“I read an article last week that made my jaw drop – one of those facts that you have to read twice to believe. 

 

According to an article in Kiplinger’s magazine, for a $5,000 balance on a credit card at an 18 percent interest rate, it would take 12 ˝ years to pay the debt off entirely by making only the minimum payment each month.  Over the life of the loan, $2,916 would go for the total interest on the debt.  And this scenario assumes no new charges are placed on the credit card.

 

Debt is affecting Americans, especially older Americans, in greater percentages.  Americans between the ages of 65 and 74 spend an average of 40 percent of their incomes on debt maintenance.  Most of the debt is on credit cards and in home-equity lines of credit.

 

Phishing scams by E-mail and telephone also plague senior citizens.  Thanks to new laws on the subject, there are stiffer penalties for bilking Americans out of credit card numbers or passwords.

 

In this technological age, there are thousands of ways to get into financial trouble: with credit cards, on the Internet, through identity theft, or simply by not knowing the true cost of a financial decision.

 

Fortunately, there are just as many ways to learn, research, and make sound decisions that keep your money and your identity safe.  There are some simple solutions to remember: Work with a reputable, non-profit credit counseling firm.  Create a household budget and talk to your family members about debt.  Always ask the credit card company or the bank for a lower rate, or shop around to see if one is available. 

 
Retirement savings are important, as any American senior citizen can attest.  Often, our well-being in retirement depends on our financial planning in the earliest parts of our working lives.  This is something for young people to remember when they bring home those very first paychecks.  The first ten years of retirement savings are equal in importance to the retirement savings of the next 30 years.

 

There is one final case of disturbing debt in America right now.  Our men and women in uniform are unfortunately often the victims of predatory lending, sometimes faced with 30 percent interest rates and higher on simple loans.  They can go to war and lose the house.  While they are earning their paychecks many times over in the service of our country, someone else might be issuing paycheck loans that accumulate interest so rapidly they cannot be paid off.

 

The issue affects everything from military readiness and the ability to organize troops for a deployment to the security clearances for servicemembers.  In fact, the number one reason members of the armed services lose their security clearances is because of financial difficulties.

 

In Congress, I am working with my colleagues to retain language in this year’s defense bill from another bill I have cosponsored, the Servicemembers’ Anti-Predatory Lending Act.  This bill will help them get fair rates and full disclosure on those lending agreements. 

 

We should all watch our nickels and dimes and be sure to avoid ‘the longest payment.’”