70 years old with $20,000 in credit card debt

With just Social Security income, paying off debt seems impossible

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

Ask a question.
Question for the CreditCards.com expert

Dear To Her Credit,
I have gotten myself into a mess. I lost my job for two years. During that time, I ran up my American Express bill to around $20,000. I am almost 70 years old and cannot find work. I have only $1,100 a month in Social Security benefits coming in. I hope to find a part-time job, but even if I do, I can barely afford to live. What do I need to do?  -- Elizabeth

Answer for the CreditCards.com expert

Dear Elizabeth,
The first thing you need to do is make sure that you stop going deeper into debt. Every month that your expenses exceed your income, as you know, you get further in the hole financially, and it becomes harder to dig your way back out.

There are three basic steps to taking control of your finances:

  1. Find out where you stand.
  2. Find more resources (cash, assets and income).
  3. Cut back on expenses.

Step 1. Find out where you stand. We know your income is $1,100 per month. Do you know what your minimum expenses are? You can use my worksheet  to calculate your monthly budget. It's OK if your income minus expenses is a negative number right now. We'll work on that.

Make a list of your assets, such as your house, your car and other financially significant items. You can use this worksheet. Don't bother with household items that don't affect your finances.

You will also need to make a list of your bills.

Step 2. Find more resources. You're already looking for a job. You might try starting your own service business -- something that requires little or no investment that you could continue doing even if you find a part-time job. Depending on your talents and your health, you might want to tutor children in math, reading or music after school. Or perhaps you'd be able to provide after-school child care. If you're energetic, you could start a home or office cleaning service. Find something that is needed in your community, and you'll have better luck.

If your house is paid for, you may want to take out a home equity loan or a reverse mortgage. If you need a smaller amount, a home equity loan is a better bet because the fees are generally lower. A reverse mortgage is a longer term solution, but it can have high upfront fees. You should only get a reverse mortgage if you intend to stay in your house for the foreseeable future.

Look for things you can sell to raise some cash. Most of us accumulate too much stuff. Perhaps you can sell some things on eBay or Craigslist. If you have an extra car or RV, now's the time to get it off your insurance bill. Even if you just sell enough to make your American Express payments, that would help!

Step 3. Cut back on expenses. Look at your budget and decide what is really necessary. Because everyone's priorities are different, I generally avoid telling people what they can't spend money on. It can be a touchy subject!

However, some people have balanced their budgets by eliminating things like cable TV and prepackaged meals. Sadly, they may have to part with pets, especially if they have half a dozen of them. Eating out may become a rare event. And sale fliers and mail order catalogs need to go directly into the recycle bin unread.

If you have an extra room in your home, consider sharing your house with someone. Other people are in the same predicament you are in, and sharing housing expenses can make all the difference. It could be someone you know who is about your age, or consider a young person going to college. One advantage of a younger boarder is that she may be able to help with yard work and errands.

As you look at your talents to decide what you can do, you will also meet new people and find that you are needed. If you find a compatible roommate, you may enjoy the company. Finding a solution to financial problems can be a challenge, but it can also be rewarding.

See related: Elderly mother can't pay $14,400 in credit card debt, 11 ways for senior to mop up credit card debt 

Meet CreditCards.com's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 11-25-2017