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How Do You Define “Financial Responsibility?”

After doing this for more than 3 decades, I've had the pleasure of meeting thousands of wonderful people that span 2, 3 and 4 generations of the same family. Many times, the issues of "intergenerational planning" come up: the act of financial planning that spans multi-generations in the same family. You'd be surprised (or maybe not) to hear that I have heard everything from "it's my responsibility" to "it's not my problem." Clearly a dichotomy of opinion- a dichotomy as broad as the variance of people I meet and assist. In the family structure, it may range from aging parents to grandparents, children of divorce, special needs individuals, or anyone in between who has the need to have someone look after them for a variety of reasons and scenarios. It's where the rubber meets the road, as they say: actually stepping up and putting you out there as a person, a caregiver, a financial supporter. I am not a great believer in judgment, and take each case as it comes, but the commonality of it all is the stress it puts on family members when the time comes to address the issue. I'm sorry to say most times it's not pretty: families torn apart while deciding who had the "burden" of taking care of Mom, or the aftermath of a death and the fighting that goes on over money and material things. I am saddened to see sibling's part ways for years or permanently: all over money. Let's do us all a favor... talk with your family well in advance of the need to talk to your family- I'm a husband, Dad and Grandpa- I can't imagine this happening in my family, the most important people in my life. Why allow it to happen in yours?

There are other examples of financial responsibility. When you buy your house, you go to the bank and they grant you a mortgage. Your job is to pay the monthly mortgage payment: their job is to let you live in "their" house. The reason it's "their" house is because if you don't pay the mortgage, the loan is collateralized, meaning the house is security that they can literally take from you by eviction and foreclosure proceedings, and sell it to reimburse them for the loan they made to you. Same with a car: don't pay your car payments? Guess what? You can count on coming out in the morning or after work to really find it difficult to find it: the bank took it back to reimburse them for the loan they gave you. It's about financial responsibility: they loan you money- you don't pay as you promised-they take the property you put up as collateral. They then sell it, and the whole process starts over.

But, what about credit cards? Most people don’t realize what a privilege it is to have a credit card. Sure, you get offers in the mail every day, and you take it for granted. But, let's think about it: here is a loan offer that has no collateral. They aren't going to take back the big screen you bought, or the vacation you charged. This is an uncollateralized loan: there is nothing to foreclose on- besides your integrity, reputation and credit rating. Your FICO score- the average rating of your credit and payment history- of the three big reporting agencies, is the world's rating and judgment of your ability and history of paying back debt. If you allow your FICO score to go down because of delinquent payments, if you do apply for credit it may prevent your loan for being approved, the interest rates may and will be much higher, and creditors will think twice before extending you credit. One delinquent payment, as innocent a mistake it may be, will stay on your history for a long, long time. It could be a judgment against you for as little as $100- you'd think it wasn’t a big deal, but creditors will look at it as if it were $100,000. It's all about someone who made a claim against you for not paying an obligation, proving that they were right, and the courts forcing you to pay. Your credit rating is reviewed many more times you think: any blemish can work against you to an adverse or expensive and aggravating outcome.

Financial responsibility is everyone's duty. It affects you, and many people around you. If you are an employer, it may work against you when you need new equipment. Looking for a new job? You can count on the fact that your prospective employer will have you fill out a background check and credit history request. If you refuse, it will just be assumed you are hiding something. The world revolves these days on you having to prove that you are creditworthy to others, and financially responsible. It takes daily work to keep your reputation as stellar as possible- so remember- it's all up to you to take responsibility. If not, it will be sure to catch up with you... trust me.

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