Family Debt

Love costs billions of dollars – and it’s rising.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Walt Disney once said, “A man should never neglect his family for business.” But what about neglecting the business of family? A fascinating new study from TD Ameritrade tallies up just how much Americans spend on their adult children and aging parents.

The big result

All told, this country will spend a jaw-dropping $630 billion this year on supporting adult children and aging parents. How much is that? Well, all the credit card debt in the nation currently stands at $856 billion.

According to TD Ameritrade, 22 percent of Americans are spending an average of $12,000 a year on their adult children, their aging parents, or both.

 

The fascinating details

They say love is blind. That may be the case here. Many of those family members who are the “Financial Supporters” – that’s TD Ameritrade’s term for them – say the extra expenses aren’t burdening their budgets.

“Only 22 percent say they needed to use their savings to provide financial help,” the study says, “while 30 percent made small sacrifices and lived more frugally.”

Yet the study concludes…

Financial Supporters hold almost $100,000 in debt on average: $22,000 in unpaid credit card balances, personal lines of credit, or personal or student loans, and $75,000 in mortgage debt.

What you can do

Interestingly, these financial situations just seem to happen, without any planning – and even worse, without any discussion.

The study adds…

79 percent have not discussed financial support of others with a financial professional, and only half (49 percent) have discussed it with the person whom they support.

So the first crucial piece of advice is to simply talk about the issue. For starters, Financial Supporters need to sit with their adult children or aging parents and create a budget.

Secondly, Financial Supporters shouldn’t go it alone. They should talk to a debt professional.

“Supporting adult children is one of the major root causes of credit card debt that I’ve seen in my nearly three decades helping people achieve financial freedom,” says Gary Herman, president of Consolidated Credit. “The financial burden of trying to support more than one household – or even just the burden caused by boomerang kids moving back into the home – is often too much for even the most stable budget to handle.”

For a free debt analysis, call one of Consolidated Credit’s certified credit counselors at or complete an online application.