FINANCE
Whose debt is it?
How you view credit cards says a lot about your spending
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Martin Crowe
970-260-8285
2755 North Ave Suite 105., Grand Junction 34 | FINANCE | JUNE 2020 |
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By Karen Telleen-Lawton
O
nce upon a time, our forebears mellowed in rocking chairs, “minded” the grandkids, and eased into passive roles in the households of their kids. Today’s seniors want more control in our golden years. Many of us are paying a high price for that control. American consumer debt was staggering even before the COVID-19 pandemic. Credit card debt alone exceeded $870 billion in 2019, according to CNBC News. For most of the last decade, the largest credit card balances have been held by people in their 50s. Many seniors now carry credit card debt into retirement. Managing cash flow with credit cards may work when we’re working, but in retirement, their debt becomes unmanageable. AARP’s Public Policy Institute reveals that half of those over 50 hold medical debt on their credit cards while a third reported using credit cards to finance daily expenses. Some use credit cards to finance children or grandchildren’s education. Notwithstanding seniors’ disproportionate medical expenses, most credit card debt is the result of discretionary spending. Profes-
sor Stephanie M. Tully at Stanford University’s Graduate School of Business and her corroborators found a wide range in attitudes about consumer debt. Those who view borrowed money such as credit card debt as their own money were more likely to spend it freely. On the other end of the spectrum, those who understand credit card debt as loans spend it less freely. “What we found is that people’s feelings about the ownership of money can predict their interest in taking on debt,” Tully said. “It seems some people are fine with going into debt as long as it doesn’t feel like debt.” Despite the many ways seniors can slide into holding a credit card balance, the way out is relatively linear. Moreover, it is paved with the wisdom of the ages. 1. Create a budget. If this seems like a punishment, reframe it to yourself as a pathway to knowledge and freedom. 2. Adjust your lifestyle so that your income covers all your regular expenses plus allocations to periodic expenses, emergencies and savings. A man is rich whose
