Share Your Tips, Suggestions, and Advice on Managing Debt

[AARPLynne]

For this segment, we are turning to you – our own community – to ask for your best tips, suggestions, and advice about ways that people approach and manage debt today. We’d also like to hear about the kinds of resources and tools that would help you reach your money and savings goals.

[f965030g]

With some guidance from my son (who is in the financial world) we set up a plan to make consistant payments to my equity loan. He also indicated that as long as I pay the current outstanding balance due on my credit card, there would be no interest charges. I still have a manageable balance though.

I also created a spreadsheet that has monthly tabs and daily columns. I enter scheduled debt payments and income on a daily basis. Since each column wraps forward (as do the months), I can see what my projected daily balance will be all the way to December.

[lynda10463]

The best way to manage debt is to not overspend.  Do not spend more than you have and avoid

creating debt.  Debt causes stress and that is even worse.  When one is free of debt they are

"free" in all respects.  And, much happier people.  If you can't afford something, postpone the purchase until you have the money in hand to pay for it.

[lynda10463]

The best way to address debt is not to have any. If you can't afford something... don't buy it.
And, you never have to think about it.... ever!
Enjoy life. Take a walk, eat healthy and keep smiling.

[lamebirdie]

Exactly! Well put!

[LindaM78799]

My parents were married during the Great Depression and I was raised as if it were still the Depression. I learned at an early age to be content with what we could afford at the time. That lesson has stuck with me throughout my life. When I received my first credit card, it was rarely a temptation to charge more than I knew I would be able to pay for when the bill arrived. The first thing I paid when I received my pay check was my tithe, then necessities followed. I have never been without food, clothing or shelter. I have worked hard for what I have & I've never had trouble sleeping due to worry about how to pay the bills. My husband & I live in a nice neighborhood in a home that is paid for. We drive 2nd hand cars & welcome the challenge to dress nicely in thrift store clothing. We cannot afford fancy vacations but that's okay because we live within our means. I'm sure our way is not the way for eveyone but it has served us well. Perhaps a way to begin managing debt is to focus for 1 month on necessities versus wants & see how much extra cash is available at the end of the month. Remember to start a savings plan for an emergency, even if it's only $10.00 a pay period. Investigate what pays the highest rate of interest but keep checking for new offers. Don't be afraid to move your money if it is not paying you top dollar for your investment. Educate yourself about finances & apply your knowledge. It's never too late & you'll be happy with the outcome.

[SebastianR717559]

Thanks. Sebastián Manuel Robiou Zapata.

[SebastianR717559]

Good afternoon. Yes there is one way on this subject. Is to count on AARP as members that we are and clients Seniors. Thank you very much. Because in this way we could share our tips, suggestions, and Advice on Maaging Debt helping each and every one of us matter. Thanks. Manny on behalf Dr. Robiou & Dr. Morales / Do It(Dental offices Intelligent terms). Dr. Sebastian Manuel Robiou Zapata(DDS) Doctor in Dental Surgery.

[sf9589]

IN REGARDS TO THE STIMULUS CHECKS........

This check that we are all hoping to get is an advance payment of 2020 federal income tax.  It is NOT a free ride.  Not one person in office mentioned that.  Look at your bank statement. The deposit memo reads IRS TAX PAYMENT.  Be careful how you spend it.  Also it WILL be considered taxable income for 2020.

[BarbaraZ314037]

It depends on how much debt.  My father always said, "if you can't afford it, don't buy it" and, in fact, only had one credit card, which he kept for emergencies (which was rarely used).

I guess, because of my upbringing, I always paid off my credit cards in full and on time, albeit I have about 8 major credit cards!  Because I got paid twice a month for 16 years, I found it easier to set aside one pay check for my rent, the other for food, medicine, or whatever, and what I truly needed but didn't have enough dollars for, I charged.

My system with those credit cards was, and still is, figure out when it is most likely you would have the cash to pay off the card (paychecks, Social Security Payments, a tax rebate, bonus, birthday, mother's/father's day gifts, etc.) and make sure you get your statements around that time.  The banks are very willing to change statement dates, just request it.  I only use 4 of those 8 cards at a time, one for food, or medicine;  one for on-line charges, clothing or household items like small appliances; one for doctors' bills, restaurants or take out, or entertainment. The 4th card I use to split with the third, should I need it.  The other 4 cards are the "exchange cards" I use when I "guesstimate" $100 spent on a card, I put it away and use another.

The one time I found myself owing a few thousand dollars, I opened a "no interest payment" for the longest one being offered, one or two years, and paid it off monthly ... no finance or service charges, and that way got out of debt.  Of course, if you bought a new car and are in debt, that can be a very different scenario!

[l832342m]

What is the procedur if a tax return is filed by a soc. sec. recipient while no tax is owed and no refund is due? In this case no bank routing # or account # is required on the return. Thanks for your answer. L.M.

[Brightpool]

Debt is such a broad subject. We have many forms of and reasons for debt. We go into debt for just about everything beyond daily expenses these days, and some even put daily expenses on loans through credit cards by paying only the minimum payment each month while shopping with the cards.

To keep this comment short, I'll address only credit card debt. I would hope that anybody nearing retirement is carrying very little or no credit card balances.

I'll start with cash advances. When you take out a cash advance from a credit card, you pay the advance fee, if any, and then pay the higher cash-rate interest every day from the time you take the money out. Any outstanding balance also accrues interest every day when you don't pay the full debt, including any interest accrued.

After you have taken a cash advance or have carried a balance, when you get your statement and you pay the full amount showing, you still haven't paid off the debt. The statement only includes interest up to the date when the credit card company figured the balance - the Statement Date. From that date until they credit your account with your next payment, they are still charging daily interest on the balance. You still owe them the interest accrued between the Statement Date and the day they receive and credit your payment.

At one point in my experience, I found out the hard way about the way this works. It took me about 3 months to pay off my debt by paying off the balance shown on my statements. Each statement included the interest up to the Statement Date, but didn't show accruals after that. After I paid the first statement, the interest was accruing only on interest that had started accruing between the Statement Date and when I paid it, so I ultimately paid interest on interest on interest on interest. They were still making money on their charges after I had paid my debt - my principal and interest through the first Statement Date.

If you want to pay off a credit card, you need to call the company and find out how much the balance will be when your payment clears their facility or just figure it yourself and pay more than the statement shows based on when your payment will clear. If you pay more than the principal plus interest when your payment clears, then the credit card company will apply the surplus toward the next statement or refund it to you on request.

One final tip: If you have balances on several loans, pay the minimums on all but the loan with the highest interest rate, and then pay all you can toward that highest-rate loan. When that one is paid off, hit the next highest-rate loan in turn, and do not decrease the amounts you pay on all your debt. For example, if you pay $2,000 per month on all your loans, then keep paying $2,000 per month on all your loans as you pay them down until you pay them all off.

My Dad used to say, "Paid for is a good color." He was usually talking about cars, but the statement applies to any debt. With plastic, that's the color we need to work toward no matter what credit cards we carry.

Stay well and enjoy!

[AngelinaDeGriz]

My credit card debt haunted me for decades. A bunch of bad decisions in my younger years and living below the poverty line caused me to build that debt buying food and gas. No matter what, I always made the minimum payment. Those balances would keep getting bigger when we were broke, but we always paid the minimum. The interest rates high but were so much better than those payday loan centers. It took over 30 years but I finally paid off those cards and came out the other side with great credit for both me and my husband. We worked hard and finally bought our own home. (We'd been living in cheep trailer parks for most that time.) We aren't ashamed to have family visit and hope to retire here.

How do you eat a whale? One bite at a time. Just keep eating at it!