Skip to comments.Last Hope in a Weak Economy? Mom and Dad (extended family by necessity)
Posted on 03/22/2008 8:15:13 AM PDT by TigerLikesRooster
Last Hope in a Weak Economy? Mom and Dad
By EMILY FREDRIX,AP Business Writer
AP - Sunday, March 23
MILWAUKEE - After being laid off from her job as an events planner at an upscale resort, Jo Ann Bauer struggled financially. She worked at several lower-paying jobs, relocated to a new city and even declared bankruptcy.
Then in December, she finally accepted her parents' invitation to move into their home _ at age 52. "I'm back living in the bedroom that I grew up in," she said.
Taking shelter with parents isn't uncommon for young people in their 20s, especially when the job market is poor. But now the slumping economy and the credit crunch are forcing some children to do so later in life _ even in middle age.
Financial planners report receiving many calls from parents seeking advice about taking in their grown children following divorces and layoffs.
Kim Foss Erickson, a financial planner in Roseville, Calif., north of Sacramento, said she has never seen older children, even those in their 50s, depending so much on their parents as in the last six months.
"This is not like, 'OK, my son just graduated from college and needs to move back in' type of thing," she said. "These are 40- and 50-year-old children of my clients that they're helping out."
Parents "jeopardize their financial freedom by continuing to subsidize their children," said Karin Maloney Stifler, a financial planner in Hudson, Ohio, and a board member of the Financial Planning Association. "We have a hard time saying no as a culture to our children, and they keep asking for more."
Bauer's parents won't take rent money or let her help much with groceries. She's trying to save several hundred dollars a month for a house while working as a meetings coordinator.
Bauer would prefer to live on her own, but without her parents' help would "probably be renting again and trying to stick minimal money in the bank," she said.
Shirley Smith, 80, said she and her husband didn't hesitate when they invited Bauer to return to their home in Eden, Wis. Buying groceries for another person isn't stretching her budget too much, she said.
"I've got three kids and any of them can come home if they want," she said.
But plenty of well-meaning parents must delay retirement or scale back their dreams because they have to help their children, Stifler said.
Some of Erickson's clients are giving as much as $50,000 at a time to their kids, many of whom have overextended themselves with big houses or lavish lifestyles. And the sliding economy might threaten their jobs.
Parents feel guilty if they don't offer help, but she warns them to be careful with their savings.
"I almost have to act like a financial therapist if you will," she said. "'Here is the line I'm drawing for you. That's fine. You can do up to this point, but at this point, now you're starting to erode your own wealth.'"
Anna Maggiore, 27, lost her job as a publicist in Los Angeles about three years ago and moved into her parents' house in Los Alamos, N.M.
She tried to find jobs, but nothing stuck, so she enrolled full-time at the College of Santa Fe to finish her bachelor's degree in business.
She figures her parents spend about $1,000 a month on her, including a car payment, car and health insurance, school and other costs. Her father is a retired nuclear physicist and her mother, a guidance counselor, will retire this spring. Now Maggiore is looking for work so she can supplement their income.
"It's kind of hitting me finally that I need to get out there and find a job," she said. "Even if it's just part-time just to help out however I can."
A new survey by the retiree-advocacy group AARP found that one-fourth of Generation Xers, those 28 to 39 years old, receive financial help from family and friends.
The online survey of nearly 1,800 people ages 19 to 39 also found 57 percent believed they were "financially independent." But in a separate question, 33 percent said they received financial support from family and friends.
Bauer was caught by surprise when her job at a resort in Kohler, Wis., was cut four years ago, one year after she got divorced. The single mother bounced around to several lesser-paying jobs, declared bankruptcy and even moved 60 miles south to Milwaukee.
Her daughter, now 12, moved in with Bauer's ex-husband near her hometown.
Bauer decided to move to be closer to her and in December she found a job with the Experimental Aircraft Association in nearby Oshkosh. She tried to buy a house but needed 5 percent down. She only had 2 percent. She's now saving for a down payment and hopes to have it as early as June.
Bauer said she gets along well with her parents and knows she'll never get to spend so much time with them again. But it hurts her ego to live at home.
"I've had people say to me, 'Oh God, I could never do that,'" she said. "But you take humble steps in order to move forward."
So very true. In fact in the book "The Millionaire Next Door" by two authors whose names I can't remember it was proved that the worst thing wealthy parents can do for their children is to lavish unconditional money on them. The wealthy parents who made their children work for their money had the most self-sufficient kids.
The opposite was true for the parents who doted on their kids, gave them gobs of money from an early age, set up their businesses, and made sure they didn't fail. The children of the latter never learned how to be self-sufficient. Many ended hoping for their wealthy parents to die early to get their money to squander as fast as they could spend it.
The same area has a large furniture factory that frequently advertises for workers.
Interesting. Really. What type of furniture factory is booming now? I thought they all moved to China.
Something is odd about that. One would think that lots of experience would be required in order to qualify as a planner or publicist. After all, you're advising other people how to do things. If that were the case, losing your job shouldn't be much of a problem since you could fall back on your wealth of experience and related skills to do something else. Maybe they were just unwilling to give up the glamour factor associated with the old job.
It is among the greatest economic catastophes and delusions we’ve ever created. “No-Fault” divorce laws are second only to abortion-on-demand rulings in our ongoing cultural meltdown. Aside from the obvious moral decay, we have accompanying economic and financial consequences which few are willing to acknowledge. Part of the reason we won’t do anything about illegals is that many are paying in to Social Security through withholding (even if it’s on a phony number) and it’s helping to replace the contributions of 40 million Americans who weren’t allowed to be born because of Roe v. Wade.
Nope. In fact there are a couple of stores in my area that carry ONLY American made furniture.
Good for them! Way to go!
Ashley Furniture of Arcadia, Wisconsin. The chicken processing plant is just down the road. Guess who works at the chicken processing plant? Let’s just say that the town of Arcadia which previously had a very large contingent of Poles now has a growing population of people who speak a different language. Hint: se habla espanol? And who aren’t afraid to take the nasty jobs the locals won’t.
Again, good for them!
And I would remind folks, that while American made products are more expensive, they are also of higher quality and longer lasting.
Are you saying that she should pay tax on it?
The donor already paid the income tax when he or she made the money in the first place.