Today’s financial worries hit home…
The harsh economic realities of recent years have caused many families to struggle financially. There are several areas in which a family can get into trouble. The following are 5 common areas of distress, and realistic solutions for each.
After the recent economic crisis, many families found themselves with an underwater mortgage. Basically, they owed more on their house than it was worth. The first step, especially if a homeowner wants to stay in the home, is to get the house reappraised.
If the value of the home has gone down, an owner may be able to pay lower property taxes. A loan modification in which the lender agrees to lower payments and interest rates is another option if the homeowner qualifies.
Excessive Credit Card Debt
The overuse of credit cards is a trap many families fall into when there isn’t enough cash to cover monthly expenses. Most financial experts recommend consolidating credit card debt into one low-interest payment. If it’s not possible to consolidate, pay off the lowest balances first.
Finally, cut up all credit cards except one to keep for emergencies. Keep the card that you’ve had the longest – unless it’s highest in interest – because FICO scores are partially determined by length of credit history. By closing out the accounts of the newer cards, this basically makes a person’s credit history age older.
We constantly hear horror stories about students graduating with massive amounts of debt. When a student is planning for college, seeking out grants, scholarships, and financial aid should be the first priority. Taking out student loans should always be a last resort. Even working part time and taking a lighter course load is an option.
If a family member already owes thousands in student loans, deferring the loan is a possibility. Reasons for deferments include attending school part time, being in the military, and unemployment. A loan in deferment is basically frozen, meaning not only are the payments put off for a specified time, but interest doesn’t accumulate. Another option is obtaining a forbearance, which has elements similar to a deferment. The main difference is that the interest process still continues with a forbearance.
Overwhelming Health Costs
Debt due to a health crisis, or having inadequate health coverage is a problem many families face. Many employers are only offering catastrophic health insurance or policies that have 80/20 payment plans. This means a major illness or accident could send a family into debt trying to pay the 20 percent. If you’re one of those who have limited insurance coverage you might want to consider obtaining supplemental health insurance. If your family already has several unpaid medical bills there are some options.
According to CreditCards.com, the first step should be to negotiate the bill with providers. Contact information for surgery, X-rays, and medications should be on the bill. If attempting to get a reduction in fees from the service providers fails, working out a reasonable payment plan is the next step. Many states and communities have assistance programs to help with medical costs. Government representatives or social service agencies should be able to help.
According to the Social Security website, working even a few years beyond full retirement age can increase your benefits. Finally, if it’s possible, working part time during retirement may help ease the financial burden.
About the Author: Marsha Smith is a financial blogger and editor who has a fondness for numbers and helping consumers save money. To make sure you’re getting the best deal on your car insurance policy, check out the online comparison tool the Kanetix service offers for more information.