Budget Basics
Help available to seniors strapped with growing credit card debt
BY
Janet Bigham Bernstel
Business Correspondent For The Fort Pierce Tribune
February 2, 2004
When Dollie Hawkins' employer went bankrupt
13 years ago, she had no idea it would be the last job she would hold. Despite a
prolonged search, no one in the Miami area seemed willing to hire a 70-year-old
nurse.
"They wouldn't say it, but no one wanted me because
of the age," said Hawkins, now 83. "I stopped fooling myself by looking because
I was just spending money I needed on car fare."
Widowed and unemployed with no retirement or pension
plan, she paid for emergencies as well as groceries, medicine and home repairs with
her credit card.
"I only get Social Security," said Hawkins. "Let's
just say I was living on this credit card."
Debt problems are tougher to avoid and solve for
seniors because, like Hawkins, they typically have no income.
According to SRI Consulting Business Intelligence
of California, outstanding credit card debt for people over 70 rose to $801 in 2002, compared with $147 in 1996.
It's not surprising. The bear market and low interest
rates for fixed-income investments have crushed portfolios that countless seniors
draw on for living expenses.
The Employee Benefit Research Institute reports
Social Security now makes up about 42 percent of elderly income and 90 percent for
those in the lowest income quarter.
Hawkins had more than $10,000 in credit card debt,
and her minimum monthly payment ate up a third of her Social Security check.
She eventually connected with the Consolidated Credit
Counseling Services of Fort Lauderdale and was able to reduce her monthly payments.
She also could have contacted some government agencies
such as the American Association of Homes and Services for the Aging -- http://www.aahsa.org.
Another is the National Council on the Aging -- http://www.ncoa.org -- whose programs
include the Benefits CheckUp, a free, confidential online service that lets seniors
know whether they're eligible for federal and state assistance programs.
Other tips for strapped seniors:
Home equity loans -- If you own your home, you possibly could tap into it
with a home equity loan or a home equity line of credit. Recent interest rates on
a $10,000 fixed-rate home equity loan averaged 6.84 percent and around 3.65 percent
for a $10,000 equity line of credit, according to BankRate.com. That's well below
the 14 percent of the average credit card.
Reverse mortgages
-- These are complex and take careful planning, but allow you to borrow on equity
and repay when you sell the house, move or the surviving spouse dies.
Property tax reduction
-- In some counties such as St. Lucie and Palm Beach (new for 2004), low-income homeowners over 65 may qualify for special property tax reductions. Contact your
property appraiser.
The information in this column is based on research
and the advice of financial experts, but is not intended as professional financial
advice.
