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American Morning

Interview with Dee, Michael Rogers, Terry Savage on Finance

Aired April 29, 2002 - 09:32   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: The "Big Question" at this hour: why are so many elderly falling into debt? Well, the number of Americans 65 and older filing for bankruptcy was up a whopping 244 percent last year from the decade before. And the household debt for the elderly people has jumped 164 percent over the past eight years. For many, the retirement dream has become a nightmare.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: With the way medicine is skyrocketing -- and medical expenses are skyrocketing, I feel like that -- I fear that one day it will come down to, do I buy medicine or do I buy food?

UNIDENTIFIED FEMALE: We're a nation of spending as soon as you get it, and gratification immediately. More and more, better,, still not happy and the world is falling apart.

(END VIDEO CLIP)

ZAHN: Dee and Michael Rogers ran up about $63,000 in credit card bills before they got some help, and they both join us from Washington this morning with some advice. Good morning, good to see the two of you.

MICHAEL ROGERS, CREDIT CARD DEBTOR: Good to be here.

DEE ROGERS, CREDIT CARD DEBTOR: Good morning, Paula.

ZAHN: So, Dee, I am going to start with you. How did you get into so much trouble?

D. ROGERS: I just like to spend money. I love to buy clothes. I can go into a store and I'll always find something in a store that I want to buy, and when you have that little plastic card in your hand, it's real easy to do that.

ZAHN: But you worked mostly full time throughout your adult life, right, when you were raising your family, so you certainly understood the value of a paycheck.

D. ROGERS: That's right, I did, and I was brought up in a society or culture with my parents were there was no such thing as plastic. However, when I got to be about 30, that's when plastic came into being, and I learned how to use it real fast. And it was just like the lady just said, it was paycheck to paycheck, and just wanting instant gratification is what it boils down to.

ZAHN: So, Michael, did Dee alone get you into trouble or did -- were you also at fault?

M. ROGERS: Oh, absolutely not. It was a joint decision. Most of our spending happened -- we discussed with each other before we went out and spent money, we both enjoyed being pleasured by credit cards.

ZAHN: And in the end, Dee, it was the credit cards, really, that got you into debt. At what point did you raise a red flag and say, I need help here?

D. ROGERS: Well, last year, I guess it was around mid-year, we decided that we really needed help. We were meeting our debts, we were paying our bills, but it was very difficult, it was very burdensome for Michael because he handles all the money, and we were literally living paycheck to paycheck, and seriously considered filing bankruptcy, but we really did not want to do that. We had done that previously in the early 80s, and our son and our daughter-in-law went onto a credit counseling plan with a company called Oriton (ph), and they introduced to us Oriton (ph), and that's what we decided to do to pay back our debt.

ZAHN: And Michael, I know Dee said that you were living paycheck to paycheck, but certainly your debts were growing all the time. At what point did you really get nervous that you were in big trouble?

M. ROGERS: Well, anytime there was a unplanned financial expense, it took us weeks and sometimes months to recover, to get back into an even keel budget-wise, and I knew right then and there that we were way over our heads and we had to get help, or something more serious might happen, and we could -- might not have a choice but to go bankrupt.

ZAHN: Dee, you talked about how much you love to shop. What else did you use the credit cards for?

D. ROGERS: Everything. Michael is a computer geek, so he was, you know, always in the store buying computer stuff. I love to decorate, so if I went into a store, I would look for things to fix the house up. That was easy for me to do. I also loved to work in the yards, so I would buy things for outside the house. Any little thing I would see, I would think, I need that. However, since we've gone on the credit counseling plan, it's interesting because you don't do that anymore.

ZAHN: Yes. What, Michael, don't you buy any more?

M. ROGERS: We really stick to things that we have really discussed and that we need. We don't buy frivolous things. I used to buy computer things just to try them out. If they didn't work, or I didn't like them, it was no big deal because I didn't really spend money. I put it on the credit card. So we've just kind of pared down spending to things that we really need now. ZAHN: I guess what I'm so amazed at -- hearing both of you talk, you seem like such reasonable people who, you know, both worked and clearly understood how to balance a checkbook and even you got into this deep trouble. Dee, a final word of advice to people out there who are saying, yes, you know what, I am buying a lot of stuff I don't need, too.

D. ROGERS: I would say get rid of your of your plastic immediately, and Michael has even said when -- it is probably take us about five years to get through this, and pay these debts off, and he said that, you know, at the end of that time, he would like to get one plastic. I am very nervous about ever having plastic again, and people are inundated every day with applications for credit, and it is just -- it's shameless what the companies are doing to people.

ZAHN: So, is Dee going to hold the line here, Michael? No more plastic the rest of your living days?

M. ROGERS: I'm sure she will, and I would also add that it is never too late. Do not be reticent about contacting some of these consumer credit counseling companies. They're very good. They're very helpful, and at some point, they will get you debt free.

ZAHN: Well, we appreciate your honesty. We know that you've really faced some very tough times emotionally as you have dealt with this ever-mushrooming debt, and we are going to have you stand by as we take some of our audience's questions as well. Dee and Michael, good luck to both of you. Thanks again for your time. So, OK, if you fall into debt, what can you do about it? Even better, how can you prevent it? Right after this, financial expert Terry Savage, personal finance columnist with the "Chicago Sun-Times" joins us from the windy city to take your phone calls and e-mails. No matter what age you are, fire away at Terry. She can answer them. That number is 866- 853-1100. Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

ZAHN: All right. We are going to take a look now at the question of how you can get out of debt at any age. Terry Savage is the personal finance columnist for the the "Chicago Sun-Times," and she joins us from the windy city this morning. Good morning. Good to see you, again.

TERRY SAVAGE: Good morning, Paula.

ZAHN: All right, Terry, just for starters, you heard the story of the Rogers about racking up some $63,000 in credit card debt. Why do we see so many couples going into debt across the country like the Rogers?

SAVAGE: I don't know, Paula. It's very scary, isn't it? I mean, it is one thing when you see 20-somethings who are starting out. They didn't learn about credit in school. They have all the things they need to buy to get started, but it's kind of frightening when you see that -- what I will call "grownups," all of us can be tempted by this, I see it, I want it, charge it mentality. Differentiating between wants and needs is a big part of it. Credit is available. There's nothing wrong with credit if you use it wisely. Some people can go to a party and have one or two drinks. Others simply cannot touch a drop of alcohol, and it's important to know what category you fall into, if you can control yourself with credit.

ZAHN: Well, let's look at some of the statistics. Some -- the average household debt now rests at somewhere around $20,000. Approximately 82,000 people filed for bankruptcy in 2001. I mean, this is the scary part. That is up 244 percent from 1991.

SAVAGE: Paula, that is -- that is seniors. No, no, that's just seniors. The actual bankruptcy figures nationally were over 1.4 million last year. It set a record. This is just for seniors, I believe at 65. So you're seeing this cuts across all kinds of lines. Seniors have some special things that happen to them. They have unexpected medical expenses. The death of a spouse may cut into income. A lot of seniors were counting on CD income, and of course interest rates have gone down. Stock values have gone down, and when it comes to being a senior, you know, a lot of people just don't realize you are in retirement. You have a different kind of budget now. Inflation may look tame, for for seniors, it is not tame, because they may not buy a new computer every year -- which the costs keeps coming down, but medical expenses and property taxes and home repairs, the kinds of things seniors are faced with, those keep climbing. So seniors need to set a new kind budget, and realize when you're on social security, you don't get that year-end bonus that covers all those little debts that you racked up during the year.

ZAHN: Yes, you are right. We are going to move on to the e- mails now. Our first one comes from Ann, and she writes: "I have been paying the minimum monthly on my credit cards, and I am now drowning in a sea of debt. Is it a good idea to get assistance through credit card counseling services? I have heard that puts another black mark against me."

SAVAGE: Well, let me say one thing. It's not the initial amount you charge. It's my favorite story, it is in the front page of my book. If you charge $2,000, and make minimum monthly payments with finance charges in the double digits, it could take you as long as 31 years to repay that debt, plus another $8,200 on top of the 2,000 you charged, so 31 years from now, you know, that furniture is on its way to the Salvation Army. You're just paying off, plus four times what you paid in debt.

Now, Ann brought up a very good question here. Where do you turn for help? I know that numbers of the consumer credit counseling agencies have two different kinds of ways to help you. One is through counseling. That does not go on your credit report. I always recommend the National Consumer Credit Counseling services, and we will put up the toll free number, I know, in a minute. They will counsel you. If you go into one of these debt repayment programs, they're obligated to report that to the credit bureaus. There's another, Debt Relief On-line. Does not report to the credit bureaus, but is very responsible for helping you work through your problems. So the question is, do you get counseling, or do you actually go into a debt repayment program? And then ask, before you start, is that going on my credit report? Of course, if your credit is already messed up...

ZAHN: All right, Terry. We are going to take a phone call now from Veronica (ph) in Pennsylvania who inherited some credit card debt from her husband. Good morning, Veronica.

We lost that phone call. I see the Rogers back with us. Welcome back, Dee and Michael. You talked a little bit about the emotional pain of finally confronting your debt. Dee, do you have a question for Terry this morning?

D. ROGERS: A question? I guess I have a question as far as being reticent to go to a credit counseling firm. I know after we did this, I had some friends who were concerned because they said that they knew people who went into it, and weren't -- the agency was not paying their bills. I had full confidence in our firm, and we worked with them with counseling to set up a one-month payment to them, and have not had any problems since then, and most of the creditors have lowered their interest rates considerably. There are a few that stay at 21 percent.

ZAHN: Terry, and what about the concern people have about consulting the counseling agencies?

SAVAGE: Dee brings up a very good point. You want to make sure you are dealing with a reputable agency. I know because my e-mail is public. I get tons of, you know, Consolidate you debt, one monthly payment, and then they have up front fees of 300, 500, $700. You want to deal with an agency that is recommended. That's why I mentioned Consumer Credit Counseling Services, or Debt Relief On-line. These are legitimate people. There are others that are legitimate. Don't pay up front big fees to do this. There may be an ongoing monthly fee for this, but make sure you see results, and make sure you check with your creditors to make sure they are getting paid. That's very important.

ZAHN: All right. Terry Savage, thanks for your help this morning, and Dee and Michael, continued good luck to you. I know people -- a lot of folks have a lot in common with you this morning. Hopefully your advice will help them find a solution as you have found.

M. ROGERS: Thanks, Paula.

D. ROGERS: Thanks, Paula.

ZAHN: And thank you, Terry.

SAVAGE: Thank you.

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