by Melody Warnick January 28, 2009
Summary
For some senior citizens, credit card
debt is a way of life that gets more difficult to handle as they get older.
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For many years, your
parents paid your way – remember braces and summer camp? – but if they’re among
the growing number of senior citizens saddled with credit card debt, you could
end up footing the bill for them sometime soon.
Legally, you’re not
obligated to do so. Your parents’ credit card debt won’t transfer to you or any
other relatives after they die. It can be hard to ignore, however, and
if you end up tackling your parents’ credit card debt, you may find it just as
stressful as dealing with your own.
The National Council
on Aging reported that 61
percent of households headed by someone over 60 years old was carrying some
type of debt. After medical debt, it is credit card debt that is threatening
seniors’ financial security, according to NCOA.
For some senior
citizens, credit card debt is a way of life that gets more difficult to handle
as they get older.
Julie Murphy
Casserly, founder and president of JMC Wealth Management, spent her whole life
watching her parents struggle to pay the bills. By the time she was old enough
to take a peek at their financial issues, they had $72,000 in consumer debt,
including unpaid credit cards and old orthodontia bills.
Even after Murphy
Casserly helped her parents tap a home equity line of credit to pay off debt,
bad health and poor money management skills soon created another mountain of
debt in its place.
“It was a chronic
problem,” she says.
Many older people,
even frugal ones, are simply unable to make ends meet on a pension or Social
Security check, so they turn to plastic to help pay for daily living expenses,
such as groceries and gas.
Other seniors plunge
into debt when their health takes a turn for the worse. A stroke, a heart
attack or a bout with cancer can create thousands of dollars in medical bills, which elderly patients may be pressured
to pay with a credit card.
The death of a spouse can wreak financial havoc for widows
and widowers, says Bruce McClary, vice president of communications for the
National Foundation for Credit Counseling.
“When the person who
handled the family finances passes away and leaves the other one to sort out
the financial picture for themselves, they often turn to credit cards to
backfill the loss of income or lack of benefits — or use it to fill an
emotional void,” McClary says.
“I have had clients
who come to me and say, ‘I went out and started spending and didn’t think about
it till it was too late.'”
Why
it matters to you
In purely financial
terms, a credit card company can liquidate your parent’s estate after death to
recoup what is owed. In that case, you could kiss the family home goodbye.
Plus, a bad credit score can make it difficult to get the loan
needed to, say, buy a new car, or even rent an apartment, which can limit your
parents’ options as they age.
More poignantly, it
can be painful to watch aging parents struggle with out-of-control debt or live
close to the bone because of it. To make ends meet, they may cut back on
necessities, even food and medications, which can affect their quality of life.
The anxiety of the
situation can even aggravate existing health conditions or create new ones,
leading to a whole host of hurdles for your family.
Having
the big talk
If your parents
haven’t come to you for help or told you about their credit card woes, you’ll
have to figure out whether it’s best to mind your own business until they do.
If, however, you’re
determined to bring up the problem, don’t expect things to go smoothly the
first time around.
“Typical responses
you could hear might be that they don’t want you to worry, that they have it
under control, that they’re trying to keep their independence,” says Lynne
Coon, a counselor in private practice in Portland, Oregon, who specializes in
helping older adults and their children.
“Or they might feel
shame that they’ve gotten themselves into a money issue.”
“I prefer the direct
approach: ‘I know this is none of my business, but I’m concerned, and I want to
ask you about your credit card issues.”
However much you
dread it, you can make the debt conversation go more smoothly. Here’s how:
Be
upfront
“I prefer the direct
approach: ‘I know this is none of my business, but I’m concerned, and I want to
ask you about your credit card issues,'” says Sharon Burns, author of “How to
Care for Your Parents’ Money While Caring for Your Parents.”
The first time, your
parents might agree with you that it’s none of your business. On the other
hand, they may want to talk later, once they know you’re clued into the
problem.
Look
for an opening
An onslaught of
credit card offers may indicate rising debt levels, so ask about it if you see
a letter lying on the table: “Do you get a lot of these offers? Are you looking
for a new credit card?”
Or volunteer to help
with the physical task of paying bills or filing an income tax return. You’ll
get a close-up look at their finances — and a better sense of whether they’re
really in trouble.
Show
your good intentions
When your parents
understand that your concern about their debt stems from love and not a greedy
scrabbling for inheritance cash, they’re less likely to go on the defensive.
Try saying, “I care
about you, and I want to make sure you’re as well taken care of as you deserve
for raising us,” or, “I want you to have smooth sailing as you go forward.”
Offer
collaboration
“Don’t say things
that imply they’re not capable. That’s every older person’s fear,” says Coon.
Instead of telling
your parents what they’re doing wrong and dictating solutions, work together to
brainstorm positive approaches to the problem and remind them that they’re not
the only ones in this situation.
Defuse
hurt feelings
Despite your best
efforts, the conversation may not go well.
You can keep it from
turning into a shouting match by keeping your tone even-keeled and offering a
measured response: “I can see that what I said has upset you, and that’s not
what I intended. I just don’t want you to feel like you have to go this alone.”
Don’t think of this
as The Conversation, advises Coon. More likely it will be the first of an
ongoing series of talks. Handle it well and you could help your parents live
longer, happier, more financially secure lives.
Tips
for getting your parents out of debt
When someone you love
is struggling financially, your first impulse may be to jump in and pay off the
offending bill. However, doesn’t address the root cause of the debt. Here are
better ways to assist:
Help
out – a little
If a tight income
caused the credit card debt, offer to buy groceries or contribute to an
emergency fund.
Tap
outside resources
Local governments,
senior centers, churches and other groups offer financial relief to the elderly
in the form of prescription drug assistance, subsidized bills, even hot meals.
Help your parents navigate the system and fill out paperwork.
Hire
a third-party assistant
Hiring a bookkeeper
may not only keep finances in order but eventually trained your loved parents
to use the same system.
Create
a financial tag team
Assign siblings or
other relatives to help with different aspects of your parents’ lives — one
pitches in some extra cash each month, one actually pays the monthly bills, one
helps around the house so your parents won’t have to hire a plumber.
Prepare
for the inevitable
Determine who will
assume financial responsibility for their parents in the future. Those who may
step up can purchase long-term care insurance now or funnel money into a
“future care” savings account.
Safeguard
your own money
As much as you want
to help, don’t jeopardize your own financial security. Doing so reduces what
you can put away for retirement.
And, as Murphy
Casserly puts it, “If you bail out the generation before you and don’t take
care of your own finances, you’ll do the same thing to your kids.”
https://www.creditcards.com/credit-card-news/5-tips-talking-to-elderly-parents-about-credit-card-debt-1267.php
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