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Gilroy
November 24, 2024

Get Out of

W hen most people think about credit card debt, they picture
struggling college students and young couples trying to make ends
meet. While the younger generation is still the worst at managing
credit card debt, retirees and baby boomers have become the fastest
growing segment with debt problems.
W hen most people think about credit card debt, they picture struggling college students and young couples trying to make ends meet. While the younger generation is still the worst at managing credit card debt, retirees and baby boomers have become the fastest growing segment with debt problems.

Everyone wants to live a comfortable retirement, free from the struggle of credit card debt. If you find yourself in a situation where your debt is unmanageable, the following are four debt-management strategies that can help you get out of the red.

1. Look into a reverse mortgage. This special type of loan converts home equity into cash for homeowners age 62 and older. The money can be received on a monthly basis, as a lump sum payment or can be used as a credit line. The loan does not have to be paid back during the homeowner’s lifetime, so long as they continue to live in the home. As an added benefit, the loan is not taxable and does not affect Social Security or Medicare benefits.

2. Give yourself a loan with your life insurance policy. A cash-surrender loan is a viable option for people holding a permanent life insurance policy with cash value. A life insurance policy has an amount of cash available should the policy be canceled before the benefits become payable. A policyholder can take up to 96 percent of the cash value available in the form of a loan that does not have to be paid back.

3. Consolidate your credit cards. There are many consolidation loans available that offer lower interest rates and allow you to lower your payments or apply more toward the principal. Counselors are available to help you choose the best option to repair your credit and pay off your debt faster.

4. Think twice before tapping into your savings. If you are fortunate to still have money in savings, it may not be wise to use those funds to pay off credit card debt. If your money is in a long-term savings vehicle such as an annuity or CD, you may be better off letting that money grow at a higher interest rate. Although, if your credit cards are accruing interest at a higher rate than what you are earning, it may make more sense to use a portion of your savings toward your debt. Just remember, you should always have some emergency money on hand.

Once your credit card debt is under control, your number one concern should be saving for retirement. It’s never too early or too late to start. If retirement seems out of your grasp because of credit card debt, it might help to talk with a professional who can give you advice specific to your situation. He or she can help you develop a long-term savings plan so you can enjoy your golden years.

Eric Heckman is president of Heckman Financial & Ins. Contact him at www.WealthCreator.com or 297-9800.

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