who acted as his emergency fund. He became financially dependent, which grew into a recurring problem in the family.

Pandemic lockdown

When the 2020 lockdown forced us all to stay at home, that gave me the chance to persuade my parents and my brother to let me help them organize their finances. Thankfully, after years of trying, they finally gave in.

I gathered all their financial data—savings, current monthly incomes, receivables, bills, and living expenses—then tabulated everything in a Google sheet. And just as I suspected, all three of them had a budget deficit. To help them start, my sister and I agreed to shoulder some of their living expenses in the meantime.

The goal was to settle their debts in the shortest amount of time. That meant eliminating all those smaller ones as soon as possible. Within six months, we got rid of 5 out of 9 loans. My sister, who is better at accounting, also looked into the details, especially the remaining credit card bill. She discovered that the penalties piled up because my mother did not pay in full every month. My sister, who got into an agreement with my mother, decided to pay the remaining balance. My mother also closed this said credit card account.

Before the year ended, my parents settled the previously mentioned mortgage using some of their savings. It took more than thirty years before they could finally hold the property title.

What's next?

In 2020, my family made good progress in overcoming debt, but we were just getting started. There is still so much to do to have even an ounce of financial stability, and I hope those first steps take us closer to that goal.

As for my parents, who are now approaching 70, my next mission for them is to settle their estates. My mother has been wiser about this, so I am more optimistic than before, God willing!