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A reader wants to know how to survive "the sandwich" — without evicting his mother-in-law.

3 minute read

Question: My wife and I just turned 37. We have only $12,000 saved for retirement, which is in a 401(k) at the school where my wife works. I’m an independent auto mechanic, so I don’t have one of those.

Our son graduates from high school in a couple years, and we don’t have much saved for his college. Meanwhile, my wife’s dad died last year and her mother is living with us. (No mother-in-law jokes here, she’s a nice woman and a wicked cook.)

My wife still has around $18,000 in student loans to pay off, and we still have $11,800 on our credit cards (like, seven of them) from a bad patch I went through when I couldn’t find work.

So my question is simple but hard: What do we save for first?

Do we sock money away for our son’s college? Pay down those student loans? Pay off my credit cards? Or kick out my mother in law? Kidding about that last one. Seriously, my wife would kill me.

— Jon in Minnesota

Howard Dvorkin CPA answers…

Welcome, Jon, to the sandwich generation. That term describes middle-aged Americans who have to pay to raise their children and care for their parents. As you’re learning, it adds a lot of stress to a family’s budget.

In fact, I’ve coined the term hamburger generation to describe your situation more precisely: You’re not only sandwiched between competing expenses, you’ve been ground up by debts of your own.

Here’s what I’d recommend…

1. Consolidate or even get rid of those student loans

You mention that your wife works at a school. She just might qualify for what’s called student loan forgiveness. This concept comes from the federal government, and like anything governmental, there are hoops to jump through.

Even if that doesn’t work, the government has other programs that can greatly reduce your wife’s monthly payments. They have cumbersome names like the income-contingent repayment program, but Debt.com can help you figure out which one will save you the most.

Bottom line: The federal government offers help with student loans, so take advantage of it.

2. Consolidate your credit card debt (maybe)

How would you like to reduce your total credit card payments by up to 30 or even 50 percent? If you’re paying late fees, how about getting them to stop? If that sounds to good to be true, it’s not. It’s called credit card debt consolidation. All your credit card balances are rolled into one, and through using a debt management program, you can save big.

How do you know if a DMP (as it’s called) is right for you? Through a painless and enlightening process called credit counseling. Essentially, a certified professional will review your income and expenses, study your debt situation, and make recommendations. Best of all, this consultation is free.

Bottom line: When you have five figures of credit card debt on more than five cards, you probably qualify for some amazing savings.

3. After you’ve paid down debt…

Because the interest rates you’re pay on your debts are most likely higher than the interest rates you’re earning in a retirement account, you want to take care of steps one and two first. Then you want to really pare down your expenses. Again, credit counseling can help you find some dollars you probably didn’t know you have.

As for your son’s college, I answered a similar question a few months ago: Do I NEED to Go To College? Not everyone does, and many successful people have attended community college and lived at home, saving money until they could transfer to a university.

Bottom line: You and your wife can make this work, Jon, and you don’t have to evict your mother-in-law!

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC