AARP’s five tips to help you manage debt
AARP Nevada Director of Communications
With a bleak economy limiting our earning power as the cost of living continues to rise; managing our finances and controlling debt has become an increasing challenge. Nevadans of all ages are struggling with debt, trying to avoid foreclosure or living leaner than in years’ past.
While there is no magic wand that can be waved to make our financial troubles disappear, there are ways to reduce your burdens. AARP has several tips to help you stay in your home, manage your consumer debt and avoid financial products that may do more harm than good.
Tip 1: Try to renegotiate your mortgage and explore mortgage programs.
Renegotiating your mortgage might not seem possible in places like Las Vegas, given the number of foreclosed home. However, there are resources available to help Nevadans to keep their homes. The state of Nevada has a great website (www.foreclosurehelp.nv.gov) which counsels Nevadans on steps to prevent foreclosure and how to talk to their lender and other tips. The best thing you can do for yourself is to learn as much information as possible so that you’ll understand your rights and the issues before you’re in a tight spot.
There are two programs available nationally that also might help – the Making Home Affordable Program and the Mortgage Modification Program.
The Making Home Affordable Program allows eligible homeowners to refinance. This is designed for homeowners who are current on their mortgage, but can’t refinance into a more affordable interest rate because the value of their home has dropped. Likewise, the Mortgage Modification Program is designed to help people at risk of foreclosure because of serious hardship, such as job loss, high health care costs or a significant increase in mortgage payments. Contact your mortgage company to see if you are eligible for either of these programs. More details are available at http://www.aarp.org/money/credit-loans-debt/info-03-2009/_making_home_affordable_plan_could_help_millions_of_troubled_homeowners.html
Tip 2: Negotiate with your credit card company.
Sometimes, one easy phone call is all it takes to get the interest rate on a credit card lowered. In other cases, you may have to be far more persistent and make multiple calls over a period of time, and speak to multiple representatives to achieve what you want – whether it’s a lower rate, or having late fees or over-the-limit charges eliminated. Visit http://www.aarp.org/money/credit-loans-debt/info-08-2011/negotiating-credit-card-companies.html for help creating a game plan.
Tip 3: Avoid high interest loans.
Avoid payday loans and rapid-refund-anticipation loans (RALs). The reality is that these short-term loans can have extremely high interest rates (APRS more than 400 percent) and can lead to a never-ending cycle of debt. A better strategy is to look into a home equity line of credit or another loan from your bank. Better yet, try to establish an emergency savings fund that you can turn to; if you start small and stick to it, it will grow over time.
Tip 4: Learn about new credit rules.
Consumer credit has typically been easy to obtain. A new law, however, now offers consumers a greater level of protection, making it more difficult for banks and lenders to charge exorbitant fees. Understanding the new rules, your credit card interest rate and fees, and the different types of consumer debt can help you stay in control of your finances. For more information, visit http://www.aarp.org/money/credit-loans-debt/info-08-2009/new_credit_card_rules_kick_in_.html
Tip 5: Don’t pay full price for consumer items.
Whether it’s food, cars, furniture, clothes, entertainment or over-the-counter medicine – nearly everything can be had for less than full price. Clip coupons, shop sales, learn the best value days at the local grocery story (some have double points, others have one day where both weeks’ sale prices are honored), become a frugal shopper and you could save thousands on the basics over a years’ time. AARP can help too. In addition to great savings with an AARP membership card; we offer free ideas for anyone to save money every week on our website, http://www.aarp.org/money/budgeting-saving/.
Visit http://www.aarp.org/orderfinancialpubs to find tip sheets and other materials to help you reduce your debt and cut back on expenses. Remember, you’re not alone and there are resources to help.