Storms and Earthquakes

The first thing we try to do is stay out of harm's way. We try to protect ourselves from financial problems. Most of the time we think we are making prudent decisions, only to have crisis occur around. In this current financial storm many people have had their quality of life deteriorate through no fault of their own. Houses worth only half of their purchase value. Medical bills forcing everything else to collapse. 401ks losing more than half of their value. The things we had set up to protect ourselves are too damaged to do any good.

And even worse is having your whole life shaken up through no fault or doing of our own. In some cases the financial world had changed faster than some could keep up with. Other cases involve people chasing down dreams and being left in nightmares. Even those who are doing the right thing are anxious and nervous. An article in USA Today titled 'Perfect storm' puts all types in financial peril illustrates many of these examples, and more. Lets take a look -

With every furlough, layoff or stock market drop, Americans of all ages and backgrounds are seeing their incomes dwindle, bills pile up and financial options disappear.

The number who are suffering has increased by 3 million the past year, according to a recent Gallup-Healthways survey. Some 37% of us said we were worried about money last week. Last year, 3.2 million consumers contacted the National Foundation for Credit Counseling, up from 2.2 million in 2007 and 1.4 million in 2006.

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The personal stories illustrate how unemployment, health problems, shrinking retirement savings, unaffordable mortgages and other financial stressors lead to unprecedented challenges, worry and consequences. Recent history has shown periods when one area of concern consumed a family — a lost job for six weeks, for example — but nothing like this. And while people once could piece together solutions to recover financially or prevent outright financial ruin, fewer options exist today.

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Whether you're in a financial crisis depends on your debt problem, says Steve Bucci, president of the Money Management International Financial Education Foundation, a non-profit organization. If you are less than 90 days late on a credit card bill, that's not a crisis. But if you are 90 days late on your mortgage, that's an earthquake, and if you are one month late on your car loan you might lose the car, Bucci says.

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The elderly have been harder hit than most. Personal bankruptcy filings among those 65 and older jumped 150% from 1991 through 2007, according to a study released last year by AARP. Although they have been known as the most frugal savers, today, many of them are deep in debt and without a safety net.

Howard Zynkian, 89, filed for Chapter 13 bankruptcy more than a year ago to help him save his home. Unlike Chapter 7 bankruptcy, which allows people to have most unsecured debts discharged, Chapter 13 sets up a plan for the filer to repay most debts over several years.

But Zynkian, who lives in El Cajon, Calif., refinanced his home five years ago and didn't understand that he was getting into a risky, alternative mortgage. After his monthly mortgage payment had jumped from $1,500 to $2,700, he was facing foreclosure.

The article is chock full of story after story of people in financial peril. We know these are tough times, but to read the stories really can put things into perspective. It also helps those of us who are worried but not on the edge get a better perspective of our own situation. And while all the stories are sad, the one we chose about the 89 year old man who did not understand his mortgage or his financial situation. We imagine after this publication the Reverse Mortgage industry will be at his door helping him plan for his financial future. trying to extract the little he has left...