Should you float Mom and Dad a loan?

If you can do it without ruining your own finances, sure. But writing a check for Mom's car payment could be like slapping a Band-Aid on a chest wound. You might be treating the symptoms, not the cause — and your treatment could be meaningless.

"If I give you money and you have a spending problem, I didn't help you," says financial guru Dave Ramsey.

A reader named Nicole learned this the hard way. Shortly after her parents moved to their rural dream home, her dad got fired. After more than $8,000 worth of bailouts, Nicole and her husband closed the bank. They invited the parents to move in, but the older couple wouldn't leave their home or get rid of their horse, goats or fowl.

The reader, who asked that her last name not be used, says her folks now take money from her two siblings — neither of whom can truly afford it.

"It's 'Oh, we're your parents; we're in such a bad situation.' But I keep thinking this is going on much too long," Nicole says.

A growing trend
The percentage of bankruptcy filers age 55 or older more than doubled to 15.3 per cent from 1993 and 2003, according to the Office of the Superintendent of Bankruptcy Canada.

Many people who thought they'd saved enough watched their retirement funds shrivel during the economic downturn. Some are going back to work, if they can get hired. Others ask their sons and daughters for loans.

"There's a lot of shame when our children become our parents," says Philip Dembo, a therapist and life coach in St. Louis.

Although you should acknowledge how hard it might have been for your parents to ask, you should never make a loan you cannot afford.

"It doesn't mean you stop caring about people," Dembo says. "But you take care of yourself first."

Saying no to a parent isn't easy. Many children wouldn't dream of it, especially if the shortfall is due to job loss, illness or a shrunken retirement fund.

But what if the wolf at the door is actually a FedEx delivery driver, a cocktail waitress or a casino pit boss with a fistful of markers? If you're enabling a parent's addictions (chemical, shopping, gambling), you're hurting, not helping.

Wealth psychology expert Kathleen Burns Kingsbury suggests offering help instead of a bailout. For example, you could decline to pay a credit card bill but offer to pay for 10 sessions of therapy for a compulsive-shopping problem.

"It may be that you can negotiate something where you're helping, really helping, instead of supporting unhealthy behaviours," Kingsbury says.

'We just want them safe'
Not every parent who overspends is an addict or a moral weakling. New retirees may find their lowered incomes aren't keeping pace with inflation. Maybe they're lonely and want to be where other people are — malls, bingo parlours or other places that end up costing them money.

Or maybe your parents never learned how money works. Ellen, who lives in the U.S. southwest, has watched her in-laws make questionable choices, including cashing in retirement funds and buying furniture and appliances rather than paying off their mobile home.

Her mother-in-law was disabled by heart disease a few years ago. Her father-in-law has been unemployed since 2007 except for sporadic contract work. Recently, they couldn't pay for illness-related items, including medication. Ellen and her husband sent money immediately. They're prepared to send more.

"We would have to find room in the budget," she says. "But it is frustrating when we look at their past of spending and not saving."

Ellen and her husband had been saving for a home of their own. Now the goal is to find a place with room for the in-laws. "We just want them safe," she says.

A more insidious loan
Two end runs around the child-as-ATM are the co-sign and the co-opt. Some parents steal a child's identity outright, but Kim's situation was more insidious.

After growing up in a physically and psychologically abusive home, she was unable to resist what she now calls extortion. She quit college to work for free in the family business. Her parents used Kim's credit cards, including taking cash advances, and coerced her into co-signing a bank loan.

Ultimately, her parents walked away from the obligations. It took Kim five years to pay off the debt — and by then her parents had declared bankruptcy and moved in with her.

Now living in a southern state with her husband and two young children, Kim has no relationship with her parents because "they have no remorse and no sense of personal responsibility."

Another reader, Ally, caved when her biological mother asked that she co-sign her half-sister's student loans. At first, Ally refused. Yet she felt education was important and "didn't want there to be tension in the family," so when her mom asked again, she signed.

Her sister has shown zero initiative about seeking post-graduation employment. Ally, who works in marketing, fears she'll soon be on the hook for $24,000. Recently, she got turned down for a car loan because of the debt that's technically hers.

Ally's mother can't pay. She's broke.