Parents fall into debt by lending to children
Throughout the United States, there are countless people fighting against overwhelming debt and Florida is no exception. Unfortunately, the cost of living can be high and it is not always easy to keep on top of your finances, especially if you are trying to support other people as well as yourself. Before you know it, you could find yourself being hounded by creditors and even having to forgo things you enjoy, just so you can afford to live.
It is a growing problem and one that can even affect people who are normally frugal and careful with their finances. For example, many parents find themselves drawing from their own savings to help their children, paying bills, living expenses or credit card debts, even once those children have reached adulthood. This can even result in the parents not having enough money put back to retire when they had planned to. As a result, they end up spending more years in work and having less chance to enjoy their retirement years.
The head of Florida’s Financial Psychology Corporation advises parents to consider loaning money rather than simply giving it to them and structuring that loan properly as if it were a business agreement. This means that you can still help your child in times of need but encourage them to find their feet and work toward earning enough to repay you and support themselves. It will still work out cheaper for them than running up debts on their credit cards, but they also have an incentive not to simply depend on you for money.
If they have fallen so far into debt it is unmanageable or if you have found yourself in a similar position, you might benefit from the advice of a lawyer. He or she can advise you about your options and may be able to suggest a suitable repayment plan or bankruptcy option to help you regain control of your finances.
Source: The New York Times, “Reopening the Bank of Mom and Dad, to Help Adult Children,” Constance Gustke, Oct. 9, 2015