The next bailout
says Sue Shellenbarger in
today's WSJ is your adult children. Sorry Sue. Hate to break the bad news, but Americans have already done that. Boomers were bailed by their parents, and the boom-lets and boom-lights even more so by their boomer parents. No one in America is allowed to have a living standard less wonderful than their parents' it seems. That was a constant riff in the "this economy" theme we've heard the past seven years, and probably before that, because Democrats didn't invent that, I think Republicans did.
My husband's parents (who were younger than mine) didn't help us much--all their disposable income that wasn't needed for the basics like housing, food, clothing went for alcohol, cigarettes and nice vacations. My husband during one stint in college lived with the parents of his best friend, not his own parents. This dear woman even fed him and bought him a winter coat. But my parents certainly chipped in. A lot. It was sort of a family tradition. My great-grandfather had helped my maternal grandmother, and on the other side, my great-grandmother had helped Dad buy his first home. Dad provided for my college education, of course, at least until I was married, then it became a loan to be paid back (and I did). He gave us $1,000 for our first home (a duplex) which didn't have to be paid back, and then took a second mortgage for us on his own savings account (that was paid back). He also sold us my mother's car, which we made payments on. But still, for the 1960s when we had no credit of our own, that was a big help. The irony is we actually inherited more from my in-laws, who'd never given us a dime, than my own parents who had so carefully managed their own resources. That really doesn't matter, since we're grateful to both families not only for their love, but their limited resources the government didn't tax away, so that I could retire at 60 instead of 65.
For our daughter, things were fairly straight forward--we had purchased stock for her (Wendy's) that had recovered from the bust in the 80s and reinvested the dividends (and hid it from her in her late teen years). We'd also taken out a life insurance policy after she left home and it had some value when she cashed it in. The money we had "sheltered" for her when she was very young designated for college was long gone by the time she wanted to buy a house, because we'd made the mistake of using her SS# which meant at 18 she had control, not us. That money went to buy a car to replace the one wrecked by a drunk driver who hit her while she was waiting at a stop light.
For our son we had to be a bit more creative to be "fair," and we won't know for years if we helped or hurt him. His stock tanked and was worthless, and we couldn't get insurance for him. His childhood college account also went for other things that young adulthood required and he had access by then. So after his divorce we purchased a home for him, a wonderful place where he could garden and run his big dog. We used our assets to qualify for a low interest ARM, and he made all the payments. He now owns it (with the bank) and we gave him the equity that he had built up by faithfully paying the mortgage and paying all the expenses for four years.
Of course, we hadn't counted on the government so badly managing the mortgage market with the same good intentions we had that it would bring down the economy. We knew some of the places we looked at with him in 2004 had bizarre financing options (NINJA), but although tempted, we took the "conservative" route, and took on the debt ourselves after years of having no debt at all except for a few months of a "bridge loan" when we bought our condo. We did far more than our parents had done for us, but still within the family tradition of the 19th and 20th centuries being the financial safety net for adult children. However, we live in a two-income household society, and try as I might to interfere, he hasn't found a wife to help with the cost of living and a mortgage. So being a brand new home owner in a neighborhood where many foreclosure signs are popping up may be tough if the credit market tumbles even further and affects his job.
But just like the social engineers in Washington, we believed home ownership was right and "a right" for all Americans, especially our children. It may take years to straighten all this out, and there could be more bailing in our immediate future.
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