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Dealing with Debt: How older people can budget their money and pay down debt

A sign of widespread financial distress and a shrinking social safety net, that's according to a research study by the consumer bankruptcy project. (File Photo)

The number of bankrupt older Americans has surged in recent years.

A sign of widespread financial distress and a shrinking social safety net is becoming more common, that's according to a research study by the consumer bankruptcy project.

CBS 2 spoke with a local financial adviser who shed some light on how older people can budget their money and pay down debt, even during their golden years.

A report by the consumer bankruptcy project shows that the rate of 65-and-older adults who filed for bankruptcy has more than doubled since 1991.

Michael Mayer with Sagepoint Financial Advisers in Meridian says that the first step to managing finances is to budget wisely.

Mayer says an emergency fund is the first thing all seniors should establish starting with three to six months of income in a savings account.

The next step is to talk to a financial adviser and work with them to create an annual budget.

According to Mayer, each year financial situations change, so budgets should be reviewed every single year. He says that having open and honest conversations about a financial situation with a trusted adviser or family member is important to create a plan that is right for you.

There are financial advisers in the Treasure Valley that are willing to help anyone set up a financial plan at any stage of life, and most of them even do it for free.

Mayer says the biggest mistakes most people make when putting together a financial plan is not accounting for inflation.

"The fun years are always the first ten years of retirement those are your active phases," says Mayer. "When it comes to planning, always think about inflation, how can you earn your nest egg enough to allow to offset for inflation because that is the hidden demon in all of this. Until you can sit down and actually plug it into a computer and look at what that looks like long-term wise, I think that's one of the basics in avoiding certain pitfalls. "

Mayer also says that no matter how much debt you do have, it is never too late.

In every financial situation, dept can be minimized , but the main focus should be you and your loved ones overall well being.

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