Seniors who use debt consolidation services are even more likely to regret it than younger borrowers.
Individuals who have reached retirement age without sufficient savings and are living on a fixed income are vulnerable to various ploys that promise them security, but often leave them living out their lives in poverty.
"Probably the very best thing my earnings
have given me - is absense of worry.
I have not forgotten what it feels like to worry
whether you'll have enough to pay the bills.
Not to have to think about that any more
is the biggest luxury in the world.”
- J.K. Rowling |
Home refinancing schemes, senior credit cards and reverse mortgages are other potential financial traps for older people.
Here are some things older citizens should watch for when considering these various products:
- Debt consolidation services - Debt consolidation often costs you more in the long run, and it continues your indebtedness further into the future because it doesn't address the behavior that got you here in the first place.
There are also many scams out there, some of which are specifically targeting seniors.
- Home refinancing schemes - leaves you paying off a mortgage for many of your retirement years and makes you vulnerable to losing your home if you can't make the payments for some reason.
- Senior credit cards - unless you pay the balance off every month and collect the dividends and rewards, credit cards are usually a bad idea if you are living on a fixed income. Seniors frequently depend on these cards for "emergency money," but they still have to be paid back, and on a fixed income that may be difficult.
- Reverse mortgages - reviews are mixed here. Reverse mortgages can provide additional income for seniors. The problem with them is that people are living longer and you could very easily outlive your equity and run out of money. We consider the reverse mortgage to be an extremely risky product and we do NOT recommend it.
In addition, the interest on your mortgage is capitalized every year, so the outstanding debt keeps getting higher and higher. If you do decide on obtaining a reverse mortgage, contact the Department of Housing and Urban Development (HUD) website or call (202) 708-1112 for information and a list of approved lenders in your area.
Sadly, too many seniors are turning to debt consolidation services because they don't know what else to do.
Medical expenses and rising cost of living can quickly deplete your savings and any cushion you had in your budget when you're living on a fixed income.
When you've crunched every bit of excess out of your budget, it's easy to feel hopeless and stuck in a situation you can't get out of. The key is to look at your resources and see what you do have that you can use to improve your financial situation:
- Do you have things you can sell?
- Can your kids lend a hand?
- What can you do to earn some money?
Avoiding debt consolidation services is even more important for seniors than for younger people. They have more to lose, and fewer resources to leverage when a consolidation scheme goes wrong.
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"Who goes a-borrowing goeth a-sorrowing."
- Thomas Tusser |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
