Mother vs. Girlfriend
by Gary Foreman
I am a 33-year-old man who recently moved in with my girlfriend. I am also the holder of an auto lease on a 4 year-old Ford Taurus, which has approximately 20 payments left on at $314 each. I leased this auto for my mother to drive, as I was living with her at the time and she suggested my paying for the lease in lieu of paying rent, utilities, etc.
I have borrowed money to pay on a car for myself. My girlfriend and I feel that the money spent on the lease should be going toward our own rent and our own future. Besides, the lease is no longer affordable at the current payment, especially when I am no longer staying in my mother's home. She is unable to afford to pay the lease herself. I still want her to have a car to drive, but I don't want to be responsible for this lease any longer. What are my best options in this case?
Curt in OH
They say that loaning money to a friend is a good way to lose both the money and the friend. I doubt that you can lose your mother, but Curt sure is in a sticky situation. First let's see how he got into this mess. Then we'll look at what options he has to solve it.
Curt made a couple mistakes. First, it's a good idea to keep financial transactions simple. He should have paid his mother rent and let her lease a car on her own. Now both deals are tied together. And that's a problem.
Second, by leasing the car, he made a long-term commitment without thinking about how he'd fulfill it. It's a common problem. Curt isn't the first person to sign a car loan or lease agreement without making sure that the money to make payments would be available throughout the life of the loan or lease.
Taken together it is almost as if Curt signed a five-year apartment lease with his mother!
So what can Curt do to keep avoid an un-civil war? He can begin by looking at what he hopes to accomplish and what resources he has available.
He wants to do three things. One, he wants to have money to contribute to his current living expenses. Two, he wants to continue to make payments on his car. Three, he doesn't want his mother to give up her car.
Apparently, he had enough money for both car payments, but that doesn't leave anything for sharing living expenses. So the solution is either going to have to increase the amount of available money or it's going to require sacrificing one or more of the three goals to some extent.
One way to increase the amount of income available would be for mom to take in a boarder or Curt to take a part-time job until the lease payments are completed. It's possible that Curt and his mom won't want to try either solution. But then Curt must recognize that he probably can't meet all three goals. At least not without some adjustment.
Curt might have to tell mom that he can't continue the lease payments and leave her the choice of taking over the payments or giving up the car. If mom chooses to give up the car, Curt will need to close the lease early. He'll probably have to pay a penalty. He can't just quit making lease payments. That would damage his credit rating.
If the termination penalty is too great, Curt might decide to sell his car and keep the Taurus for himself. Of course that means when the lease is up, he'll be looking for a car again.
It's possible that a lower lease payment might help. One way to do that is to refinance the lease. That would provide lower lease payments, but would extend the term of the lease.
Still another option would be for Curt to sell his car and buy something that wouldn't require a car payment or would require a lower payment.
It's also possible that Curt could pay part of his mother's lease and still have something to help his girlfriend pay rent.
One thing for every one involved to remember is that in 20 months the auto lease will be up. Curt won't be responsible for paying it at that point. And mom will be without the Taurus. So what should Curt do? Only he can decide what option will keep mother and girlfriend on speaking terms. It's likely that there is no answer that will please everyone. Perhaps the best Curt can do is to be more knowledgeable next time he faces a similar situation.
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and he's a regular contributor to CreditCards.com. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
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