Questions to ponder before helping your kids with debt - Cincinnati News, FOX19-WXIX TV

Helping your kids with debt

In this economy, it's becoming a common problem - adult children, mired in debt, asking their parents for help.

But before you rescue them, you should ask yourself a few questions.

First - try hard to look at their debt problems objectively. 

Was the debt caused by something out of your child's control, like a job loss or a serious illness, or is it the result of a lack of spending control? 

Is this the first time they've asked for your help, or the fifth? 

If you do decide to help, set very clear ground rules. 

Instead of saying, "Yes, I'll help you out", maybe it's "I'll cover your bills for two months", or "I'll give you half of what you need."

And be very clear about whether the money is a gift or a loan. 

If it's a gift, make sure you investigate the tax implications. If it's a loan, you need to draft an agreement that you both sign, and make sure you document everything. 

One thing to be wary of is mixing your finances. Opening up a joint credit card, or adding your adult child's name to your existing card could create real problems for you down the road!

And if you just don't have the resources or the wherewithal to help out your kids - even though it might break your heart – the least you can do is put them in touch with a good credit counselor.

And you can find them by getting in touch with National Foundation for Credit Counseling at nfcc.org.

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