Become Debt-Free This Year

En español | Have you made a money-related New Year's resolution? If so, you're not alone. A recent poll from TD Ameritrade found that 73 percent of Americans have made at least one New Year's resolution tied to their personal finances.

Topping the list of financial goals: save more money, get out of debt and plan for a secure retirement.

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Here's the stark reality: A growing number of people aged 50 and older are ensnared by debt of all kind: mortgages, credit card debt, auto loans and even student loans. Older Americans are increasingly filing for bankruptcy protection as a way to get rid of certain unmanageable debts, such as credit card payments and medical bills.

According to the Consumer Bankruptcy Project, a sharp uptick in credit card debt and medical debt has led to a dramatic rise in the number of Americans 55 and older declaring bankruptcy. For instance, from 1991 to 2007, the percentage of bankruptcy petitioners between the ages of 65 and 74 skyrocketed 178 percent.

A 2010 study from the University of Michigan Law School, called The Rise in Elder Bankruptcy Filings, revealed that Americans 65 and older are the fastest-growing segment of the U.S. population declaring bankruptcy. Also, the Washington, D.C.-based public policy group Demos reports that Americans 65 and above who carry a balance on their credit cards owe an average of $10,235 — up 26 percent from 2005.

Photo by: Michael JN Bowles

Lynnette Khalfani-Cox paid off over $100,000 of personal debt.

I know what it's like to struggle with massive debts, and to wonder how you're going to get rid of those burdens. I'm living proof of how you can become debt-free.

In 2001, I had $100,000 in credit card bills. I knew that bankruptcy was an option, but I resolved to tackle my debts head on — and pay them all off. I did just that, wiping out all $100,000 in credit card debt in just three years.

Afterward, I wrote a book about it, called Zero Debt: The Ultimate Guide to Financial Freedom, so others struggling with debt could see how they could pay off their debt.

I wasn't in debt because of high medical costs or as a result of going through a divorce or a downsizing — although the latter two events did occur to me while I was in the middle of paying off those weighty bills. I got into financial trouble because of overspending, plain and simple.

Deep in my heart, I knew that no one had put a gun to my head and made me go out and spend excessively. I also knew that, by adopting proper fiscal habits and making smart money moves, I could dig myself out of debt and emerge from the experience smarter and on more stable financial ground.

Now I'd like to share some of my hard-earned wisdom and techniques with you.

This month, I'm hosting AARP's "Pay Down Your Debt Challenge." It's designed to help you eliminate debt and learn how to manage credit and debt wisely. And what better month to get started than January, when you've made a resolution to improve your finances?

So every week, you'll find my debt-busting advice right here on this site. I'll also be answering your debt-related questions online and doing a book giveaway each week, and we'll pick some overall winners at the end. Be sure to read our contest rules.

Be sure to return to the Pay Down Your Debt Challenge group to try our weekly challenges and share your stories and tips. And keep using our tracker tool to keep track of your progress. You'll find a lot of good strategies about dealing with your debt on our Pay Down Your Debt page.

The Pay Down Your Debt Challenge will be chock-full of information, but it'll be fun too. Together we'll share our hits and misses, strategize about what works — and what doesn't — when it comes to paying off debt, and keep the conversation going about why it's so important to practice good money-management skills at every phase of life.

You can start your debt-free journey today. Join us.

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, television and radio personality, and a regular contributor to AARP. You can follow her on Twitter and on Facebook.

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