Many people are under the impression that debt problems only affect those who are struggling to raise a family or who are young and still not at their full earning capacity but that is far from being the case. As the population ages and reaches retirement age – by 2015 this is projected to be around 31% of the working population – problems with debt are likely to rise in this sector, simply by the law of averages. As most people who retire do not have any expectations of any increases in income, beyond index linked ones in some situations, so any debt problems people have as they age are likely to be serious ones.
Don’t ignore it
The same advice goes for those on a pension as for those who are in work or seeking work. Things don’t go away just because they are unpalatable and debts which are not sorted out can only get worse. Many of the options available to younger people, such as remortgages, loans (including payday loans) and other temporary fixes are often not readily available to the older person and so they may struggle for a long while before seeking help. There is an element of pride involved – people over sixty have often been the main ‘bank of mum and dad’ and they now feel awkward having to refuse to help children because of lack of funds or even approach them for help.
Benefits are out there
Many pensioners struggle to make ends meet despite the fact that there are many benefits out there which, whilst they might not solve the problem, will certainly help make the money go round. Depending on where the older person is living, it might be possible to do without a car. With free bus passes available to those on a pension, it is easy to see that the savings can be immense. Travel goes from costing a minimum of £1000 a year (including insurance, road tax and petrol but not one off servicing and MOT) to absolutely nothing. If there is a car which is owned outright in the mix, then there could be anything upwards of £3-7k or even more becoming available towards debt reduction. If this is a possible solution, then this is best put towards high interest debts such as credit cards and unsecured loans. Cheaper borrowing such as mortgages should be at the bottom of the list when it comes to paying things off.
Don’t save for a rainy day
If the rainy day is already here, don’t bother trying to save for the future. Savings accounts pay very little and loans are pricey so it makes more sense to plough spare cash into repayments rather than stashing it in a low-interest bearing account. Sometimes dealing with debt after retirement can mean turning everything a person has always believed on its head because saving was always inculcated in years when interest rates were high. Dissolve Debt are always available to talk over debt problems and are non-judgmental and helpful. Getting in touch costs nothing and it is the end of worry and the start of feeling good about money again.