The Sandwich Generation Is Crushed By Debt From Many Sides
The sandwich generation; a group that is financially responsible for both their aging parents and young children.
It’s a somewhat invisible generation because not many people know about it or understand the struggle of being in this group.
However, even if most people don’t acknowledge it, the struggles and challenges they face are absolutely real.
With crushing debt caused by both sides and difficulties in creating a stable financial situation, it can be extremely challenging and often frustrating to juggle so many responsibilities.
On one side of the sandwich, this generation has to cover the costs of raising a child.
The Canadian publication MoneySense estimated the costs of raising a child from birth to the age of 18 to be a staggering $243,656–and this was almost a decade ago.
This cost covers everything including housing, child care, transportation, clothing and so on.
On the other side, supporting your parents financially can be extremely daunting.
Whether it’s medical costs, financial responsibilities or even debts, the list goes on.
Taking on your responsibilities in the sandwich generation
It’s extremely important that you face your responsibilities as part of the sandwich generation.
If you ignore these issues, it can land you in serious debt which can be difficult to overcome.
First, identify the exact causes of debt.
Examine your income and compare it to your expenses, and use proper budgeting strategies to find out ways to save money and live debt-free despite your financial obligations.
If there are areas where you can avoid spending too much money, then you should work on establishing frugal practices to stay out of debt.
By creating a list of financial obligations, you’ll have a much easier time calculating how much money you actually have after you receive your paycheck.
If you find that your financial responsibilities are too much to handle, then we highly suggest that you look for debt relief options on unsecured sources such as a personal loan.
However, if any of your expenses are directly related to your family, then you may need to take different solutions to solve your financial worries.
Is filing for bankruptcy an option?
Filing for bankruptcy is always an option to help relieve you of your debts.
However, do keep in mind that you’ll have to forfeit some of your assets.
The exact value that you forfeit will depend on the province that you live in.
Thankfully, most provinces will allow you to keep most of your belongings that are used for your own wellbeing.
This even includes work-related equipment, your car and even your home.
Unfortunately, filing for bankruptcy doesn’t come without caveats.
For instance, you’ll have a mark on your credit report for up to seven years.
This will make it difficult for you to seek financial assistance in the future and could harm your future mortgage plans.
In addition, you’ll have limited credit options with low-interest rates, which could potentially drag you back into a life of debt.
Being a part of the sandwich generation and filing for bankruptcy can severely limit your financial options.
While it’s certainly a fantastic option to help you relieve severe debt, we highly suggest that you speak with a Licensed Insolvency Trustee to learn more about the process and if there are viable alternatives.
Understanding who is in debt
One mistake that the sandwich generation makes is wrongly assuming that the debt is in their name.
In some cases, debts that your parents have accumulated will be merged with your own, especially if you feel financially responsible for helping them clear their debts.
It’s important to understand if your parents are the ones that owe the debt.
If that’s the case, then you may be able to file for bankruptcy or seek debt relief options to help them without affecting your own financial situation.
You’ll have to sit down with your parents and discuss their debts while also consulting a Licensed Insolvency Trustee.
This will help you understand their debt situation and if there are viable alternatives to claiming bankruptcy.
This could include a consumer proposal, debt settlement plans or even unlocking equity from their existing home.
If you’ve successfully separated the debts in our family, this could open up many options when it comes to settling or paying back debt.
For example, you could become a guarantor for a debt consolidation loan, or your parents could consider filing for bankruptcy if there’s no other option that seems feasible.
This can happen without negatively affecting your own financial situation as well, making it easier on the sandwich generation.
Every family’s problems are unique
We’ve spoken a lot about parents, but what about your children?
There are a number of different expenses related to your child, and many of them can catch you off guard.
For example, if you’re planning to pay for your child’s college tuition, then you might also need to consider paying for their rental fees if they’re moving out, buying furniture for them and even some study equipment such as a laptop.
However, many of these expenses can actually be handled by your child with their own lines of credit.
Student loans can be a powerful way to seek funding for your child, but you need to remember that debt is a debt.
The last thing you want is to drown your child in debt due to poor financial decisions, and you certainly don’t want them to rely on a line of credit at such a young age.
As such, we suggest sitting down with your child to speak to them about debts and credit to ensure that they remain free from debt during their college years.
In addition, you could always request that your child works for their expenses, such as taking up a summer job.
If you’d like to learn more about dealing with crushing debt as part of the sandwich generation, don’t hesitate to contact us today to speak to one of our licensed trustees.