This is alarming to me…
WASHINGTON — Alice Smith thought she would live comfortably and quietly in her Hyattsville, Md., retirement community. Instead she’s fretfully dodging calls from her creditors.
She owes more than $10,000 to four credit-card companies and more than $7,000 to a credit union — in part, she said, because of spending to help her family.
She doesn’t give exact figures because she is unsure of them: With late fees and higher interest rates, the amount she owes has grown. Her income has not.
Through a pension and Social Security from her former job at a National Institutes of Health laboratory, she receives about $2,000 a month. Her rent is $955. She doesn’t know how she can ever pay down her debts. So she thinks she just might not.
“I am 80 years old,” she said, “and I don’t need this headache at my age.”
Older Americans are among the most vulnerable age group in this recession. They are carrying debt loads they can barely handle with their fixed incomes, dwindling retirement savings and, in many cases, devalued homes.
Average credit-card debt among low- and middle-income Americans 65 and older carrying a balance for more than three months reached $10,235, up 26 percent from 2005, according to a recently released study by the public-policy groupDemos. It was the fastest increase of any age group. Soon-to-be retirees are also struggling with debt.
It’s a surprising reversal of fortune for a generation that had been considered more financially responsible than younger generations.
Our parents didn’t have credit cards to teach us how to use them, or better yet, avoid using them. Therefore we’ve been doing the majority of credit management on our own, with the help of learning from others’ bad experiences. On a positive note, learning how to manage credit cards with positive results is and should be our goal.
There some circumstances that seniors are experiencing more often lately. A condo strata where a senior couple or individual lives may need extra levies and assessments due to unusual repair. This could force these residents to find credit by way of a mortgage, from their bank. This will put a strain on the fixed income and choices between eating and medication; it may be a reality and not what happens to somebody else.
So how can one be prepared for such hard times is the question? Start a savings and earning plan early, ie when your in your twenties. Let the interest, as nominal and even seemingly insignificant, build the principle and don’t be tempted to use to buy big ticket items. Use a budget and stick to it that includes an emergency component.
I writing this, not because I’ve done it 100% but when I stuck to it, it works.
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