You’ve probably heard the term Generational Wealth – money and assets that can be passed down through the generations.
But what about Generational Debt?
At Consolidated Credit I see this all the time. Grandparents who avoided debt their entire lives — only to fall into it when grandchildren arrive.
It’s such a common phenomenon, I’ve almost forgotten how poignant it can be. I was reminded the other day when we spoke with Susan, who lives near the tip of Maine, in a town along the coast.
The pandemic didn’t derail her. In fact, it gave her a chance to reset, “I received stimulus and other funds, so I was able to pay off some very old debt and tried to make a plan for increasing my credit score.”
But then came the news that changed everything. “I had just received word that I was going to have my very first grandchild. So, I was buying things for my daughter that I thought she would need. And in the process of doing that, I maxed out my credit cards in order to take a trip and meet my grandchild.”
As her grandchild grew, so did Susan’s debt.
“I found myself in a loop, where every month I was making the minimum payment,” she recalls. “Then I had to reuse the available credit just in order to pay my necessities.”
While I’m moved by all of our clients’ Debt Stories, the ones involving grandparents really tug at my heartstrings. This is one form of debt I already understand. I’ve heard it from so many grandmothers, from Rebecca to Sandra to Rose.
Interestingly, these women managed to frugally raise their children, but their grandchildren blew up their budget. Since the Great Recession, raising a family has felt financially unpredictable. Then came the pandemic. Record inflation. Now ongoing economic uncertainty.
Grandparents see their children struggling — and they step in. Sometimes with their savings. Too often with credit cards. For Susan help came quickly – because of her own mother.
“At the time all of that was happening to me, I remembered that my mother had used a debt management plan with Consolidated Credit,” Susan says. She had forgotten because “it was about 30 years ago” – only a few years after our nonprofit credit counseling agency had opened, and a decade before I arrived.
Susan’s interest rates on eight credit cards dropped from as high as 31% to between 9.9% and 11.9%. “There is no way I would have been able to negotiate that for myself,” she says. “I’m saving thousands of dollars doing this. It brought me so much relief.”
Susan says her credit counselor has been a big help: “I know that I can call them at any time when I may have a question.”
Generational wealth isn’t just about passing down money. It’s about passing down stability, security, and peace of mind.
Grandparents shouldn’t have to sacrifice their own financial future to support the next generation. With the right plan, they don’t have to.
