 Don't use future money for past debt
|  Dear
Debt Adviser,
I was laid off from my job a year and a half ago. I got another
job but it doesn't pay as much. My husband and I are not able to
keep up with our debt now. We have talked with a counselor but unless
my husband finds a part-time job, there is no help. Neither one
of us is hardly able to work a second job as we are both in our
late fifties. We have used some of our retirement money to try to
keep up with our bills, and I have worked as much overtime at my
job as I can. What is your advice?
-- Dianne
 Dear
Dianne,
It's not a solution, but it might help to know that you are not
alone. A recent AARP Bulletin poll revealed that 53 percent of workers
age 40 and over, and 30 percent of retirees, see their current level
of debt as a problem. Many of these folks are one layoff or unexpected
large expense away from where you are today.
I want you to stop for a minute and consider what
you have been doing. When you accumulated debt, you were, in effect,
saying "I need money today, so I'll borrow it from tomorrow's
earnings." When the money from "tomorrow's earnings"
failed to materialize, you made the same mistake again, this time
with your retirement future. My first bit of advice is to stop using
money earmarked for a future purpose to settle past expenses. You
are going to need it later. Secondly, if you haven't stopped charging,
stop now.
From a practical standpoint, working overtime as long as it is available is smart. If you qualify for time and a half, that will help even more. If earning extra income proves to be too difficult, I suggest you generate some cash by cutting expenses.
For most of us, the bulk of our monthly expenses is for shelter and transportation. At your ages, you and your husband might consider downsizing your home. If you are a homeowner, then you could use a portion of the proceeds of the sale of your current home to pay off your debt.
Transportation is the next area where you might be
able to cut back. If you own two vehicles, consider downsizing or
selling one. Savings on insurance, gas and a possible loan payment
could add hundreds of dollars per month to be used for debt payments.
Getting from point A to point B does not require a new vehicle or
one with the most comfortable ride.
Another thing you said leads me to suggest an additional
type of solution for you: A little over a year ago my dad passed
away at 86. Sitting behind me at the wake were a row of 90-plus-year-old
guys he used to work out with who just kept saying that he was so
young. Diane, if your age is the reason you feel you, or your husband,
are not able to work a second job, then there might be more here
than meets the eye. Debt can be a depressing prospect, and it is
a short step from there to helplessness and hopelessness. This can
drain the energy out of an Energizer Bunny if you're not aware of
it.
I am in your age bracket, and I know I feel the best when I am
active and have something to look forward to. I'd suggest a second
round of credit counseling with a traditional credit counselor.
Tell the credit counselor you want a budgeting session and ask for
someone skilled in that area.
If none of the above recommendations work, you may
consider contacting a bankruptcy attorney. I would use this as a
last solution because I think you have something systemically wrong
with your finances and a bankruptcy might only resolve a symptom,
not the cause.
Good luck!
The Debt Adviser, Steve Bucci, is the president
of Money Management International Financial Education Foundation
and the author of "Credit
Repair Kit for Dummies." Visit MMI
for additional debt advice, or to ask a question of the Debt Adviser
go to the "Ask the
Experts" and select "debt" as the topic.
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