With both MasterCard and Visa throwing their weight behind the chip-and-PIN payment systems already popular in Europe, magnetic stripe cards will likely soon fall by the wayside in the U.S. Meanwhile, the success of online shopping and mobile payments have also become game changers that have left brick-and-mortar businesses struggling to keep up.

Leaders in the payment industry talked about these developments and what’s coming next when they gathered this week in Salt Lake City for the Smart Card Alliance 2012 Payments Summit. CreditCardGuide’s Marcia Frellick took part in a press conference call to learn about some areas that will see the biggest changes — and challenges.

Brick-and-mortar stores
Thanks to the Internet, stores are now dealing with a new breed of customer, says Patrick Gauthier, head of market intelligence for PayPal.

“For the most part, stores are now dealing with educated consumers who know what they are looking for — buyers, not browsers,” Gauthier says. “People see an item they’d like to buy on their laptops at home, research it on their tablets as they commute to work and compare prices on their mobile phone while in the store.”

That means stores will have to seize on what makes online payments successful to compete, according to Gauthier. Utilizing wish list technology, for example, would allow consumers to register for items that they like in advance, giving retailers the opportunity to notify them of sales or special discounts. Coffee shops could allow customers to order and pay for their favorite beverages via mobile phone and skip the line.

“Imagine if you?were [to have] a completely parallel experience with what’s happening online,” Gauthier says. “When you come to a store, the merchant would know where you’re coming from, who you are … they would know which products you’ve picked and put back, which one you looked for information on, which one you asked people about.”

With ease of payment in mind, PayPal is testing a new in-store payment system at 51 Home Depot stores in the San Francisco area. It allows customers to pay for items via their PayPal accounts at the stores, either by using a PIN with their mobile phones or by using PayPal cards that would draw from their PayPal accounts. A customer who forgot his wallet could pay just by entering his mobile number and a PIN.

Card readers
Merchants have been reluctant to get rid of their magnetic-stripe-only readers because the transition to EMV, until recently, wasn’t imminent. No more, says Jim Stapleton, chief sales officer for mobile wallet developer Isis, a joint venture of AT&T, Verizon Wireless and T-Mobile USA. According to Stapleton, electronic payment technology company VeriFone has declared that every one of its readers will soon support EMV technology.

“So there isn’t a merchant out there that I’ve spoken to who would conceive of buying a reader today without this technology embedded in it,” Stapleton says.

The U.S. embracing EMV technology would have a big impact on global standards, according to Ed McLaughlin, chief emerging payments officer of MasterCard Worldwide. Payment devices manufactured in other countries could be sold in the U.S. Travelers who used to encounter problems using their magnetic swipe cards abroad would have EMV cards they can use worldwide.

“People have to realize the U.S. is pretty much an island now surrounded by this advanced  EMV technology,” McLaughlin says.

Proponents of EMV also tout its security. Instead of relying on the three- or four-digit security code on the back of a credit card, EMV generates a unique security code for each transaction, one that dies after a single use.

“The ability to clone, counterfeit… is incredibly thwarted,” Stapleton says.

Mass transit
New York, Washington, D.C., Chicago, and Philadelphia are among the cities greeting the future when it comes to paying for fares. New York, for instance, is moving away from stored-value fare cards toward online management of travel expenses, says Amy Linden, senior director of new fare payment systems with New York’s Mass Transit Authority.

The goal is to make paying for transportation as easy as buying a cup of coffee, allowing riders to travel when they’re ready to travel, without waiting in line to buy fare cards, encountering the unforgiving block of a turnstile arm or facing the flashing “insufficient fare” notice.

“What this does is let the customer choose to pay their fare anywhere, anytime and any way they choose,” Linden says.

Mobile wallets
Mobile wallets let consumers make payments with their phones rather than their cards — and the wallet wars are on. Google launched its Google Wallet last May. Companies such as American Express and Visa are exploring versions of their own, as are banks, mobile carriers and payment service companies such as PayPal.

What’s certain is the wars won’t result in a single wallet solution, says PayPal’s Gauthier.

Consumers already have a wealth of options when it comes to transactions, Gauthier points out. They can use an actual credit card. They can use QR codes (a pattern similar to a bar code that can be read by smartphones). They can shop online with passwords and PINs. They can even make contactless payments by hovering a card or a smartphone above a payment reader, a technology known as near field communication (NFC). According to Gauthier, there is no reason to limit these options.

“The fundamental approach is to not make ourselves beholden to any particular modality at the point of sale, because that limits the value we can deliver for merchants and consumers,” Gauthier says.

This summer, residents of two major American cities will get hands-on experience with NFC technology. Isis is rolling out its payment platform to the populations of Austin, Texas, and Salt Lake City for testing.

“We will be launching a full frontal attack across carriers, banks and merchants, a conversion opportunity for consumers to experience this world that we’ve all talked about,” Stapleton says.

I want to have my boyfriend (whom I’ve lived with for three years) added to my employer’s group health benefits as a domestic partner. I have to show several forms of proof that we’re financially dependent on one another. One way to prove that is opening a joint credit account. Our plan is to open a joint account and never use it (except as proof for him to qualify for my employer’s health insurance benefits). My boyfriend has never had a credit card, which I’m guessing means he has no credit history. Will sharing an account with him hurt my score (which is pretty good)? Also, will opening up another credit account that I never use hurt my score? — Christine

Hi Christine,

You do realize that merging your credit with someone else is very serious, don’t you? Though your boyfriend has an excellent reason to hook up in this way, you’re taking quite a gamble. While having health care benefits is important (unless you’re unusually wealthy, even a short hospital stay can break a well-stocked savings account) you have to consider many factors before forming this kind of bond.

Now I’m not going to be the one objecting to this financial marriage, as long as you go into it completely informed. Here’s what you need to know before walking down the credit card aisle.

First, don’t assume that your boyfriend has no credit history. He may, even if he’s never had a credit card. If he went to college and took out a student loan to pay for it, the lender has been recording the status of his account from day one. Same goes for a car that he might have financed. Perhaps his parents helped him out and co-signed on the vehicle. Essentially, if he has ever borrowed money from a financial institution, whether on his own with another person, those accounts are on his credit reports, and a FICO score is being generated from that information.

You’ll want to be acutely aware of what you’re getting into with your guy, so, before committing to anything, have him access his credit reports and scores. Pull yours as well and read them together.

If both of you like what you see on the reports, proceed to the next step: understanding exactly what co-signing means. As individuals, you are each 100 percent liable for the account. Each of you guarantees to the credit issuer that debt will be repaid according to the terms of the agreement. If either of you overcharges and fails to pay, the creditor may sue one or both of you for the balance due. The credit reports and scores of all co-signers will suffer too. Consequently, you have to be sure that your honey is a person with whom you are comfortable going into business with.

Still want to move forward? Fabulous. Check out what kind of credit cards are currently available, and apply for the best one that you’re eligible for. The issuer will assess not just the credit rating but the financial information of all parties, including the length of your employment and the amount you earn.

Upon qualification, the creditor will issue each of you a credit card. Just having this shiny new account will barely affect your credit score; it’s when you start using it that you’ll see the real effect. You want to leave it dormant, but if your boyfriend changes his mind and takes it shopping, any misstep of his will show up on your reports. Because of this — and the fact that your boyfriend has never had a credit card — he’ll need a lesson in how to properly use the thing. Smart charging is not an intuitive process. Make sure he knows to never roll balances over to the next month, and to always pay by the due date.

As for you, if you’re going to keep the account alive, keep a sharp eye on the statements. Ultimately, that is your responsibility — because you can’t go crying to the creditor if your lover charges a fortune and then skips town. They won’t care.

Here are eight strategies for super-sizing your rewards:

1. Set priorities.
First off, decide how much time and energy you are willing to devote to managing and tracking rewards.

“For some people, playing the rewards credit card game is a serious hobby, and they devote a considerable amount of time and energy to it,” says Tim Winship, publisher of FrequentFlier.com. “But most people don’t want to do that. That’s something you have to consider up front.”

Rewards credit cards vary widely in how easy they are to use. Some come with complex terms like tiered rewards that kick in after a certain amount of spending. Or, as is the case with many airline credit cards, you may be able to earn maximum rewards only after you reach elite status. If you have the time to track rewards earnings and reap top-tier rewards, this is all well and good. However, if time is an issue, stick with simpler rewards credit card programs.

There are websites, such as MileWise.com, that can also help you keep track of your rewards.

2. Match rewards cards to spending patterns.
Cards with the best rewards perks typically come with an annual fee, but many also have a no-fee version. To find out which is best for you, do the math to see which card best fits your spending pattern.

For example, for a $75 annual fee, the Blue Cash Preferred Card from American Express rewards 6 percent cash back on supermarket purchases, 3 percent on gas purchases and 1 percent on everything else. Alternatively, the Blue Cash Everyday card (which has no annual fee) gives 3 percent back on supermarket purchases, 2 percent on gas and department store purchases and 1 percent on everything else.

To determine which card is the best fit, check how long it would take you to earn back the annual fee. With Blue Cash Preferred, you earn an additional 3 percent on supermarket purchases. That means an extra 3 cents for each dollar spent. To earn back the $75 annual fee, however, you’d have to spend $1,250 each year at the supermarket before the extra earnings kick in (ignoring for the moment any extra earnings on gas and department store purchases). For a family spending a lot of money on groceries each month, the annual fee might be worth it, but, for a single person, it might not be.

3. Mix and match.
When it comes to maximizing rewards, it often makes sense to mix and match rewards cards. In addition to picking a credit card that enables you to leverage spending on purchases made in supermarkets, drug stores and gas stations, consider getting a card that offers cash back in rotating categories, such as the Chase Freedom Card. Alternatively, if you travel frequently, find an airline rewards card that will let you earn the most benefits on travel and travel-related purchases.

4. Pick a primary card.
While strategic mixing and matching of rewards credit cards can be a great way to maximize earnings, be careful not to spread yourself too thin.

“People often get themselves involved in too many rewards programs, so that their earnings are diffused over multiple programs,” Winship says. “It’s very important to consider your options from the beginning and try to focus your earnings activity on one primary program and one or two secondary programs. Don’t fall into the trap of participating equally in several programs.

5. Put your fixed monthly expenses to work.
As much as possible, use your primary rewards card to pay your regular monthly bills, such as telephone bills, mortgage, cable bills and so on. Just make sure to budget for your charged fixed expenses so you can pay the credit card bill when it’s due.

6. Don’t forget about business expenses.
If you run a small business, look into getting a business credit card that will give you cash back on qualifying purchases such as computers and electronics, office supplies, phone bills and transportation. With the Chase Ink Cash Business credit card, for example, you can earn 5 percent cash back on the first $25,000 spent annually on office supplies and phone and cable expenses.

7. Spread it out.
Get a card for all members in the household responsible for making purchases to earn rewards on all expenditures. If you have employees who make purchases for your business, get cards issued for them as well; it automates expense reporting, and you can set spending limits to protect the bottom line.

8. Don’t forget about the big picture.
Keep the larger picture in mind when you’re making small financial decisions like applying for a new rewards credit card.

“We play all these games on credit cards to get better rates on balance transfers or rebates on rewards credit cards,” says Michael Rubin, author of the book “Beyond Paycheck to Paycheck.” “But to the point that this throws your FICO score so you go from the highest credit score to the next one down, you end up costing yourself much more than you’ll ever save.”

A final reminder: Be sure to pay off your balance in full on your rewards credit cards each month. Otherwise, you’ll end up paying more in interest than you will earn in rewards. If you need to carry a balance, look for a card that offers the lowest possible interest rate rather than a rewards card.

This month, we are unable to pay our credit card bills for the first time. We have no more money to give, after paying for our house and food. My husband has been out of a job for eight months, and I am working at Target, which supplies us benefits — but I don’t bring in enough to carry us both and pay the bills. I’m sorry to say that we owe $4,000.  What should we do now, Erica? We are trying. My husband is always looking for work. I need to know what to do with these cards so the good credit history we have made since coming to the U.S. is not totally ruined. Thank you in advance for your kind help. – Rida

Hi Rida,

How wonderful it is that you’ve never been late on a payment! To present and future creditors, that counts for a lot. It also says good things about the way you’ve managed your finances and credit during this crisis.

I get that you’d like to preserve your excellent credit rating, but you may have to accept that a ding could be in your future. If you have only enough cash to cover your most fundamental living expenses, there won’t be any extra that you can send to those you owe. It’s a matter of simple math:

Fixed income minus essential bills equals the amount you have left over for other bills.

If the remainder is tiny (or nothing), you won’t be able to send the minimum requested payment, and the credit card company will react. They’ll send notice of your delinquency to the three major credit reporting bureaus, and that negative information will remain on your files for a total of seven years.

Would one skipped payment cycle wreak havoc with your credit rating, though? In the short run, it will have a detrimental effect, as recent activity is factored into your FICO score more heavily than what happened years ago. However, if you were able to get back on your financial feet quickly and make all subsequent payments by their due dates, your credit scores will rebound in a matter of months.

Unfortunately, unless your husband secures a new job in the next month or so, you may be in for a few more missed payments — and greater credit damage. Because of this distinct possibility, I would like you to take swift action. Contact your creditors to see if you can work out a hardship plan with them. Because you’ve been such a responsible customer so far, they may give you a break and permit you to make no or smaller payments for a set period of time. While these arrangements may not protect your credit reports and scores (in fact, they probably won’t), they can help to reduce the very real risk of your creditors sending delinquent accounts to collections or suing you for unpaid balances.

I also urge you to visit a nonprofit credit counseling agency. These are organizations that have been set up to help people like you — borrowers who are struggling and seeking answers. There is no charge for counseling, and you’ll have the opportunity to meet with a professional who will review your budget and debt and then suggest some sensible methods of resolution. For example, if the credit counselor discovers that you can reasonably reduce spending, he may recommend a debt repayment plan that allows you to pay your accounts through the agency. Or, he may have resources for employment services. You won’t know until you make an appointment, so put that on today’s to-do list.

I wish you and your husband the best of luck — and am sending serious good job vibes.

I’m 30, and I’ve had the same credit card since I graduated from college. It has a $3,500 limit, and I charge one big purchase (like an airplane ticket or my rent) on it a month and pay the balance off immediately online. Keeping track of finances stresses me out, and this really simple system works for me. I have a pretty good credit score, too. But I hear friends and family talking about their rewards cards and all the perks. I think it’s time for me to move beyond my no-frills system, but I don’t know where to start. What should I look for in a rewards card? Are they more trouble than they’re worth? And should I keep using my old card, even if I get a new one? – Maggie

Dear Maggie,

There’s a lot to be said for no-frills systems when it comes to managing credit cards. Far too many people end up with balances on multiple credit cards each month, and come billing time, this generally results in multiple headaches. The more charges and the more credit cards, the more to keep track of — which is one reason how card issuers cash in on millions in late-payment fees and over-limit charges every year.

So when it comes to credit cards, keeping it simple is always a good idea. Less time spent managing and paying credit card bills is more time spent living your life!

Fortunately, you can have your cake and eat it too. Like spouses, rewards credit cards come in many types, ranging from very easy-going to high maintenance — so as long as you do your homework, you can easily find a good match. To help you choose, here’s a guide to each category.

1. High-maintenance rewards credit cards
Without a question, the rewards credit cards in this category give the best perks and benefits — if you can stand keeping up with their high-maintenance requirements.

Most airline rewards credit cards fall into this category. These are generally cards tied to a specific airline, and, for those who accumulate enough rewards card earnings and miles to earn elite status, the doors open to some pretty significant rewards and perks. These don’t just include free travel, but also free checked bags, priority boarding and free upgrades to first class when seats are available.

On the downside, these cards are very high maintenance. It takes a real commitment to figure out all the terms and conditions, and, unless you already travel frequently, it’s not easy to fulfill the travel requirements to reap the best rewards. Some people like this challenge and make a hobby of cashing in on bonus sign-up offers and special deals. This works if you have extra time on your hands, but for a no-frills kind of girl like you, it probably won’t be a match made in heaven.

2. Middle-of-the-road rewards cards
When looking for a rewards card that is simple to manage, cash back credit cards are often a good choice, because you earn a simple cash back discount on all charges. Some cash back cards advertise 5 percent cash back on charges, which, at first glance, may sound like a pretty attractive option — particularly since these cards often come with flashy sign-up offers.

However, as always, the devil is in the details. The 5 percent cash back is rewarded in rotating categories, which often change every few months, and you have to sign up for those categories online to qualify. Many cards do offer rewards on purchases outside these categories (often 1 percent cash back). Yet, for some cards, you won’t be able to earn that 1 percent until you reach a certain spending level. Of course, that little fact is buried deep in the fine print, where it is easily overlooked.

So again, to reap the full benefits of this type of rewards card, there may be more maintenance involved than you would fancy.

3. Low-maintenance rewards credit cards.
So, what is a no-frills person to do? Well, there are indeed rewards cards that will let you earn rewards on purchases without any extra work. Examples of these include the American Express Blue Cash Everyday card and the Capital One No Hassle Rewards cards. With both of these, you’ll automatically earn up to 3 percent cash back on grocery and gas purchases and 1 percent on all other purchases. There is no spending minimum, no enrollment needed and no rotating categories. Further, rewards earnings are easy to redeem — you can simply get a statement credit for the amount earned.

Also check out the Capital One VentureOne Card, which is one of the few low-maintenance travel rewards cards. Cardholders earn 1.25 points with no annual fee on the VentureOne card and 2 points per dollar spent on the Venture Rewards Credit Card, which comes with a $59 annual fee. Be careful, however. While the Venture rewards earnings are redeemed at a value of two cents per dollar spent when redeeming for travel-related purchases, the value is only one cent per dollar spent if redeeming for cash back.

The bottom line
In short, as long as you look around to find the right match, you can indeed get a low-maintenance rewards credit card. For the sake of your credit score, keep the other card open and just use that card once in a while. Having more than one credit card and access to a higher credit line will likely boost your credit score. If you want to show active use on your old credit card, you can always charge one of your fixed monthly expenses to it and set it up for automatic monthly payments, so you don’t have to spend time paying bills.

One last point of caution: While keeping it simple is a smart strategy when it comes to managing credit cards, you don’t want to keep it so simple that you undermine your credit score. You mention that you only charge a few things each month and pay off the balance right away. However, while charging regularly and paying off in full is great for your score, paying off the balance immediately is not.

Most card issuers only report to credit rating agencies once a month (after the bill goes out in most cases). If you pay off the balance before you get your bill, chances are that your credit report doesn’t accurately reflect your credit use, because the balance will show zero when reported. So wait until you receive the bill, and then pay off the balance — it’s a small, no-frills kind of adjustment, but it could boost your credit score considerably.

According to wedding industry research company The Wedding Report, the average cost of an engagement ring in 2011 was just more than $3,200. Fortunately, if you haven’t been able to sock away enough cash, there are several ways to make the cost and payments manageable.

1. Get a store credit card.
The advantage of this option is that many stores offer to defer interest (often for six to 18 months) and may offer an off-the-top discount on the total price of the ring.

The key here is the word “defer,” says Bill Druliner, Midwest regional manager of GreenPath Debt Solutions. Interest is building up in the background as the months go by, and if you don’t pay every bit of the ring off by the date specified, you will get zapped with that interest retroactively — often close to 25 percent — on the balance you had accrued each month.

The offers at major chain stores are similar. For instance, Kay Jewelers offers a plan with its Kay Card for no interest if you put 20 percent down on a minimum purchase of $500. If you don’t pay it off in 12 months or are late with a minimum payment, an annual percentage rate (APR) of 24.99 percent (lower in some states) will be charged from the date of purchase. Jared offers similar terms with a minimum purchase of $1,000.

Keep in mind that getting a store credit card could ding your credit report. Opening another account will count as an inquiry, which can lower your score. The new account can also lower the average longevity of your credit accounts, which also lowers your credit score. If your only other credit account is 10 years old, for instance, you just cut your average to five years.

Another drawback with a store credit card is that, in many cases, the store gives you a line of credit in the exact amount of the purchase. That means you’ll be maxing out your available credit, which can hurt your credit score, says personal finance expert and bride-to-be Farnoosh Torabi, host of “Financially Fit” on Yahoo! Finance.

“Your credit utilization is an aggregate, so if you have open lines of credit you’re not using, it’s going to be in the mix of that,” Torabi says. “If [a store card] is your lone line of credit, it could really make an impact.”

2. Use a regular credit card.
If you’re going to pay off the ring in one or two months, using a regular credit card is a great idea, Druliner says. This buys you some breathing time and allows you to rack up some rewards points. Some credit cards will offer protection if something happens to the ring. Be sure to read the terms that came with your credit card agreement.

One advantage to paying with a regular card as opposed to a store card is that you wouldn’t have the deferred interest problem.

“It’s a little less risky in that you won’t see the interest blow up on you at the end of a year,” Druliner says.

But you should still have a plan to pay the ring off to avoid regular interest charges each month.

3. Take out an installment loan.
An installment loan requires regular, predetermined payments until the debt is paid off– like a car loan. These types of loans generally come with interest rates in the teens, according to Druliner.

“On the one hand, that can be good because credit card debt can lull you to sleep with the minimum payments,” Druliner says. “… whereas an installment loan will force you to pay it off within a fixed period of time.”

Of course, if something comes up and you can’t make a payment to the bank or credit union, there’s less flexibility. If a payment is more than 30 days late, it can show up on your credit report, Druliner notes.

4. Shop around.
Another consideration is whether to go to a national chain store in a mall or seek out independent jewelers.

Mall jewelers are more likely to offer financing deals and their own brands of credit, says Antoinette Matlins, gemologist and author of books including  “Jewelry and Gems: The Buying Guide.”

The bad news about major retailers, she says, is that the markup can be as much as 300 to 400 percent.

“You may find that [an independently owned store’s] regular price, no sale, is less than the 50 or 60 percent sale price at one of these other places for the same quality diamond,” Matlins says.

Even after you’ve chosen the seller, there are ways to keep the cost down and have manageable payments. Although “the average salesperson is not about to tell you how to get a ring that ‘looks just like this one’ for half the price,” according to Matlins, there are techniques for getting a good deal.

Take flaws in the diamond, for example. There are 11 grades on the flaw scale, according to Matlins.

“You can come down seven grades and see absolutely no difference with the naked eye between your diamond and one that’s flawless,” Matlins says. “But the cost difference is dramatic.”

Of the “four C’s” (cut, color, clarity and carat weight), Matlins recommends focusing on the clarity grade.

“It will give you more flexibility in your budget and have absolutely zero impact on the beauty of the diamond,” she says. “Even a diamond at the worst clarity grade is still 97 percent clean or clear.”

You can find out what to look for at the Gemological Institute of America site.  Often, people pay more for what they think will make the most sparkle — but won’t, Matlins says.

“People associate the sparkling quality of a diamond with the clarity grade and … that’s absolutely not correct.”

Instead, the sparkle has everything to do with how it’s cut, according to Matlins.

If you’re buying a diamond of at least three-quarters of a carat, Matlins advises shopping for the diamond before choosing the setting. That way, you can place the diamonds side by side and see for yourself how the stone in your budget compares to others.

5. Think twice about starting marriage with ring debt.
That word “budget” is important, even in the throes of romance. Despite discounts and financing deals, the best option for this kind of purchase is cash, Torabi says, even if that means removing the element of surprise.

In other words, don’t deplete your savings for a ring the bride may not be thrilled with, especially in this economy. Modern couples don’t have to follow all the traditions.

“I’m hearing about brides and grooms dividing the costs of the ring,” Torabi says. “Couples in their late 20s may have student loans and may not have full-time jobs. To throw [the cost of a ring] into the mix could really shake things up.”

Besides, your future life partner should be the last person who wants you to go into debt.

“If it’s going to be something that’s going to get you into a loan situation or a credit card situation, I don’t think any bride would want that,” Torabi says.

I am the breadwinner for my family of four. My husband is on Social Security disability, He gets $982 per month. He has to pay $200 for a truck note, $110 for a couch rental from a rental center and, until April, $185 a month for a cash advance. I have to pay the remainder of the bills: $200 for groceries once per week, $150 for the electric bill, $50 for the water bill, $67 for my car insurance and $110 every three months for home insurance.

I have four credit cards that are maxed out for a total of $2,500 and a personal loan for $4,000 (which I have to repay at $158 per month). To top it all off, I owe three cash advance places a total of $2,740. I’ve been having to borrow money from family and work a lot of overtime in order to make ends meet. I am too tired to do things with my family, and I’m depressed. What can I do at this point? – Ann

Hi Ann,

If I could do one thing in my life, (professional thing, that is) it would be to stop people from trying to borrow their way out of financial trouble. It’s a desperate and profoundly flawed move. Borrowing money today to pay for the things you couldn’t afford yesterday and won’t be able to afford tomorrow is irrational and is a temporary solution at best. Just ask lenders. If the only type of credit you qualify for comes with a sky-high interest rate and terrible terms, they consider you to be a big, bad risk — which is your cue to walk away.

Look, I know that emergencies come up and it’s not always easy — or possible — to cover their costs with immediately accessible cash. But rather than take out a loan that you’ll regret in the near future, it would be far better to suffer though the situation by taking drastic but productive action. That could include everything from living on pasta for a month, to selling family heirlooms, to asking teenaged kids to contribute their odd job earnings.

Now that you did turn to expensive debt instruments, though, you’re tapped out and exhausted. Is there anything you can do? Yes, but no miracle is waiting in the wings. You and your husband are going to have muster some energy for a fresh effort. So brew a pot of coffee and gear up for some changes. Here’s a plan:

1. Don’t borrow one more dime. Resist all urges to add to your balances. Remember, more debt will not help; it will hurt.
2. Set your income ceiling. Your husband is bringing in monthly Social Security Disability (SSD) checks of $982. As you’re the primary breadwinner, I’ll assume that you earn more than that. Whatever that sum is, add it to his. For example, if your monthly net pay is $2,000, you’ve got $2,982 to work with. Unless you can earn more, that’s the maximum you have to spend.
3. Determine necessary expenses. What’s with the rented couch? You could have picked one up from a garage sale for a single payment of $100! You’ve got to budget down so you can pay for the things you really need. Find areas to slash, like spending less at the supermarket. Total those essential bills up.
4. List your obligations. Write down who and how much you owe, then prioritize those debts by interest rate. The most expensive ones (ahem, those cash advance loans) are at the top, and the rest falls under that.
5. Pay your debts. Subtract the total of your necessary bills from your monthly income. Use whatever is left over to pay the minimum for each. If there’s any extra, apply it to the liability that’s No. 1 on your list, and, when that’s at zero, send more to the next in line.

And then there’s filing for bankruptcy. While discharging all that debt would offer immediate relief, you’ll soon be back where you started if you continue to spend and borrow outside your means.

“A mortgage or a car payment is understandable as they may be necessities for many,” says Nancy Anderson, a certified financial planner and think tank director of Financial Finesse, a leading workplace financial education firm. “However, carrying credit card debt into retirement is a symptom of poor cash management. If you aren’t able to live on your income while you are working, how are you going to live on your income in retirement?”

Retirement is supposed to be a time to put financial worries behind you and enjoy life. Yet many boomers are finding themselves carrying their financial burdens into their golden years.

Tough economy means tough retirement
The economic downturn and extreme volatility of the stock market has taken its toll on all demographics in society. But, for many baby boomers nearing retirement, it poses a particular challenge.

“Baby boomers have more challenges than their parents did in preparing for retirement,” Anderson says.

Unlike their parents, Anderson explains, boomers can’t rely on traditional pension plans, but are on their own to fund their retirement.

“They have to do so in a tough environment,” says Anderson in an email. “Boomers faced the ‘lost decade’ of the 2000s with little stock market growth and the financial crisis negatively affecting the real estate market.”

According to a recent survey by CESI Debt Solutions, a national nonprofit credit counseling organization, 59 percent of people recently retired had saved less than $50,000 toward retirement. And a little more than one out of three still carried credit card debt when they retired.

While some may decide to simply work longer to better position themselves for retirement, this may be easier said than done. First of all, in uncertain economic times, it can be difficult to find or keep work. Further, the older you get, the greater the risk that health issues could leave you unable to work as long as you had planned.

Moreover, thinking that you can “just” work longer can be a way of avoiding the issue at hand — the fact that you’re not living within your means.

“The problem is that the issue not only doesn’t go away, but it gets bigger,” Anderson says. “The root cause of the problem is never addressed, so debt may continue to accrue.”

Tips for weathering the storm
To avoid getting tripped up by debt and credit issues in retirement, experts advise taking the following steps:

1. Get a handle on your cash flow. If you are nearing retirement and still are accumulating credit card debt, you have a cash management issue. To put it plainly, you are living beyond your means. Begin tracking what comes in and how it is spent. Then create a budget, matching income to expenditures.

“Getting a strong handle on cash flow before retirement is critical,” Anderson says. “Not only does it help you pay off debt, learning how to live within your means will help to make retirement income last a lifetime.”

2. Stop using credit cards. The first step in getting rid of credit card debt is to stop spending money you don’t have, says Mike Sulllivan, director of education for Take Charge America.

“Any balance carried month to month is debt that the consumer couldn’t afford to pay off,” Sullivan says. “And consumers that can’t afford a debt sure can’t afford the extra cost of paying 19.99 percent interest or higher.”

3. Start an emergency fund. For most people, credit card debt accumulates not so much because of frivolous spending, but because they don’t have money set aside to deal with unexpected expenses. This includes medical expenses, one of the most common budget busters for people nearing or in retirement. Set up automatic monthly payments into a savings plan for an emergency fund, so that you won’t get tripped up by unexpected expenses.

4. Set up a plan for paying off credit card debt. Paying off credit card debt takes a lot longer than most people realize. Use this calculator to determine how much you’d have to pay off each month to be free of credit card debt by the time you retire (or earlier, if possible). Then put a plan in place for paying off not just credit card debt, but your car loan and other personal debts, so you don’t have that drain on your budget when you retire.

For individualized recommendations, Anderson recommends working with a financial planner or checking out your company’s Employee Assistance Program. More and more companies are offering financial wellness benefits in addition to other types of wellness programs.

Another option is to work out a plan with a nonprofit credit counseling agency tailored to your unique situation. A credit counselor or professional financial adviser can help you get a bird’s-eye view of your situation, set up and plan and support you in carrying it out. This may involve making sacrifices in the short term, but once you enter retirement, you’ll reap the benefits many times over.

My 20-year-old son needs a co-signer for the house he wants to rent with his friend. He asked me, but I’m not sure how this will affect my credit if they don’t pay rent on time. Will late payments ding my credit score? What if my son pays his half on time, but his roommate doesn’t? They’re good students and everything, but it’s their first time living on their own, and neither of them makes much money. — Karen

Hi Karen,

Your question highlights a very common haze about credit. Therefore, I’m glad you asked, because it gives me the perfect opportunity to clear out some of the clouds for everyone.

In the financial context, credit is a loan. A bank might extend someone credit — a set amount of cash available on a credit card — based on past borrowing and repaying performance. For example, they may allow the cardholder the ability to spend up to $5,000. If that person does really well by charging regularly and paying on time, but doesn’t go overboard by maintaining a high balance, all is grand. The credit issuer sends the cardholder’s glowing information to the credit reporting bureaus, and his credit rating (which is measured by credit scores like FICO) goes up.

So does this differ from a rental agreement? Absolutely. The landlord or building owner does not lend money to the person moving into the property. Instead, she allows the tenant to stay there according to the terms set forth in a lease or rental agreement. If the tenant pays on time and adheres to the rules of the contract (which the landlord must also follow), problems are avoided. The credit bureaus are not notified because rent payments are bills, not loans or lines of credit.

That said, most landlords will pull prospective tenants’ credit reports and scores to find out if they are a good risk. If the person has used credit responsibly by keeping debt down and paying on time, there’s a greater chance he will also submit his rent when he should. But credit reports are only part of the qualification process — for example, the landlord will also make sure the home-seeker has a job that’s steady and provides enough income to afford the place.

Which brings us to the co-signer issue. Because of your son’s young age, he may possess neither the attractive credit history nor the employment requirements necessary to support the rent. In this case, adding someone who does have established credit and who can add to the cash flow makes a great deal of sense.

If you were to co-sign, you would become equally responsible for the rent and upkeep of the home per the contract. So if your son or his buddy is supposed to send the money and doesn’t, or if a beer keg explodes in the bathroom, flooding the place and ruining the hardwood floors, the landlord can demand payment from anyone on the lease. The landlord might also send the debt to a collection agency, which will then hurt your credit reports (and make it even more difficult for your son to secure another rental). And if things get really bad, the landlord can sue for unpaid rent and/ or damages. The judgments will also wind up on the reports.

Now you have to make a decision: to co-sign or not. Maybe I’ve watched too many episodes of “Campus PD,” but if I were in your position, I’d give it a pass.