Outrage as Mom Liquidates Her Daughter's College Fund To Keep 'Dream House'

A mom who was forced to liquidate her daughter's college savings to finance her poor investments has been slammed online for being irresponsible.

The Reddit user explained in a viral post that when her husband died four years ago, he left everything to her, providing her with a seven-figure inheritance.

With her newfound wealth, user u/Throwawayveal-9 sold the family home and relocated with her then 13-year-old daughter to Malibu, where they bought their "dream house" by the sea.

While the poster and her daughter were ecstatic about their new home, the family lawyer wasn't so impressed and showed concerns about the finances early on.

The Reddit post reads: "My late husband's lawyer was furious at my decision, so I stopped taking his calls. I ended up signing with a money manager, who said that we'd be passively earning 90 percent of what surgeons earned per year.

"But the money manager ended up tanking a lot of our investments. I took the dwindling money out and made my own investments, which made it worse, and because of all that, I only have around $35,000 available to me now, not to mention our debts."

For the last five years, the Financial Health Network surveyed individuals about their personal income and spending. In 2022, they found that the number of people considered financially healthy declined for the first time, dropping down to 31 percent, a decline of three percent.

More people are now considered to be in the financially coping bracket, with 55 percent of respondents having just enough money to live paycheck to paycheck.

After losing so much of the inheritance, the mom looked at how else she could accumulate the money she needs to stay in the Malibu home.

Her late husband set aside enough money to fund the daughter's education, however the mom decided to use that money for her mortgage instead.

"With the money there, I could prevent our credit cards from being shut down, and not have to worry about the mortgage for many more months," the Reddit post continues.

"So, I ended up liquidating my daughter's college fund. I told her about it today and she was furious and said she cannot believe all her dad's work is gone. She also said she won't be supporting me for retirement."

As a wealth advisor at Ullmann Wealth Partners, Patrick Kilbane has seen a number of clients in difficult financial positions due to poor investments or bad spending habits.

Kilbane would usually look at how they can reduce the spending and make financial goals, which gives the person something to work towards.

"The first step we take is to analyze the spending habits and identify any areas where we can trim expenses," Kilbane told Newsweek.

"Often, we can find some expenses that can be eliminated. We then have a detailed discussion about financial goals. Making tough choices, and possibly liquidating some assets might be necessary."

After making poor investments, it can be hard to face doing it again. But Kilbane says that finding an encouraging advisor who knows how to handle the fluctuating markets can help.

The Reddit post was shared on April 11 and in just a matter of days, it has received over 7,900 votes and more than 3,000 comments. The responses largely criticize the mom for whittling away so much money and impacting her daughter's future.

One comment reads: "You decided not to listen to the lawyer, you decided to move to an extremely expensive place, and you decided to trust someone's shady advice. Now you're taking away your daughter's chances of being able to go to college loan-free. That money is not yours."

Another commenter wrote: "Sell your house and move into something you can afford. Replenish your daughter's college fund and try to repair your damaged relationship with her."

Newsweek reached out to u/Throwawayveal-9 for comment. We could not verify the details of the case.

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