Poor Dad, will you please make up your mind?

Growing up is indeed painful business, especially when parents incessantly insist that they know more than you in terms of lessons of life due to their vast experiences. While i do agree that they know more, i'll challenge them as to what have those experiences done to them? Their relinquishment of their freewill. They become timid and get pushed around by people - the taxman, HDB, the bank, the utilities board, the doctor etc - big bullies of life. I may not have seen plenty of the lessons that life has to offer, but i've read up on the many years before me to foresee the kind of quagmire that my parents are in now lying right in my future path. If i don't do something to alter my future, i'll be stuck, just like my parents, in the quagmire of financial difficulties and debts.

To tell you the truth, i'm already a foot in it. Should i attend SMU in the coming July without a scholarship, i'll be starting my post-study life with a debt to fend off. But i've finally received a positive reply from SIA for the first round and i'm definitely going to give my all for the second round. I'm right now experiencing the shoving of life's bullies indirectly. From the several sessions with my dad regarding the family's financial issues, i've come to realise the immense psychological pressure that financial imprudence and debts can put on my parents; and its impact on the children - my sis and me.

Last night i demonstrated once more the deficits that my dad will suffer from should he not get rid of the mortgage, vis-a-vis the savings that he'll enjoy once its gone. We have a lump sum to fend it off now, but my dad's worried about our liquidity abilities to react to unforeseen circumstances should that lump sum be gone, which is valid concern.

But even if the lump sum is around, and something happens to say, Grandma, would our lump sum be enough to fend off the mortgage and my grandma's medical fees at the same time? The answer is a simple no. We will be sinking even further in this case. Fending off the mortgage now will resolve one of the biggest problems in life. Comparing this with the situation of trying to foot the mortgage and, touch wood, my grandma's medical bills at the same time, which one is more acceptable? I'm quite sure that the answer is obvious. Further more, my mom's savings insurance account is maturing in 2 years' time. The cash from that maturing account will be sufficient to cover any substantial expenses from then on. But my dad's still very worried about the period from now until that maturity date. He is still reluctant to begin a life without debts, which really frustrates me because from where i see it, we really have no two choices out of this. It's either undercutting the savings further to foot the mortgage or begin saving now, after getting rid of he mortgage.

It's about simple economic sense of knowing which means will put more into your pocket and which one will not. It's about having more, not less. Who will pay more for an item on the shelf when we can get the same item for less at another shop? There are no such stupid shoppers in this world. Yet, when it comes to purchasing bigger things in life - homes, cars etc, many choose to pay more, not less, through loans. My very own family example would elucidate the matter.

As the session became more of a financial lesson for my dad due to his lack of financial knowledge, he sensed that his authority was being challenged by me and got defensive, utilising his arrogance [Pride + Ignorance] to cover up his indecision arising from his lack of understanding. He insisted that his experience tells him that having liquidity in hand is way better than fending off the mortgage once and for all. Such an irrational remark after our 2 hours worth of rational analysis? This is economic folly and a total waste of the past 2 hours. This is purely a case of paradigm shifting; a changing of mental models. It will be entirely up to my dad to decide which road he wants to take from now on. I've done all that i could and nothing else, save for more persuasion, can be done.

Poor Dad, will you please make up your mind? It's financial independence or die dead broke. Make your choice.