Yes, I’m a confirmed Obama supporter, as well as a total political junkie (in addition to scouring the Internet for new credit and debt news).  So I was very interested to see the story stating that John McCain has a debt between $100,000 and $250,000, depending on the source.  Whatever it is, it’s big.  I’ve seen people talk about how this debt means that McCain would be a terrible steward of the economy.  I may side Democratic, but I’ll give John McCain the benefit on the doubt on this one.

Believe me, it’s a hard benefit to make because the current administration has racked up a huge amount of debt after inheriting a surplus.  So if McCain follows Bush’s policy of non-fiscal discipline, it doesn’t speak well for how the economy would unfold under a McCain presidency.  Democrats are always accused of being “tax and spend liberals.”  This administration has the “spend” part down, without much of a plan about how to earn it back.  

That said, I don’t think there’s a great relation between how John McCain manages his credit cards.  Basically, rich people have greater debt.  While $200,000 in credit card debt sounds obscene (and it is) so is the McCains' yearly income.  Cindy McCain reportedly brings in $6 million a year, and that’s without John McCain’s own assets.  So they’re racking up huge credit card debt because they can afford it.  

This is distinctly different to how the economy is currently being run.  It’s not as though we can right a huge check and get out of debt to China and other sources that have kept us afloat.  The McCains, on the other hand, could likely write a huge check and get out of debt in a minute’s time.  Responsible or not, very wealthy people just don’t think about money lost to interest due to credit cards: they can afford not to.  In addition, the interest on these cards is also much lower due to their spending habits and history.  

But it’s pretty hard to think of McCain as a regular guy with this type of spending under his belt, so on the whole this is not the kind of info that the McCain camp wants spread far and wide.  I just don’t think that just because a millionaire has a lot of credit debt means that he’d steward the economy in exactly the same manner.  

There was already evidence that Barack Obama was going to take on the credit card industry as part of his platform.  Back in December, when there were still a number of candidates still in the running (remember that?  It feels like 4 years ago) Obama revealed his Credit Card Bill of Rights.  Back then, Obama didn’t really have any opposition to this idea, as Democrats generally come down on the same side of the issue re: credit cards.  

Now the situation’s changed and Obama railed hard against McCain yesterday about the issue of credit cards and lending practices:

“John McCain has been part of the problem not part of the solution. When he had the chance to help families avoid falling into debt, John McCain sided with the credit card companies. When he had the chance to protect teenagers and college students from deceptive credit card practices, he sided with the credit card companies. And when I fought against the credit card industry’s bankruptcy bill that made it harder for working families to climb out of debt, he supported it -- and he even opposed exempting families who were only in bankruptcy because of medical expenses they couldn’t pay.”

Pretty tough to counter that and really bodes well for Obama in the general if these types of issues are at the forefront.  Most know that McCain is a foreign policy candidate and the economy isn’t his strong suit.  Still, surprisingly, polls show that McCain polls better at handling the economy than Obama, which is why Obama’s in the middle of a 17-day campaign swing about the economy and hitting issues like credit card debt.  It’ll be interesting to see if those poll numbers head in the other direction in the next couple of weeks.  

McCain’s got his work cut out for him – because even if Democrats were culpable in the subprime mortgage fallout and credit crisis, it still happened under a Republican administration.  Basically, everyone was at fault for the mortgage debacle or it wouldn’t have been as widespread as it was, but Bush could have enacted more regulations and oversight recommended by some lawmakers.  That’s a pretty heavy anvil to have draped around McCain, so he should be thanking the polling Gods that he’s currently seen as strong as he is on the economy.  

I’ve implored here that people need to think about getting out of credit card debt before retirement whenever possible.  A new survey shows that this even more important for a growing number of retirees.  The survey says that mortgage debt is increasing among people over 55 by 20 percent every year.  20 percent!  That’s a staggering number.  It means that people are entering retirement with all sorts of debt.  Credit card debt is just the tip of the iceberg, but if you’re combining credit debt with a mortgage you’ve got to be doubly aggressive about tackling both debts as soon as possible.  

Part of the rising number in mortgage debt is due to the fact that retirees are borrowing off of equity and then taking that new debt into retirement.  Perhaps that equity is being used to pay off outstanding credit card debts, but studies show that equity is most often used for other daily expenses, rather than debt repayment.  The problem I’m signaling out is those people who have both a mortgage and credit card debt post-retirement, because that can be especially debilitating – especially if new costs arise, such as medical costs, which is virtually inevitable.  

The average mortgage debt for retirees is around $50,000.  Average credit card debt is $10-$20,000.  These figures can vary wildly depending on the person.  People 55 and older generally have higher credit card debt for the sheer fact that they’ve been using credit cards for longer.  Alternately, you could make the argument that retirees have less of a mortgage burden because they’ve been paying off the mortgage for longer.  This new survey suggests otherwise, which is not a good portent for the new class of retirees.  

So what should you do?  I’d say tackle the credit card debt first.  If you’re carrying a mortgage debt as well, you should go for the higher-interest debt first because that will be there for longer.  Refinance your mortgage if at all possible, and if you’re one of the lucky ones to still have equity to borrow, use this to pay off high-interest debt.  It’s better to get one debt out of the way, even if it means creating another one by taking out a new home equity loan.  Be sure to be upfront with your lender about how your using equity, as this can make it easier to secure a loan – which is not as easy to do in today’s market – because it will show that you’ll have less of a debt burden post-loan, meaning you’ll be better positioned to pay off the equity loan.  

Check out our calculators to help get you started on reducing your current debt load, and take a look at LowerMyBills to get a good deal on a home equity loan.  

The emotional stress of identity theft remains one of the most distressing aspects of this heinous crime. People who have had their lives turned upside down by identity theft often suffer from different levels of emotional distress after the crime. The Identity Theft Resource Center offers a number of tips and warning signs of emotional stress for victims to be aware of after identity theft:

 

Recovering from identity theft is a long and arduous process. The ITRC recommends that you start the healing process as soon as possible. Tips for identity theft recovery include moving forward, recognizing that you are not alone and asking for support from family and friends.

 

The emotional stress of identity theft will quite likely include feelings of powerlessness. It’s important to recognize your emotions, acknowledge them and then to be consistent and to stay organized with your goals, says the ITRC. Accentuating the positives in your life and taking time for you are important parts of the identity theft recovery process. Any opportunity that you have to reward yourself for all of your hard work and time spent regaining your identity should be welcomed.

 

Get more tips for dealing with the after effects of identity theft in the Credit Bloopers blog.