Economists say that, technically, the recession is over and the economy is starting to move again. But for millions of Baby Boomers, the pain is still with us, including double-digit unemployment, investment portfolios that have climbed back to 1999 levels, and home values that have shrunk to 30-40% lower than just three years ago.

And what about all that credit card debt weve been amassing? In previous years, so many depended on year-end bonuses to pay it off. But for most of us, those bonuses have either been frozen or eliminated along with our companys matching 401(K) contributions.

These economic woes are impacting more than our wallets or dreams of retirement. Theyre affecting our health as well. A study by AARP found that one in five adults aged 45 or older said they had health problems related to their financial troubles.

So whats a Boomer to do? Short of selling your house or apartment and living in your car or moving in with your parents (or your adult children), here are some suggestions to help get you back on track financially.

Stop Living Beyond Your Means

Youve heard it before but its a harsh reality that bears repeating: if you dont have it, dont spend it! Thats a lot easier said than done. To some spenders, saying stop living beyond your means is like telling an alcoholic to stop drinking so much or a smoker to stop smoking. Overspending has become an addiction; its one very tough habit to kick.

If this describes you or a loved one, there are places to go for help, such as DA (Debtors Anonymous), an international free self-help program based on the same 12 step principles as AA (Alcoholics Anonymous). If you prefer to work individually on these spending challenges, try going to a psychologist, psychiatrist, or even a financial therapist, which is a relatively new discipline that includes therapists who have an expertise in money issues.

Pare Down to the Necessities

When Ann Farrells Fortune 100 clients pulled back on hiring her to lead training programs for their employees, Ann and her family tightened their belts. Were very fortunate, says Ann, who lives and works in Chicago, and whose husband still had his management job at a manufacturer and marketer of trucks and diesel engines. We had to give up luxuries, not necessities. But we got more frugal. We started to eat-in more. Our entertainment is a lot more family time versus going out to plays or musicals. Ann adds, I cant tell you the last time I walked into a mall or a store.

JoAnn Hines, who runs a company called Packaging Diva, has found that choosing private label brands can save her and her family as much as thirty percent for certain products. If youre trying to save money, try new things, says Hines.

Paring down to the necessities also means learning to say no more often to your kids when they ask for non-essentials, or asking a child, teen, or adult child to pick a less expensive alternative, and that can be very hard to do. But there are economic realities that the entire family has to face (depending, of course, on the age and maturity of each child and what, and how much, about what is going on financially with your family is appropriate to share).

Get Clarity by Making a Budget

A budget will help you see how much money you actually need each month. It will also provide you with transparency about your spending habits. List every single thing that you need to spend money on each month to survive: mortgage or rent; food; gas for your car; landlines or cell phones; local transportation for commuting to work; and so forth.

The National Foundation for Credit Counseling (NFCC), founded in 1951, makes it easier to create a working budget with its online budget worksheet. Be very cautious about credit counseling agencies, by the way. Many are not what they seem.

Once you have a budget of what you are spending, note which expenses are necessities or have tos and which ones are luxuries or wants. See how many wants you can cut down on, or cut out completely, whether its eating out regularly or buying fashionable new clothes when last years will do, until your financial situation is back on track.

Pay Down Your Credit Card Debt

The only way to get ahead is to change your lifestyle, notes Gregory J. Kurinec, CEA, a financial advisor at Benton Financial Group, Inc. in Naperville, Illinois, who works with Baby Boomers. After stopping unnecessary spending, continues Kurinec, throw as much money as possible at your debt. This is the advice that you need to hear and act on if you are one of the 46.2% of American families carrying a credit balance of $7,000 to $8,000 in credit card debt paying an APR (annual percentage rate), on average, of 14.9% according to LowCards.com. (If you miss a payment, or your credit score is poor, which is the basis upon which APR is determined, your APR can be as high as 29%.)

Find a way to pay it down, says Ben Woolsey, Director of Marketing and Consumer Researcher at CreditCards.com, a site which enables consumers to compare and contrast the various cards that are being offered. (It does not cover credit cards offered by local credit unions, which need to be explored at the community level. You can search for a local credit union at www.creditunion.coop.)

It can be overwhelming if you have a lot of debt on a lot of cards so the best way to start is to choose the card with the highest interest rate, focus on that one, and pay that one off, adds Woolsey. Then go on to the next highest interest rate card. This is a proven strategy of chipping away at a massive amount of credit card debt. In just couple of years, it is possible to get rid of $40,000 to $50,000 of credit card debt. But it does require discipline and focus and putting all your discretionary income toward paying down the credit card debt.

You should, however, still make at least the minimum payment, or as much as you can afford, on any of your other outstanding credit card balances with lower APRs.

If you think the APR that a particular credit card company is charging you is too high, you can call the customer service department at the credit card company and ask them to lower it. Have your reasons for making this request clear in advance including telling them youve been a good customer, that you will move the balance to another company, if you do plan to actually do that, as you plead for mercy. Unfortunately, the outcome is up to the discretion of the credit card company and they can say no. (See Credit Tips and Tricks for more information.)

Declaring bankruptcy is an option, but this is not a step to be taken lightly. There are immediate and long-term consequences to declaring bankruptcy. If this is an option you want to consider, make sure you consult an expert in this field who will help you weigh the pros and cons of taking this step. (For more information, talk with a trusted attorney; some basic information, which is not a substitute for legal advice, is available at www.bankruptcyinformation.com.)

New credit card regulations in the Credit Card Accountability, Responsibility and Disclosure Act of 2009 can be very helpful.

Keep One Credit Card with a Low APR for Emergencies or Travel

Allow yourself one credit card for emergencies or for travel-related expenses (such as renting a car). If you have paid off your other cards and do not plan on using them again, cancel those cards yourself. Woolsey of creditcards.com points out that your credit card score will not be adversely impacted if you cancel a credit card, but it might be if a bank cancels it because you have not been using it. (To curtail bank-initiated cancellations, use your active cards at least once every couple of months, but make sure you pay the balance off when the bill arrives so you do not fall back into credit card debt.)

Use a Debit Card for Daily Expenses

Using a debit card, also known as a bank or check card, for your everyday purchases is one way to avoid credit card debt, since it is tied to your checking account. To avoid large overdraft charges if you come up short occasionally, link your debit card to a second account (an overdraft account). This will help you to have a smaller, one-time overdraft fee, instead of multiple fees. Or, consider using a credit card to cover the shortfall. As long as you pay off the credit card charge the next month and do not incur credit card interest charges, you may avoid overdraft penalties. (AARP has more information on the pros and cons of debit cards.)

Generate More Revenue as You Spend Wisely

If there is noticeable gap between the amount of money you usually spend and your typical monthly income, whether you have been making up the short fall by relying on credit cards or dipping into any emergency or savings funds that you do still have, here are suggestions for how to generate more revenue so you can get in the black again:

• If you are out of work, reinvent yourself to get a job. If your first job is not covering your economic needs, now that the job market has improved, go for a higher salaried job, get a second one or take on freelance work. (Watch for a column devoted to job-hunting help for Boomers in an upcoming column.)

• Add a new product or market to diminish the impact if you lose one type of client or business. Thats what Ann Farrell did when her corporate clients temporarily dried up. Using her executive coaching tools and technology, Farrell launched a group coaching program at www.yourcorporatesuccess.com for a monthly investment of $47 a month. It has been a great way for those in a position with no development budget and for those in transition to focus on their own development, says Farrell.

• Take in a paying boarder. (If you are a homeowner or renter, make sure you are allowed to do that in your town or building.)

• Hold a tag or yard sale for all the accumulated goods, art work, toys, or clothing that you no longer need but others will pay for. (Or, do it electronically by posting your items for sale on eBay or Craiglist.)

• Frequent thrift shops. Dont be shy about returning or exchanging gifts you receive that you do not need or want; alternatively selectively regift to others the gifts that you receive.

• Do you have any skills that you could teach, coach, or tutor? There is a market for those services. Consider bartering your skills in exchange for supplies or services that you need. Check out what regulations or tax consideration you have to be aware of. (For more information, go to National Association of Trade Exchanges.)

• If your children or teens are mature enough to take on chores, you can free up more time or money by paying them an allowance for helping out with those everyday jobs.

• If you have enough equity in your home, consider a home equity loan to tide you over.

• Look into the benefits of refinancing your home if the lower mortgage rates would justify the cost and time involved in the process.

• If you have been saving up thousands or even tens of thousands of points or miles, now is the time to finally redeem those rewards for goods, restaurant or store gift cards, hotel stays, or trips.

• If you were thinking of moving anyway, sell your condo or home even if you dont get as much money for it as you might have at the height of the market.

Start to Save Again

Once you have paid off your credit card debt, you want to build up an emergency fund as well as a retirement account. Even saving just small amounts each week or each month will add up.

You can begin saving (if just in a minimal way) by signing up for one of the programs the banks are offering today. You can set it up so that every day you use your debit card, a predetermined amount of money is taken out of your account and put in a separate savings account (or you can set up an automatic deduction from your checking to savings account each month, such as $10, $20 or more). Psychologically, it can be a positive step to see money that you are saving that is free and clear.

If you get an unexpected windfall, save it rather than spend it.

But you of course want to get yourself back on track for retirement in a much bigger way than just by saving token dollars. That will require that you do what, in hindsight, you should have done, or should have done better -- planning.

Planning for Retirement

Whether you are 49 or 63, it is time to become more pro-active about your retirement. As Mark Pretorian, a Canadian-licensed investment advisor at Manulife Securities Incorporated in Ontario, says, Plan. I cant stress that enough.

Pretorian says that a good financial advisor helps you to create a retirement plan that shows you what you need to have available on the specific date that you want to retire. For more information on finding a financial advisor in the United States, go to: National Association of Personal Financial Advisors (NAPFA).

The good news is that there is help out there no matter how challenging your financial situation is, or may seem, right now. While Boomers in their late 40s or 50s may have more time to get their savings accounts replenished than do those in their 60s, it is still possible to get back on track financially. Proactive steps include some belt tightening; concerted efforts to get a first, higher paying, or second job, or freelance work, if necessary; paying off credit card debt; and setting up a savings fund the more automatic, the better whether you call it your retirement account or your Third Age dream fund.

The key is not to despair but to take positive actions that will help you to get yourself and your family back on your feet financially. It may be hard to envision this now, but you may even look back on this financial downturn as the catalyst to becoming more appreciative of your family and friends as you explore more cost-effective ways to get together, have fun, travel and explore.

Resources and Sources

Books and Articles

  • Bach, David. Start Over Finish Rich. New York: Broadway Books, 2010
  • The Business Journal of Milwaukee. Survey: Downturn stress impacting health. January 2, 2009
  • Chatzky, Jean. The Difference: How Anyone Can Prosper in Even the Toughest Times. New York: Three Rivers Press, 2010
  • Economides, Steve and Annette Economides. Americas Cheapest Family Gets You Right on the Money. New York: Three Rivers Press, 2007
  • Mundis, Jerrold. How to Get Out of Debt, Stay Out of Debt, and Live Prosperously. New York: Bantam, 2003
  • Orman, Suze. Suse Ormans 2009 Action Plan: Keeping Your Money Safe & Sound. Spiegal & Grau, 2009
  • Pretorian, Mark, Top 5 Financial Risks Facing Seniors Today. http://www.ericksonresource.com (September 15, 2009).