Boomers have been ridiculed in the press recently for being the cause of the national debt problem. Certain Gen X journalists are even disgruntled that Boomers are going to live longer than previous generation counterparts and their Gen X, or even Millennial, kids will have to assume their care and debt longer than bearable.
Though these perspectives could be argued by economists, politicians and psychologists for hours, looking at one of the significant reasons why Boomers likely have been carrying so much debt, for too long, may be more helpful in figuring out how to remedy the issue.
A large part of Boomer debt has to do with being part of the Sandwich Generation. The import of that specific terminology may tell the story of the Boomer debt crisis – literally being in the middle of trying to help both older parents and younger kids on 1 income. They’re either lending personal care to an older parent who cannot afford assisted living, which means they may also not be able to work enough hours to create sufficient income to pay down their debt, or they’re paying for assistance to help take care of older parents.
In addition, they’re also often helping their own kids who, in this downturned economy since 2008, may have lost their jobs or had significant pay cuts. In an effort to help keep their kids, and even grandkids, from being put out on the street due to losing mortgages, or unable to pay rent and utilities, Boomer parents too often have put themselves on a financial limb. They’ve co-signed loans, which they’ve wound up having to re-pay themselves, or they’ve run up credit card debt from helping kids with any number of emergency financial issues.
Just in case Generation X’ers and Millennials don’t know this, or have forgotten these details, the Sandwich Generation has also been the “helping hand” generation as well. Boomers are the generation who cut their wisdom teeth on fighting for social reforms – equal pay, college entrance, for women and minorities, the “wars” of which Gen X’ers and Millennials have been luxuriously able to reap the benefits of and take largely for granted.
In addition, the Woodstock gang also created myriad other social reform programs to help those in need. All the while, Boomers did, and still do, the majority of the volunteer work in the country.
The result of all that helping is that a generation of older Americans, who should be able to be thinking about retiring, are now forced to look for higher paying full-time jobs, or taking on a part-time job, to meet all their financial obligations. But who’s helping the Boomers? Not banks or credit unions.
In fact, they’re making it harder for Boomers to meet all their financial obligations from the “help” they’ve given others. They’re upping APR’s on credit cards – even if they’ve made payments on time – and making it harder for them to get their own loan. If that wasn’t bad enough, sly financial entrepreneurs are targeting them for their financial schemes – offering “pension advances” with enormous interest rates from 24% to 106%!
So, if you’re an older adult and find yourself needing a little “help” yourself, here are a few things you can do to help yourself (as usual):
1. Beware of Cash Advances. Steer clear of pension, or other cash advance schemes like Pay Day Advances, etc. These have enormous very high interest rates attached to them and can get you in more financial hot water faster.
2. Work smarter, not harder. Try to find a full-time job that will meet your current expenditure needs, or close to it. In some areas of the country where the economy is more suppressed than others, this may not be possible. You may need to think of “commuting” to the next bigger city, or a city further away, where a much higher paying job may be available. You may need to explore telecommuting with a company in another state even if it means working on an independent contractor status. If you can’t switch full time jobs yet, you may have to work at least a temporary part-time job 15-20 hours a week to make up the difference.
3. Consolidation loans/credit cards. These services can help you consolidate debt into one monthly payment. Yet, often they want to do “debt-settlement”, which can reduce the amount you owe but also adversely affects your credit rating. If your credit rating is already poor, this is not an issue, but if its still good, you don’t want to lower it further. Rather, start paying off your highest interest credit card, or other obligation, first, putting more on them than others.
The trick is not to use that card while paying it down. Cut it up, or lock it away in a box to use only in an emergency. Taking out another credit card with a 0% APR for 12-18 months can help pay down much higher interest credit cards, loans, etc. Again, don’t use the card though to add up new charges.
4. Streamline your Expenditures. Do you really need all those magazine subscriptions? Could you get a cheaper cell phone rate? What about home and auto insurance – shop around for a lower rate. Make a list of all your monthly service bills and see which ones you could let go of or get a better rate on.
4. Kids/Parents Need Help. It’s easy for an uninvolved financial advisor to tell you to cut the cord to your bank account for kids and parents. Yet, you know, that you won’t be able to do that in reality, especially in an emergency. So, the best thing to do is set firm limits of what you can help kids/parents with financially. Save your help to emergency need only – utilities threatening shut off, emergency car repair, medical emergency, etc.
It may be cheaper to hire a person to help with your parents in their home than you giving up work hours to help them out. For kids, be sure they’re doing all they can to make their own ends meet even if that means them getting an extra part time job as well. You may need to help streamline their expenditures as well to get them on more secure financial footing.