Client Profile: Rose S.

Profile of Rose S.

Addressing debt problems caused by helping family members get ahead.

Rose is 72 years old. She would like to spend more time at home sewing and doing puzzles but she has to work 4 hours a day to pay down debt.  Although a portion of the debt came from renovations on her own house, majority came from setting up a home for her adult son – from appliances to everything that he needed. During the Great Recession the number of adult children living with parents increased 1.2 million to 15.8 million between 2007 and 2010 as chronicled in an article by Reuters. Rose went a different route. She never even got a thank you but instead a $25,000 debt.

The idea of helping out adult children is common. It’s a scenario that client services supervisor Stanley U.  hears often from parents and grandparents who got into debt by overspending on their children and grandchildren.

 
“When I hear the frustration in their voice and see how they’re struggling – they’re really trying, but they can barely put food in their refrigerator or feed themselves,” he says, “It really touches me. I spoke to a lady whose grandkids had run up her credit cards. They refuse to pay the debt, and the grandmother feels obligated to pay it back because the debt is in her name.”

Feeling stuck, much like many other seniors who come to Consolidated Credit, Rose sought help but with a different company at first.

Consolidated Credit picked up the job they couldn’t finish and Rose picked up the pieces…

“After a while they said they couldn’t help me anymore and transferred me over to you guys which has helped me out a lot,” she says. “Before, I was paying the minimum and the debt just wouldn’t go down. My interest rates were way up there – 24, 27 percent but they were reduced to as low as 6 percent.”

Rose is making headway and her balances are going down…

“When I realized I had $25,000 in debt I wasn’t too proud of it and I had to figure out a way somehow to pay it down. I started out with five credit cards that I had maxed out. I’ve paid off two and I’m now down to just three,” she rejoices. “In fact one more will be paid off soon and then I’ll be down to two.”

Rose didn’t want to declare bankruptcy so she endured the sacrifice even when medical problems came up…

“I didn’t want to go through bankruptcy,” she says. “It really wouldn’t be to my benefit to go that route. I’ve had some medical problems come up so I haven’t been able to do a lot of the things that I’d like to do but that’s okay. I’ve lived without them and it feels good to see these cards getting paid off. Knowing that the end is in sight is a huge sigh of relief.”

The debt management program among other lessons taught her that cash is king…

“Your debt management program taught me that I can do without a lot of things,” she says. “And if there is something that I really can’t do without, if I have extra money after paying my bills, I get it and pay for it in cash.”

Although Rose is ecstatic that she will soon be debt free she won’t be spending more money to avoid getting back into debt…

“I’m not really going to celebrate because that takes extra money,” she says. “With that money we no longer give to Consolidated Credit maybe we can do all the things that we want to do.”

To those struggling with debt and to avert falling into debt Rose says…

“Tighten your belt and do without. If you see something that you really want, before you buy wait at least a week and see if it’s something that you absolutely need or can do without. During that waiting period you will discover that the desire for most of the things we think we need goes away.”

The idea of elderly parents and grandparents racking up debt to bail out their adult children financially is endearing but disconcerting. This prevalence creates problems that compromises their financial security and diminishes their chances of retiring with well-deserved dignity.

Rose is not alone.

The National Endowment for Financial Education NEFE and Forbes and AARP and Demos reports:

  • 59 percent of parents provide financial support to their adult children who are no longer in school
  • 50 percent of parents help their adult children with housing and 48 percent with living expenses
  • 26 percent of parents help by taking on additional debt
  • 13 percent sacrificed life events like buying a home or taking a vacation
  • 7 percent delayed retirement
  • 23 percent of older Americans over 50 say they added to their credit card balances because they gave money to relatives

Don’t love your kids to debt

Stanley has seen lots of Roses…

“There was this older gentleman who felt it was his duty to feed and entertain his grandkids. He often threw parties and took them on trips to fulfill what he says were his duties as a grandfather. ‘Somebody has to feed them, somebody has to entertain them,’ he always said. ‘I have to take them on trips; they are my grandkids.’ He ended up with at least $40,000 in debt.”

Like Rose and these grandparents have you racked up credit card debt to bail out your adult children? If this is your story and credit card debt is putting undue stress on your finances it’s time to enlist the help of a financial professional. Dial to speak with a certified credit counselor or request help online now.