Friday, July 29, 2005

Savingcents for Seniors

A recent article out of Texarkana,Texas underscores the need for people of all ages to be aware of household finances and the need for effective estate planning.

Unfortunate circumstances like an unexpected death in the family can create a significant strain on personal finances unless proper insurance and estate planning has been put in place.

A key component of an effective estate plan is sharing financial information with executors and surviving spouse to ensure that location of all Insurance Policies, Investments and Savings accounts are known so that there is a smooth transition of finances.

Given Recent demutulization or Insurance Companies, there are a number of unclaimed term life insurance policies that may have been purchased decades ago and worth several thousand dollars yet nobody in the family is aware that they exist.

Never too late to make wise financial choices
Thursday, July 28, 2005 8:56 AM CDT

EDITOR'S NOTE: Jessica is a pseudonym used to protect privacy.

Texarkana Gazette

For Jessica, 60, of Texarkana, Ark., marriage was about her children and her family, not managing money matters.

After her husband died, she was baptized by fire in a river of credit card debt.

Jessica moved back home to Texarkana in 1994 and into her mother's home. When her mother died and she was left in that home alone, updates and repairs were needed. And because some of her late husband's insurance was unavailable immediately, she relied on credit cards.

While the credit cards helped her to make the repairs to the home, they did not help her financial situation because she did not grasp the damage high interest rates could do to her credit.

"I had no idea the bills would be so much because we had never charged that much and we had always paid them off within the month," she said. "The only time we paid on something for several months was when we were paying off a piece of furniture or something. I had not idea about interest rates. I was clueless."

Jessica's story is not uncommon among seniors. Although many people generally consider credit card problems to be associated with college-age people, Baby Boomers have racked up their share of debt as well, said Joanne Haney, a certified consumer credit counselor for the Consumer Credit Counseling Service of North Central Texas Inc.

In many cases, seniors, like college students or anyone else with deep credit problems, begin using credit cards because of the necessity and convenience and are in trouble before they know it, she said. When people come to her for financial help, they sometimes are accruing 28 percent interest on credit cards. With those rates, paying off the debt is highly unlikely even for someone making a committed effort to clear their debt.

In one recent case, Haney helped a man plan a clear track of paying 1 percent interest rates as compared to 28 percent interest rates. In another case, the interest rates were reduced 10 points, from 20 to 10 percent.

"We don't negotiate each debt with the credit card companies because we know the policies for each company," Haney said. "What we do is help the individual make a living expense budget with what they need each month-utilities, mortgage, prescriptions-and then we help them set guidelines on what they can pay on their credit card debts."

In many cases, an overall goal to have the credit card debts paid will be made, such as a five-year plan, she said.

"If people agree to make a payment of the same amount each month, the finance company will work with that," she said.

In addition to the statements from the companies that show payments are being made, seniors also receive paperwork from the Consumer Credit Counseling Service indicating the progress that is being made. This helps people stay focused and feel positive about the inroads they are making on their credit, she said.

There are many dishonest companies that will claim to have the best interests of seniors in mind when they call the home or are shown on a commercial on television, but Haney cautions people to always be leery about a company if it wants to talk about large amounts of money from the beginning.

Recently she received a call from a woman who had discovered a Florida-based company on the Internet that claimed to specialize in helping to pay off creditors. However, although the woman sent the company $900, no bills show any difference in the amounts.

Although the woman had checked with the Better Business Bureau to make sure there were no reports on the company, she forgot the most important thing-to listen to her gut instinct, Haney said.

"When she called, she told me it all sounded too good to be true," Haney said.

If seniors believe they have been taken advantage of by a service, they should always follow up with a report on the incident even if they feel foolish about it happening, she said. The report could save someone else from going through a similar ordeal.

Reports such as these can be made to the Federal Trade Commission and the state's attorney general's office, she said.


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