10 Tips to Help Seniors Deal with Debt
Last Updated: November 13, 2017
Tips for Seniors:
1. Get a Part-Time Job
If you’ve got more credit card debt than you can count, it’s likely that you might be struggling to pay down even the minimum amount, let alone anything extra. If this scenario rings true for you, you need to find a way to lower your monthly outgoing or earn some extra money – there’s really no way around it.
2. Protect Your Finances
With all of our finances now online, is anyone really safe from hackers? In light of the recent Equifax Credit Breach, it’s important to protect your finances against fraud or abuse. So, if you are already trusting someone to shop for your groceries and pay your bills, it’d be a good idea to let this third-party monitor your bank account and credit activity, too.
By doing this, you can stop any suspicious activity before you become a victim of identity or credit card fraud. From an official stance point, you can give Power of Attorney to a person you trust to look after all of your finances if you are unable to do it yourself. This can be revoked at any time but it may benefit you greatly to have an extra pair of eyes protecting your finances.
3. Limit Your Credit Cards
Now that you’ve retired, your outgoings should have shrunk. So, that means you’ll need fewer credit card accounts. You can use one or two for purchases and make use of rewards like cash-back, but if you’ve got a lot of cards they can be hard to keep track of. Having too many credit cards is a recipe for racking up debt, so it’s better to have fewer accounts so you’ll be able to manage your money more easily. It’s also a good idea to use credit cards with lower interest rates and better perks.
It might work for you to use a credit card that offers a time-limited 0% APR rate on balance transfers. Then, you could put all of your existing credit card debt into one pile that you can manage.
4. Get Advice from a Trusted Debt Counselor
If you find yourself in need of advice, consult with a trusted debt counselor. It’ll help to get a second opinion from a professional, rather than making any rash decision. Additionally, they might be able to tell you about helpful resources that you didn’t know about. With many scams and con-artists advertising all over the internet and calling your home phone, it’s a good idea to talk to a third-party that you can actually trust.
If you think you would benefit from a trustworthy counselor, go to The National Foundation for Credit Counselors. To find someone in your area call (800) 388-2227 or visit their website www.nfcc.org. Instead of keeping yourself up at night with worry, ask for guidance.
5. Avoid Debt-Relief Companies and Home Equity Loans
While Home Equity Loans can seem like a quick fix, you’re more than likely to be left out-of-pocket, or even on the street if things turn sour. Don’t allow temptation to use this loan to pay off your credit cards, it won’t fix the problem, it’ll just turn your biggest asset into more debt. It’s also a bad idea to use a Home Equity Loan for material things, like vacations, cars, and appliances.
Similarly, it pays to avoid debt-relief companies that promise to lower your credit card bills and monthly payments. Many of these ‘quick-fixes’ are actually scams that leave desperate people in even worse financial shape. These scammers will charge high fees and then take your money. There are legitimate services out there though, but they’ll never ask you to pay up-front, so be wary.
6. Bankruptcy?
Maybe you’ve lost all hope of paying off your bills and making repayments. If so, declaring bankruptcy could be the best of a bunch of bad options. By filing for Chapter 7 bankruptcy, any medical or healthcare debts will disappear, while your retirement funds are likely to be safe. If you’ve got a 401(k), 403(b), 457(b) or other plans your money cannot be touched by creditors. The same goes for your Social Security, but you’ll need to hold it in a separate account to stop it being taken.
However, if it’s mortgage, car payments, or student loans that are plaguing you, you’ll need to file for Chapter 13 instead. With this type of bankruptcy, you’ll pay back creditors, including medical providers, over a long time. But, this isn’t a light decision to make, so please talk to a trusted debt counselor to find out the best course of action for you.
7. Investigate Your Parents Financial Situation
If you’re the child of a senior with some possible financial problems, you probably want to help your parents in any way possible. So, be ready to step in and investigate their finances, particularly if they are elderly. While it might be too early to get Power of Attorney, it can help to know your way around their finances for later in life, when this task will fall to you.
However, know that admitting to financial mistakes or debt is often a difficult and embarrassing thing to do. Your parents might be getting a little stubborn in their old age, and they might try to hide their debt from you. So, a little persistence on your part can help. By holding monthly or quarterly meetings to go over their finances and expenses, you’ll get a better scope of the situation.
8. Don’t Co-Sign on Their Credit Cards
Never co-sign on any type of loan or credit card that your parent(s) might want to acquire. The reason that they need a co-signer in the first place is that they are not a good credit risk, or they have too much debt already. It’s unnecessary to put yourself in this position because if they die or default you will become the sole party that is responsible for repayments, any late-fees or collection charges that they have incurred.
If they already have existing cards or loans taken out in their own name, these debts won’t transfer to you when they die so don’t make future problems for yourself. Especially if you’ve already got some debts of your own. So, don’t risk your own credit-rating, no matter how much you’d like to help out your parents.
9. Seek Help from Outside Resources
There often better ways to help your parents than signing-off on their loans or loaning them your own money, you just might need a little help to find them. A great place to start is the many outside resources that you can find from local governments, senior centers, churches and other groups.
There are many non-profits and agencies out there that can help seniors with financial relief like grants, and other services. Some of these include prescription drug assistance, transport, subsidized bills and even hot meals. To find these helpful resources a quick google search can turn up some good results. Additionally, get your siblings involved, as more often than not you can find these services in your local area by word of mouth.
10. Take Control
It can be incredibly upsetting to see your parents start to deteriorate, but pay attention to the signs. If you’re noticing memory loss they soon might not be able to look after their own finances. Additionally, they might become an easy target for financial scams – something you can avoid by offering assistance.
Eventually, you’ll need to become Power of Attorney. This might seem like a big decision but it can be the best course of action to prevent your parents from making bad decisions or falling victim to scams. By taking on this extra responsibility, you’ll be in charge of their finances. But don’t worry, any debts or loans won’t be yours to pay after they die. You’ll simply act as a mediator, without sacrificing any of your own wealth.