Author: Vawn Himmelsbach

Imagine this scenario: Brenda is 59, single, has no children and is eyeing retirement. The hitch? She still has $81,000 outstanding on her mortgage, so she’s wondering if it makes sense to remain in the workforce until it’s paid off.

If she retires with a mortgage, she’d join a growing share of older Americans who’ve done so. In 1989, 24% of Americans aged 65 to 79 had a mortgage, home equity loan or home equity line of credit on their primary residence.

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By 2022, that number jumped to 41%, according to a report from the Joint Center for Housing Studies of Harvard University (JCHS).

In 2022, homeowners aged 65 to 79 had a median mortgage debt of $110,000 — more than a 400% increase from 1989, according to JCHS. The picture is even more drastic for those over 80, whose median mortgage debt ($79,000) increased more than 750% from 1989 to 2022.

So, should Brenda keep working to avoid lingering debt in her later years?

Pros and cons of paying off your mortgage before retirement

Whether or not you choose to pay off your mortgage before retiring often comes down to personal choice, regardless of whether it’s the best financial move.

For some, the peace of mind that comes from not having a large outstanding debt in retirement outweighs any financial downsides.

After all, as long as you’re carrying a mortgage, there’s always some risk of foreclosure — and if you’re out of the workforce, this can be much harder to recover from.

The decision isn’t clear cut. Since housing costs are lower when you no longer have a mortgage, paying it off may free up cash for other expenses.

On the other hand, using a large chunk of your retirement savings to pay off your mortgage may reduce the monthly amount you can draw from in retirement and hurt your cash flow more than having a mortgage payment would.

The money you use to pay down the mortgage goes toward your home equity, which isn’t easily available for cash flow. Also, taking a large withdrawal from a 401(k) or other tax-deferred plan can raise your tax rate for the year and potentially increase your Medicare Part B premiums.

You may want to avoid taking a lump-sum pension payout to pay down the mortgage. If you don’t roll the payment directly into an IRA or employer-qualified plan, then it will be taxed as income. Even worse, if you do this before you turn 59 ½, you’ll face a 10% early withdrawal tax penalty.

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Relative returns play a big part

It may not make sense to pay off your mortgage if your potential investment returns are higher than the interest on your mortgage. In other words, you may not want to pay down a 5% mortgage with money that could be earning 8% if it stays invested, advised Dana Anspach, founder of a financial advisory firm in an interview with U.S. News & World Report.

However, “while it’s possible to make more money in the market than paying off your mortgage, it’s not guaranteed,” Jay Zigmont, founder of Childfree Wealth in Mount Juliet, Tennessee, told U.S. News. He tells clients to “look at paying off their mortgage as a tax-free, risk-free return of the interest saved.”

But not all advisors agree. “Paying off the mortgage at retirement is rarely beneficial,” David M. Williams, director of planning services for Wealth Strategies Group, told MassMutual in March. “Maintaining and managing a mortgage may actually improve retirement cash flow.”

For example, if you’re able to claim the mortgage interest deduction, the tax break may offer just enough relief without sacrificing your savings or investment growth opportunities.

The decision also depends on your individual situation.

If you don’t have investments and are relying solely on Social Security for income, then it can make sense to work a bit longer and try to pay down the mortgage for your peace of mind and the extra retirement cash flow this could bring.

If you’re heading for retirement and concerned you can’t carry a mortgage after you leave the workforce, then you may want to explore options such as working longer (either to pay it down or build up more savings), working part-time for the first few years of retirement, downsizing your home or even moving to an area with a lower cost of living.

You could also explore whether a reverse mortgage might be right for you, but this option also comes with a lot of pros and cons.

At 59, Brenda still has several options available to her, but she may want to consult with her financial advisor to determine the best path forward and create an updated plan for retirement.

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Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

While homeownership was once viewed as a path to wealth and financial stability, some homeowners are feeling trapped by homes they can no longer afford.

Take Mendy, for example. This 35-year-old from Canada has a total of $1.8 million in debt, which includes his family home and a triplex he was renting out in Montreal. Now, with a second child on the way, Mendy’s feeling downright anxious about his financial situation.

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When Mendy called into The Ramsey Show for advice, host Dave Ramsey was rather blunt, telling Mendy that he and his wife need to make some serious changes before it all burns to the ground.

Struggling under the weight of debt

As Mendy explained on the show, he owes $590,000 on the family home, which is worth $750,000. He also owes $680,000 on the triplex, worth about $850,000, which he’s listed for sale (so far, there haven’t been any takers).

On top of that, he owes roughly $70,000 on each of his two electric vehicles, along with $35,000 in student loan and credit card debt, and another $350,000 in personal debt (mainly to his cousin, who lent him money for a down payment and for renovations to both properties). Mendy’s total household income is around $120,000 per year before taxes.

“I had my ‘a-ha’ moment when I saw $22,000 going out in one month after doing a budget and I don’t know what exactly to do,” Mendy shared with Ramsey and his co-host, Rachel Cruze. “I cut out everything from potato chips to haircuts, literally anything I could to curb the debt.”

Taking on more work isn’t exactly an option, either. As he explained on the show, Mendy is bipolar and his doctor has told him he needs to maintain a healthy work/life balance. And making matters worse, his wife is about to go on maternity leave.

“The answer to getting rid of this anxiety is getting rid of all the crap and the debt associated with it,” said Ramsey. That starts with getting rid of the EVs and replacing them with cheap cars, “like, $5,000 cars,” said Ramsey.

While Mendy has given up on being a landlord and is trying to sell the triplex, “that thing’s got to be priced in such a way that your real estate agent can sell it and get it gone,” said Ramsey. If Mendy can make a profit of $200K to $250K on the triplex, he could then use that to pay off a chunk of his $350K personal debt.

Ramsey also says getting Mendy’s wife on board will require a serious conversation.

“The house is on fire, darling,” said Ramsey, assuming the role of Mendy in this conversation with Mendy’s wife. “You get to decide with me if we’re going to let the house burn down or are we going to do something to put it out?”

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Why homeownership isn’t a safety net anymore

For decades, owning a home has been considered the ultimate financial security blanket, offering a path to future wealth. But these days, for many middle-class families, homeownership can mask financial instability rather than solve it.

As a result, many Americans currently find themselves in a “homeownership trap,” where the financial burden of owning a home eclipses other financial goals and erodes their quality of life.

“This year, the U.S. housing market is shrouded in uncertainty, with little indication that record-high levels of unaffordability will ease anytime soon,” states the Harvard Joint Center for Housing Studies in a report called The State of the Nation’s Housing 2025.

Property taxes increased by an average of 12% between 2021 and 2023, according to the report, while home insurance premiums increased 57% from 2019 to 2024.

In some states — like California, Florida and Louisiana — the “scale and frequency of climate disasters has prompted private insurers not only to raise premiums, but in some cases to reduce coverage or pull out of markets entirely.”

As a result, an increasing number of homeowners are cost burdened, meaning they spend more than 30% of their household income on housing and utilities.

“As of 2023, nearly a quarter (24 percent) of all homeowners are cost burdened,” according to The State of the Nation’s Housing 2025 report. That 24% translates to 20.3 million households throughout the U.S. It’s also a “reversal of a nearly 10-year trend of consistent declines in homeowner cost burdens between 2010 and 2019.”

How to avoid falling into a money pit

If you’re planning to buy a house, you’ll want to make sure you’re budgeting for everything — not just the purchase price. Consider property taxes, insurance, utilities, repairs and ongoing maintenance. If you have a variable-rate mortgage, you’ll also need to have room in your budget for payments with higher interest rates.

Once you tally up these costs, if the total is well above 30% of your household income, you may want to consider other options — such as buying a smaller, less expensive home or even co-buying with friends or family.

You’ll also want to shop around for the best mortgage rate you can find, since the current rate averages around 6.72% for a 30-year mortgage. To negotiate a better rate with lenders, it helps to have a strong credit score and low debt-to-income ratio.

If you can afford a 20% down payment, then you can avoid paying for private mortgage insurance (PMI) each month on a conventional loan.

“Borrowers making a low down payment might want to consider other types of loans, such as an FHA loan,” according to the Consumer Financial Protection Bureau. “Other types of loans may be more or less expensive than a conventional loan with PMI, depending on your credit score, your down payment amount, the lender, and general market conditions.”

If you’re already living in a money pit, you could try to renegotiate your mortgage to lower your monthly payments. For example, you could consider a loan modification (changing the terms of your mortgage) or refinancing (replacing your existing mortgage with one that has better terms).

For those living in a home they can no longer afford, like Mendy, the solution could require a more radical change — like finding a roommate, downsizing to a smaller home or moving to a less expensive neighborhood. And, like Ramsey said, “quit buying crap you can’t afford.”

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• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Consider this scenario: Paul’s wife unexpectedly passed away a few weeks ago.

Aside from the shock of losing the love of his life, he has a new source of stress he wasn’t prepared for: His wife made 65% of their household income. And he can’t afford the mortgage on his own.

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• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now

Now, Paul is wondering what to do. Should he refinance his home? Should he dip into his retirement savings to pay the bills?

While he does have some money in a high-yield savings account (about $30,000), he’ll also get a life insurance policy payout worth about $200,000. He’s been putting money into a 401(k) at work too, but he doesn’t think he should dip into that money before he retires.

So, what can he do instead?

Dealing with the death of a spouse

Dealing with the death of a spouse is hard on many levels. Suddenly, you’re left without your life partner, but you also have to deal with the financial implications of being suddenly single.

Paul isn’t alone. Individual annual income falls by an average of $5,500 after the death of a spouse for at least two years, according to National Bureau of Economic Research data cited by the Federal Reserve Bank of Chicago. The rate of financial insolvency also increases after the death of a spouse.

Women tend to be hit harder than men, since women on average make less money than men. As of 2024, women earned 85% of what men earned in the U.S., according to a Pew Research Center analysis. They may also leave the workforce temporarily or permanently to raise children.

Women also tend to live longer than men — roughly six years, which can have significant financial implications.

A Thrivent survey found that more than half of widowed women experienced financial challenges, with 51% living paycheck to paycheck or struggling to manage their bills.

One major reason? Debt.

“Debt is one of the top financial challenges facing widowed women. Thirty-nine percent carried over $25,000 in debt immediately following the loss of their spouse, including 10% having over $100,000,” according to the survey.

But the same can be said of any spouse that’s making less money than their partner, as in the case of Paul.

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What are the first steps after a spouse suddenly dies?

While it’s generally advisable to avoid making major life decisions immediately after losing your spouse, sometimes you don’t have a choice when it comes to finances.

When a spouse suddenly dies, the surviving spouse may want to start by doing a “financial triage,” which means assessing your financial situation, prioritizing what’s most important (such as paying the bills and paying high-interest debt) and doing an inventory of your debts.

You’ll want to locate important documents, such as the will, property deed and life insurance policy. You’ll have to contact the insurance company directly to inform them of the death and start the claims process.

In most states, a life insurance payout is issued between 30 to 60 days, though it may be faster, according to Ramsey Solutions. These payouts are tax-free and you can take them as a lump sum.

It’s also important to consider commonly overlooked benefits, such as spousal beneficiary rollovers and survivor benefits.

With a spousal beneficiary rollover, the deceased’s fund assets are transferred to the surviving spouse, usually in one of two ways: Either the surviving spouse becomes the new owner of the retirement account or the funds are rolled over into the surviving spouse’s retirement account.

There’s also an option to liquidate the account and receive a lump-sum payment at any time, says the IRS.

When rolling over an individual retirement account (IRA), in most cases the surviving spouse won’t have to pay taxes. A lump-sum payment, however, is likely to be considered taxable income. Keep in mind that a Roth IRA (in which you contribute post-tax money) may have different withdrawal rules than a traditional IRA (in which you contribute pre-tax money).

In some cases, it may be possible to claim survivor benefits, which are monthly payments to family members of a deceased family member who contributed to Social Security during their working years (the amount is determined by the deceased’s average lifetime earnings). Not only are spouses eligible, but so are divorced spouses, children and dependent parents.

According to the Social Security Administration, to be eligible as a spouse, you need to:

• Be at least 60 or older
• Have been married at least nine months before your spouse’s death, and
• Hold off remarrying before age 60.

But, age may not matter if you’re still caring for a child of the spouse who passed away.

A widow could be eligible for Medicare based on their deceased spouse’s work history. A widow could also potentially qualify for Medicaid, depending on their income and assets.

For guidance, contact your state’s Medicaid office or State Health Insurance Assistance Program, which can provide counseling and assistance with Medicare and Medicaid.

Rebuilding your finances — and your life

Eventually, you’ll start creating a new life that accounts for only one household income. Once you understand how much money you have coming in (including a life insurance payout and any other forms of income you’ve been bequeathed), you’ll be able to reassess your lifestyle based on your new household income.

For example, before his wife had passed away, Paul bought a second vehicle. Now that he no longer needs two vehicles, he could sell one and use the money to help him pay down debt or help with the mortgage.

He may also want to consider downsizing to a smaller home. In the meantime, if he can’t afford his mortgage payments (or wants to wait until rates go down), he could consider working overtime or taking on gig work to bring in some extra money. He could even get a roommate to help him cover the mortgage and household bills.

For those feeling overwhelmed by all of this, there are community resources and state programs available that can help with both emotional well-being as well as financial guidance, such as the Wings for Widows and Soaring Spirits International.

It may be worth working with a trusted financial advisor or even a grief counselor to develop a roadmap for the year ahead — from rebalancing your budget to restructuring your lifestyle.

Be prepared

Each spouse should know where important documentation is stored, as well as passwords for any electronic documentation. It’s also important to have a will that names a beneficiary or beneficiaries; otherwise, the state decides who gets your estate — and that can be a long, complex and emotionally draining process for your loved ones.

Since it can take up to two months to get a life insurance payout, it’s also a good idea to build an emergency fund that will cover expenses during that timeframe. Dipping into your own retirement savings to get by during this time could hurt you in the long run.

While it can be uncomfortable, it’s important for couples to discuss their end-of-life wishes and make financial plans ahead of time.

What to read next

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• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

A California real estate analyst discovered that thousands of homes in the state are owned by big Wall Street firms. And, in the midst of a housing affordability crisis, the California State Assembly is taking notice.

Curious about how many California homes are owned by Texas-based real estate investment trust (REIT) Invitation Homes, Ryan Lundquist made a map of their locations, which he showed to CBS News Sacramento.

The real estate analyst and appraiser from Sacramento discovered that Invitation Homes — which calls itself “the nation’s largest single-family home leasing and management company” — owns 11,000 homes in California, with nearly 2,000 of those in Sacramento.

“All these dots represent where the company owns. Pretty wild,” Lundquist told CBS News Sacramento while pointing to a map on his computer screen. “Absolutely, we can’t ignore this. We need to have a conversation about it. This is a really hot issue.”

His discovery adds fuel to a growing movement among lawmakers to limit institutional control over single-family housing.

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• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now

Why lawmakers are taking notice

After the Great Recession, government-backed investment firms began buying up foreclosed homes to convert into rentals.

“It was that rare opportunity that attracted the institutions to build a portfolio out of these foreclosed properties,” Steven Xiao, an assistant professor of finance and managerial economics at the University of Texas in Dallas, told CNBC.

These firms, including Tricon Residential, Progress Residential, American Homes 4 Rent and Invitation Homes — some of which are backed by private equity firms such as Blackstone or investment managers such as Pretium Partners — have bought thousands of homes across the U.S and developed built-for-rent communities.

In 2023, MetLife Investment Management predicted that institutional investors could control 40% of U.S. single-family rental homes by 2030.

That’s why California Democratic Assembly member Alex Lee wants to cap the number of single-family homes these firms can buy in California. “I would say it’s housing-crisis profiteering,” Lee told CBS News Sacramento. “So as we produce more housing, we don’t want the market to be eliminated or narrowed because of those corporate actors.”

Lee has introduced California Assembly Bill 1240, which “would prohibit a business entity, as defined, that has an interest in more than 1,000 single-family residential properties from purchasing, acquiring, or otherwise obtaining an ownership interest in another single-family residential property and subsequently leasing the property, as specified.”

According to CBS News Sacramento, as of July 2025, the bill has passed the Assembly and is headed to the Senate Judiciary Committee.

Responding to the legislation, a spokesperson for Invitation Homes told CBS News Sacramento that “this is a tired narrative that lawmakers often promote that distracts from the real causes of high housing costs in markets like California.”

Still, in 2024, Invitation Homes settled for $2 million after the California attorney general sued the company for price gouging.

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Disrupting single-family housing markets

Despite this “tired narrative,” some potential homebuyers are being outbid by corporate buyers who are able to make quick, all-cash offers, according to NBC News.

“This has increased prices in markets with already limited supply, such as San Francisco, Los Angeles and New York, intensifying the affordability crisis for residents,” according to Jae Hong Lee in the Emory Economics Review.

In 2021, for example, institutional investors owned more than 28% of the single-family homes available for rent in metropolitan Atlanta, “which amounted to 10% of all rental properties in the region,” according to the Urban Institute.

Lee, paraphrasing from Jenny Schuetz’s book, Fixer-Upper: How to Repair America’s Broken Housing Systems, adds that “in major U.S. cities, speculative investors often purchase properties only to leave them vacant, expecting a significant return when prices rise.” This, in turn, “reduces the availability of affordable housing and contributes directly to price inflation.”

Not everyone agrees that institutional buying makes housing less affordable.

“There is a correlation between areas of the country that have a lot of institutional single-family operators and larger increases in home prices, but correlation is not causation. They target fast-growing areas,” Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute, told Governing Magazine.

Goodman points out that institutional investors often buy “dilapidated homes that first-time homebuyers don’t have the means to repair anyway,” and that lawmakers should focus more on the rental practices of these companies.

But it’s not just homebuyers feeling the effects — renters face challenges, too.

For example, some private equity landlords raise rents, impose new fees that increase housing costs for tenants and “skimp” on upkeep, according to research by Americans for Financial Reform. Some are also quick to issue eviction notices and then “aggressively pursue tenants in court.”

Regardless of where the negative impacts of institutional buyers are being felt, lawmakers are looking to mitigate them, with “at least half a dozen states” looking at legislation related to the issue, according to Governing Magazine. Whether these proposed limits gain traction remains to be seen, but the debate over institutional ownership is far from over.

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
• Here are the 6 levels of wealth for retirement-age Americans — are you near the top or bottom of the pyramid?
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• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Being robbed doesn’t always happen at gunpoint. Cybercriminals can sneak into your home through your computer and your phone — and may make you an unwitting accomplice to your own robbery. It’s a problem for everyone, but if you’re over 60, you’re particularly vulnerable.

Last year, losses to cybercrime increased 33% from 2023 to a record $16.6 billion, according to the Federal Bureau of Investigation (FBI) Internet Crime Report 2024.

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• Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now

Last year, the FBI’s Internet Crime Complaint Center (IC3) received 859,532 total complaints, of which about 256,000 resulted in losses averaging about $19,000.

But these numbers understate the true scope of the problem since they’re based only on crimes reported to the IC3.

Why older Americans are being targeted

Older Americans tend to become less financially literate and digitally savvy as they age, making them a prime target for cybercriminals. If they’ve been widowed, they may be lonely and more prone to romance or confidence scams.

This older demographic reported about 147,000 cybercrimes in 2024, which is a 46% increase from 2023. Not only do they represent a significant portion of those lodging complaints, but they’re also losing more money than average.

As a group, their total losses were $4.885 billion in 2024, which is about 40% of the total losses for all Americans, averaging about $83,000 per person. And 7,500 complainants lost more than $100,000.

Americans 60+ most frequently reported being the victims of phishing or spoofing, tech support scams, extortion or sextortion, personal data breaches and investment scams.

Investment scams were responsible for the largest financial losses for those 60+ in 2024, followed by tech support and confidence and romance scams. Across all attack types, the losses to scams involving cryptocurrency were substantial.

Read more: You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how

Common types of cyberattacks

Phishing or spoofing occurs when a cybercriminal pretends to be a reputable source, such as your bank, to obtain sensitive information such as passwords or financial information. It’s often done through email but can also be done through voice, text, QR codes and fake websites. Phishing has become increasingly sophisticated, thanks to generative AI.

Tech support scams come in many forms, such as a pop-up on your computer screen or a phone call that’s supposedly from a legitimate tech company. Typically, it will alert you to a ‘problem’ on your computer and offer to fix it for you — for a charge, of course.

Individuals targeted for cyber extortion are commonly contacted through email or text.

Cybercriminals threaten to release sensitive information about you on social media or to your contacts unless you pay a ransom by transferring money or cryptocurrency to them. Often they’ll be bluffing, but in some cases they may have illegally acquired this information.

Personal data breaches can occur through your own technology — for instance, using passwords acquired through phishing — but often result from breaches at companies that store your data. Bad actors may use this data for identity theft, financial fraud and extortion. Your best defence is to be selective as to which organizations you share personal data with.

Investment scams often begin with a direct message, often on social media, claiming that you can make a lot of money through a certain investment or asset, such as cryptocurrency. You may then end up investing at a fake investment firm or paying for useless training.

Safeguarding your finances from cybercrime

To protect yourself from cybercrime, start by gaining an understanding of the threats. There are several online resources — and sometimes courses offered at community and seniors’ centers — that can help you understand the current threat landscape and how to protect yourself.

Always install the latest updates of your operating system and software. Also ensure you have a reputable internet security suite, which you may need to purchase separately. In addition, check the security settings on your computer, email, internet and social media to ensure you’re protecting your information.

Don’t use public networks (like the library) to conduct transactions that involve personal information. If you have no choice, consider using a virtual private network (VPN). Use strong passwords and don’t use the same password in multiple places.

Avoid clicking on links in emails, social media or texts unless you know and trust the sender — and never click on pop-ups. Use discretion if you get an unexpected link or attachment from someone you know, especially if it doesn’t come with a message or doesn’t sound like the sender.

Financial institutions don’t tend to send links. If you get a notice from your financial institution, avoid the link or number on the notice and manually check your account or contact the number you would normally use to contact the institution.

Use a similar approach for so-called technology companies that tell you to contact them about computer issues. Ignore unsolicited phone calls — especially robocalls — and, as much as you may want to help, don’t lend or give money to online romantic interests.

If you believe you’ve been a victim of cybercrime, stop all engagement with the perpetrator. Secure your computer by changing all passwords and running virus and malware scans. Contact your financial institutions and credit agencies and report the attack to the police and IC3.

If you believe your identity has been stolen, report this to the Federal Trade Commission at IdentityTheft.gov. Be sure to document everything about the attack and what you did in response, such as who you contacted and when. Afterward, you’ll want to monitor your bank accounts to ensure there are no strange transactions.

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
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• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Picture this: Tabatha, 29, is a registered nurse who makes about $80,000 a year. She’s always been responsible with her money, which means she’s debt-free, has an emergency fund and is setting aside money for her future.

But her mom, who is $20,000 in debt, is now pressuring Tabatha to take out a loan to help her pay it off. To make matters worse, the rest of Tabatha’s family is piling on the pressure, too.

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Since her mom has a history of being financially irresponsible — and emotionally manipulative — Tabatha has put her foot down and said no. But now her mom says she feels “betrayed” by her daughter, and Tabatha is wondering if there’s anything she can do to repair their relationship without giving in to her mom’s guilt trip.

Setting financial boundaries with family and friends

About one in five U.S. adults receive financial support from friends or family, according to research from the Consumer Financial Protection Bureau. Meanwhile, another survey found that while lending money to friends and family is a common practice, 27% of Americans who’ve lent money to a loved one in the previous year ended up regretting it.

If a close friend or family member were to ask you for a loan, take a beat and ask yourself a few quick questions. For example, how would this affect your own financial situation both now and in the long term? And if you were to loan them money, what happens if they don’t pay it back?

If you were to use your credit to take out a loan and lend that money to someone who is unable to pay you back, then you’re stuck paying off the loan — after all, it’s under your name. And if you struggle to pay it back, then you could end up damaging your credit in the process. That means, down the road, it could be harder to get approved for a car loan or a mortgage.

In Tabatha’s case, her mom has a history of being irresponsible with money. If her mom is truly unable to pay back her creditors — who could potentially garnish her wages or take her to court — then how would she be able to pay Tabatha back? Tabatha could easily end up enabling her mom’s problematic behavior if she were to lend her mother the money.

A general rule of thumb is that you shouldn’t lend money unless you can afford to lose it. If you can’t afford to lose it, or you don’t trust that the debtor will be able to pay you back, then you may have to make the financially responsible decision to say no. But that isn’t easy, especially if you’re saying no to a family member who has a habit of trying to guilt trip you into doing what they want.

“The key is to be diplomatic in your approach, to be able to handle the situation with empathy while firmly refusing their request,” wrote Pascal Gagnon, a licensed insolvency trustee with Ginsberg Gingras, in a blog post.

If this response isn’t well received and the family member or friend attempts to guilt-trip you, “a satisfactory resolution for both parties is virtually impossible,” Gagnon continues. “It is nevertheless critical to be firm about your position. If you falter at this point, the other person will think nothing of using the same strategy again in the future.”

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How to provide non-monetary help

Fortunately, you can still show you care without giving a family member a loan — and without jeopardizing your financial future.

For example, you could help your loved one find a nonprofit credit counselor or debt-management agency. Working with an impartial third party could help take the emotion out of it and come up with real solutions.

You can also show that you care without a loan by creating a debt repayment plan that helps your loved one over the long run, rather than providing a band-aid solution in the form of a “friends and family” loan.

If a loved one is truly in a dire situation and you want to help, consider a one-time gift — but only if you can afford it, and only if you’re comfortable doing so. If you decide to go this route, be clear that it’s a one-time gift and the amount you’re gifting is all you can afford. For 2025, you can gift up to $19,000 per person — after that, you have to submit a gift tax return to the IRS, which goes toward your lifetime gift tax exclusion.

If you don’t feel comfortable giving cash, you could “gift” a loved one by helping them pay a monthly bill for a specified period of time, or buying an annual bus pass to help cover the loved one’s transportation costs.

Another option is to help them find ways to make extra cash. Perhaps Tabatha could help her mom look for extra work. Or, if her mom has a house, perhaps Tabatha could help her rent out a room for extra money, which she could put directly toward her debt.

While Tabatha is worried about damaging her relationship with her mom, imagine the damage that would be done if her mom is unable or unwilling to repay a loan, putting Tabatha deep in debt. Sometimes saying no is the right thing to do, both financially and emotionally.

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
• Here are the 6 levels of wealth for retirement-age Americans — are you near the top or bottom of the pyramid?
• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.