Mom, I can't make the rent and the baby's been sick. Can you help?
We've talked about Emergency funds for something that may affect your life and your finances, but have you thought about how your children's emergencies may affect your life?
I used to let them pull themselves out of whatever mire they found themselves in, but then came the grandchildren and you can't let your grandchild be punished for poor planning on your child's part. You will open the coffers and let the cash flow. And how many kids do you have?
I have learned that they very soon forget that they borrowed anything at all from you, let alone discuss payment plans. After the first $15,000 (includes a student loan co-sign) I knew that we weren't going to get the same pay back attention that others do.
I drew up a standard contract which allows me to specify the dollar amount they are now getting from me, interest rate, the date of repayment, late payment penalties and method of repayment (sole payment or series of payments). I had my legal service review it, tweak it and we now use it for all transactions with the kids.
There are five of them and six grandchildren. We've already gone through too much of money we should have been investing into the upkeep of the house and landscape.
It has come to the point where the Bank of Mom and Dad has permananetly shut the doors to several of the kids. They have reached the maximim lifetime withdrawal of funds from the Bank of Mom and Dad..
And then there is Terry's father who is 88 years old and lives with us. Insanaity is everywhere!
You might want to put money aside for emergencies that supercede those that affect only your living expenses. There are those that affect your life because they are a part of your life.