Talking to elderly parents about credit card debt

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Patience, reassurance can make emotional conversation easier



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. 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.”

See related: Elder financial abuse: How families can cope, Aging father’s big card debt puts his home at risk  

 




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