First Person: We're Frantically Getting Rid of Debt While Our Elders Load Up

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My husband and I are frantically crossing out our debt like many of our Generation X peers. Meanwhile, our older relatives appear to be loading up on debt. We are starting to realize that we need to be completely out of debt in order to help the younger and older generations.

While the older generation loads up on credit card and mortgage debt, the younger generation loads up on student loan debt. In our particular situation, we are trying to help our children avoid taking out college loans. As far as our elders, we have never anticipated an inheritance. The best we have hoped for is that they can remain financially independent, even if it means going deeper in debt in order to make it through retirement.

Owning a home free and clear

According to recent Census report data cited in a Wall Street Journal article, debt among older households rose 120 percent between 2000 and 2011. Experts say the big jump in debt is largely due to senior citizens' mortgage obligations. It used to be the older generation would want to own a home free and clear by the time they hit 65. While many seniors we know take out mortgages or refinance, we are trying to pay our home off in our 40s.

Resisting the temptation to borrow

According to the Wall Street Journal, older Americans are borrowing against the equity in their homes. With the recent upswing in housing prices, it's easier to get out a home-equity loan of credit. The fact that we are frantically paying down our mortgage has completely killed any temptation for us to borrow against our equity. Moreover, we struggled for so long being underwater on our mortgage. We aren't going to undo all the progress we made. However, the seniors I know aren't really thinking about the future. I'm always hearing my senior citizen neighbor say, "What do I care? I'll be dead."

Staying out of credit card debt

I try to never assume that our financial situation today will be the same as it will be tomorrow. I know a good friend who keeps racking up credit card debt because she makes $80,000 a year. She assumes she won't get ill, injured or laid off. One of my older relatives says he doesn't worry about his $10,000 credit card debt because he has the money in savings. Meanwhile, though, he's paying a lot of money to the credit card company in interest charges. I avoid all credit card debt because I don't know what the future brings.

According to the report, the median net worth of Americans was about $69,000 in 2011 compared to $82,000 in 2000. Nothing kills a person's net worth faster than credit card debt. At least with mortgage debt, it's possible the value of the home will go up, improving one's overall net worth. My husband and I are frantically trying to build up our net worth so that we will not have to live in poverty during retirement. We'd also like to leave an inheritance for our children so they can build a better life with no debt weighing them down.

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More from this contributor:

Keeping Lifestyle Inflation in Check

I Can't Afford to take on more Debt

Taking the "Spent Challenge"


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