Nana bailed me out of debt — and I’m still ashamed

My grandmother regularly slipped me money — $10 here, $20 there — today in an envelope, tomorrow right into my palm. I was age 10 or 11, back in the early 1960s, so I had no complaints. Soon I was hooked, almost for life. 

All through high school, college and my first job, and then on through my marriage and the birth of our two children, my nana kept plying me payouts, now $100 a pop, then more like $1,000.

I never had to ask for a cent. She would just extend her hand with some fresh currency, or a check would materialize magically in my mailbox.

I was already earning a living, more or less, and never really needed the supplementary funds. But hey, the infusions came in handy, and I saw no reason to say no.

Grandparents helping grandchildren financially — and generously — is nothing new or unusual. Almost all lend a hand on an ongoing basis, whether contributing to savings accounts, setting up trusts or defraying the costs of college tuition, medical bills and other expenses. Indeed, 94% of grandparents chip in, doing so with an average of $2,562 a year for each grandchild, according to a 2019 survey by the American Association of Retired Persons.

But in 1989 my finances went off the deep end. I had dug myself into debt by falling behind on back taxes, federal, state and city. I was in the hole for about $12,000. 

The fault belonged to nobody but me. By then I’d lived as a freelancer for about eight years and had started coasting. I’d earned about half as much income as the previous year and was now unable to fulfill my civic obligations. 

For the next eight years, as if submerging into quicksand, I sank deeper into debt. My wife and I watched our pennies. I took a part-time job, then finally went full-time. I worked six days a week and soon earned twice as much money as ever before. 

Still, penalties and late fees on my tax burden expanded exponentially. They took a toll, onerously so, like an undertow at the ocean shoreline that yanks you down into the muddy sand underfoot, and my debt more than quadrupled. At age 45, I now owed more than $50,000.

All I could manage to do on this most slippery of slopes was to pay down the debt on my debt. A day never passed without me fully aware that we now lived our lives squarely behind the eight ball. It looked like it could take me the rest of my life, however long that might be, to break even, if ever. 

Then in 1997, we struck a deal with the Internal Revenue Service, thanks to an arrangement called an Offer In Compromise. Taxpayers who demonstrate a clear inability to pay the full freight owed anytime soon can be negotiated as a recourse. The rationale is the IRS would rather have some of your money now rather than wait to get all of it much later. The amount would be $15,000, less than one-third of the debt owed and only $3,000 more than the original debt incurred eight years earlier. 

My grandmother paid it. And that was that.

Grandparents typically pitch in financially while grandchildren are young and then into early adulthood. But some research suggests that the older the grandchild, the less likely such support is to be given as generously and frequently. Grandparents may step into the breach if adult children are unemployed, receiving low wages or hit with an unexpected and expensive hardship.

Talk about turning points. In the 28 years since, I pulled a 180. I developed a more robust work ethic and was employed at global professional services firms, rising to senior management.

I always pay my taxes on time, too, along with all our other fiscal obligations, strictly avoiding any kind of debt. In due course, I rebuilt my credit rating. We even managed to save a few shekels and paid cash for our house in Italy. 

Nothing like a close call, a brush with doom, to scare you into staying on the straight and narrow. I learned my lesson, and then some.

Offering a lifeline can, and often does, strengthen the bonds between grandparents and adult grandchildren. Lowering financial stress generally promotes a sense of security. But getting help in your 30s, 40s and beyond can come at a price. It can foster guilt and create a dependency that discourages, delays and even deters a grandchild from developing an independent life.

Only now, all this time later, do I recognize that being spared the disgrace of bankruptcy and insolvency was a blessing and a curse. Getting a handout ate into my pride, my sense of independence and my self-respect. To this day, I feel embarrassed and ashamed. 

I let myself play the victim twice — first of the debt itself, then of the life preserver tossed to bring me back onboard. I’m still second-guessing my decision to accept the charity. Could I have saved myself? Should I have solved my own problem with a free-market self-correction?

I’ll never know. It’s probably just as well. And it no longer really matters.

Besides, as banks, airlines and automakers well know — whether it’s JPMorgan Chase, Delta or General Motors — bailouts are nothing new. I, too, was once the beneficiary of a bailout. Only mine just happened to come from my grandmother.