Barefoot’s advice to a mum angry and ashamed over her son’s car loan deal with ex-girlfriend

Get your boots on, Mama! When you’re angry that your 20-year-old son has left his ex-girlfriend stranded with a $21k car loan and no car, Barefoot has some sound advice.

As you read this, I’m flying somewhere above your head.

We’re on a long-haul flight to Europe, which means that our four free-range farm kids are currently locked up in an aluminium tube for the next 22 hours.

Madness.

Yet that’s not the craziest thing we’re doing … that happens when we land.

We’re picking up a six-berth motorhome and doing an epic road trip through Germany, Switzerland, Austria, France, Italy and the UK.

If I’m honest, the trouble started when I was booking the motorhome. I noticed they all seemed to be manual drive. So I emailed an Italian car-hire business and requested an automatic, but was told:

“I’m sorry sir, but automatic vehicles are only for … disabled people.”

I wanted to reply and tell him that I do have some lead in my saddlebags: I’m driving on the wrong side of the road … in a seven-metre-long bus … on tiny narrow roads built thousands of years ago … in the peak holiday season … with four kids!

And you know what?

I can’t wait.

It’s been three years since we did our ‘lap of the Aussie map’, and that was hands-down the best investment I’ve ever made. So much so that we started planning this trip the day we got back.

We’re going to be doing a bit of free camping (which has Gran absolutely scared stiff). Yet we’ve also hired local Italian and French travel agents (via the freelance site Upwork) to guide us on our itinerary and book some off-the-beaten-track campsites and farmstays. Best of all, for $15 an hour, they’re our on-the-ground ‘fixers’ – on hand via WhatsApp whenever we get in a jam. (“Buon giorno, Sabrina, can you please speak to this lovely traffic policeman in Italiano for me … tell him I’m really sorry.”)

For the next few months, it’ll be all about the open road and the adventure with the people I love.

After all, the best thing you can spend on your kids is time, right?

Till we meet again …

Tread Your Own Path!

I’m so ashamed of my son

Hi Barefoot,

My 20-year-old son’s (ex) girlfriend signed up for a car finance loan so my son could buy a $21,000 car. The car was registered in his name, the finance contract in hers. He promised to pay her the monthly amount owing on the contract, but this was never put in writing. He made a couple of repayments, then crashed the car. It was only insured for third party fire and theft. They broke up. It’s now unregistered, uninsured and undrivable. He’s refusing to pay her anything at all and isn’t taking her calls. I’m incensed, angry and embarrassed about how he’s treated her. She’s obviously very upset – she’s only 20 herself, has been left with a five-year debt, and is just a student with a part-time job. My question is, can she get out of the contract? What are her options?

Edwina

Barefoot has some advice for a mother whose son has left his ex-girlfriend stranded with a car loan but no car.

Hi Edwina,

So this is the first question in 20 years that’s truly stumped me.

And no, it’s not because I don’t know the answer, which is actually quite simple:

Your son’s ex-girlfriend will not be able to get out of the contract with the lender. It’s now a civil matter, and if she wants to pursue it she’ll need to get independent legal advice (which she’s unlikely to do as a broke student).

What I’m finding difficult about your question is putting myself in your shoes, as the parent.

What would I do?

Well, I’d give him a kick up the backside. (I know that’s not politically correct … but I’m not a politician.)

I’d tell him how deeply ashamed I was and give him an ultimatum: if he doesn’t make things right, you’ll cut him off financially from that point on.

Then I’d make contact with the ex-girlfriend and offer to make the repayments on her behalf.

I’d also encourage her to book in and see a financial counsellor (1800 007 007). They will likely suggest that she surrender the car back to the lender, and will help her apply for a compassionate debt waiver.

Hang on, why would the lender even consider waiving the debt?

For a few reasons:

First, it could be that your son coerced her into signing for the loan.

Second, it could be argued that the lender was at fault for not requiring her to take out comprehensive car insurance … or for lending a substantial amount of dough to a student on a very low income (take your pick).

Finally, given she’s a broke student, they may decide she’s not worth chasing for the dough (she likely has no assets and not much income, so the lender may be thinking she’ll go bankrupt and stiff them).

At which point the financial counsellor could negotiate a ‘full and final’ settlement of a few thousand dollars – which your little kidult should definitely pay.

Get your boots on, Mama!

Your bucket system failed us

Scott,

The bucket system outlined in your book is now failing us. With interest rises and inflation, our cost of living has increased significantly, and now our mortgage takes up 55 per cent of our daily expenses bucket. Given these changes, how would you amend your system to accommodate this?

Heidi

If you are feeling under financial stress you need to get your home loan repayments down to a more sustainable level – around 30 per cent of your take-home pay is a good rule of thumb, says Scott Pape.

Hi Heidi,

Where in my book did I say take out a loan where the repayments are more than half your take home?

That’s right, I didn’t.

However, I did devote pages and pages to explaining why interest rates would eventually rise … and my answer was to borrow less than the bank offered and to set up different money buckets to prepare for it.

So what can you do now?

You need to get your home loan repayments down to a more sustainable level – around 30 per cent of your take-home pay is a good rule of thumb – and you need to do it pronto. After all, what are you going to do if rates go higher from here?

And you’re not going to get there by cancelling your Netflix or swapping burrata for baked beans. You either need to earn more money – by getting a raise, or taking a second job, or both – or you need to think long and hard about whether you can afford the house.

This one is not for you

Dear Scott,

I’ve wanted to email you this for a while, but unfortunately this message is not only for you but for someone very important in my life: my nana. For the past four years she has cut out your articles from the paper and mailed them to me. Your advice, as well as a copy of your book, not only helped me out of a financially stressful life but gave me the skills to buy my first home at 28 years old, all by myself. I know my nana will read this because she will be cutting it out to put in a little envelope for me. To both of you I say thank you so much for setting me up for life by treading my own path. I love you, Nana. (You too, Scott!)

Charlotte

Hey Charlotte,

Clearing the financial runway in your twenties means you’ll reach cruising altitude much earlier in life … and it means you can choose where you’re going to land. Well done.

Yet this answer really isn’t for you.

It’s for your nana – and for the hundreds of thousands of kind and thoughtful Barefooters like her who have cut out this column, or bought my books, and handed them to the people they care about.

In truth, my message hasn’t changed in 20 years. It’s people like your nana, who put it under the nose of someone who it is new for, that make all the difference.

Thank you.

Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions

Originally published as Barefoot’s advice to a mum angry and ashamed over her son’s car loan deal with ex-girlfriend