Your debts are hurting you, finance counselor says

Jeff Witherspoon heads the Consumer Credit Counseling Service Inc. of Wichita, which advises local consumers on how to pull themselves out of debt. (June 8, 2017)
Jeff Witherspoon heads the Consumer Credit Counseling Service Inc. of Wichita, which advises local consumers on how to pull themselves out of debt. (June 8, 2017) The Wichita Eagle

Jeff Witherspoon and his staff counsel people for free on how to get out of debt, bankruptcy and poverty.

Many people stopped overspending in the 2008 recession, he said. But some have forgotten.

“Trump’s America Is Facing a $13 Trillion Consumer Debt Hangover,” said a recent headline on Bloomberg.com.

Household borrowings have risen to a record $12.73 trillion, and the percentage of overdue debt has risen for two consecutive quarters, the report said. Debt delinquencies are rising. Credit card companies are setting aside more money to cover bad debt. The drivers of recent increases are student loans, auto debt and credit cards, the report said.

We will regret this behavior, said Witherspoon, who heads the nonprofit Consumer Credit Counseling Service in Wichita.

What keeps him up at night? “The 80-year-old grandmother who sat in my office and sobbed, and I sat there knowing there was little I could do.”

Her husband, who had died, had not put anything into retirement, so she was trying to live off Social Security benefits only.

We overspend on what we don’t need, though it’s clear that college and health care costs are rising – and the government may have to tinker with Social Security.

“I’ve been doing debt counseling for 21 years, and in most of that time, nobody came in with medical debt,” Witherspoon said. “Now a lot of people have it. Costs have gone up, and insurance companies are not covering people like they used to.”

Here’s what Witherspoon says you need to know.

▪ Set aside at least 10 percent of your gross earnings for retirement. Ideally, he said, put 15 percent away.

Most people don’t come close to that number. If they don’t win the lottery or inherit an estate, they will probably regret not doing setting aside some money.

“I just counseled a guy with some debt,” Witherspoon said. “He’s not putting anything away. And he’s 42. ‘You’ve got to start,’ I told him. He says, ‘I don’t have the money to do that.’ And he’s making $130,000 a year.”

▪ Most people eat out too much. People now spend more in restaurants than they do on groceries.

“I get it that it is convenient,” he said. “But on any night in Wichita, you see how busy all the restaurants are, and how on some days there are big wait lines.”

Many of his clients eat out four or five times a week.

▪ His agency is seeing more elderly people come in the door than 21 years ago. “It’s too late,” he said. “Saving for retirements needs to start as soon as you have a job.

“There are no do-over buttons here.”

▪ Many people, like the 80-year-old grandmother, have turned to pay-day loan companies, which charge outrageously high interest rates.

▪ Technology. “It’s not uncommon for us to see people paying $250 a month for cellphone plans. That’s $3,000 a year. Why? And ... most people would never hand their teenager $750 to put in their pocket. And yet they think nothing of handing them a $750 iPhone to put in their pocket.

“Why? Because of peer pressure?”

Roy Wenzl: 316-268-6219, @roywenzl, rwenzl@wichitaeagle.com

Dan Voorhis: 316-268-6577, @danvoorhis, dvoorhis@wichitaeagle.com