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Complicated family dynamics

As a full-time student, Isaac doesn’t have the cash to pay for his basic essentials. He claims to occasionally deliver food via delivery apps, but hasn’t generated any income from these side gigs over the past month.

Instead, his basic expenses are supported by his father. Hammer calculates that Issac’s dad transferred a total of $600 over the past month. The car he drives for food deliveries is also a hand-me-down from his father. In fact, Issac claims his dad is the reason for his most bizarre financial decision: “The main reason that I put my tuition on my credit card was I thought my dad would help me pay it off,” he told Hammer.

“Sounds like you’re spending money you don’t need to be spending and then he [dad] is bailing you out,” Hammer responds.

On the surface, Issac’s situation seems typical. Nearly half (47%) of Americans claim to financially support their adult children in some way, paying an average of $1,384 for their basic necessities, according to a survey by Savings.com. (Which researchers note is more than twice what they reported putting in their own retirement accounts.) The rising cost of living has compelled many young adults to lean on family for economic support.

However, Issac’s situation isn’t typical. Later in the interview, he reveals to Hammer that he expects his dad to support him financially because he gave him $15,000 of his savings for a down payment on the family home when he was just 18 years old. Issac originally expected some of this money back to help pay for college, but has now given up on recovering it.

Gifted down payments are fairly common, with 23% of first-time home buyers in 2023 claiming to use a gift from friends or family to finance their purchase, according to the National Association of Realtors (NAR). However, it’s much more common for these gifts to be handed down from parents to children — not the other way around.

Issac’s decision to contribute $15,000 at such a young age may have put him at a financial disadvantage. However, by borrowing on credit cards he expanded this disadvantage further.

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Getting back on track

After paying for several semesters of biotech classes with his Apple card, Issac now has an outstanding balance of $14,715. Minimum monthly payments are $548.

The only way out of this situation is for Issac to stop spending and start earning money. Hammer recommends taking a few semesters off and focusing on gig work to maximize income. This should allow him to pay down a considerable amount of debt.

His next step will then be to ensure he doesn’t land in this position again. Fortunately, Issac claims he’s already been approved for a federal student loan. The average interest rate for a Federal undergraduate student loan is 5.5%, according to Education Data Initiative, which means Issac’s studies can be financed much more cheaply when he eventually resumes classes.


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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.


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