Welcome back to another episode of the Make Money Your Honey Podcast!
First of all, thank you so much for the outpouring of support as my team and I learn how to do this podcasting thing. This was a project I was pretty scared to try, and your kind words have helped tremendously with my nerves 🙂
Second of all, in this episode we’re going to be talking about how to start paying down student loan and credit card debt. Because we’re discussing financial topics, just a friendly reminder that I’m not a certified financial planner, attorney or anything like that. I’m simply a regular 20-something who writes and teaches finance for a living so I’ve learned a thing or two.
With that being said, when we’re discussing topics like consolidation, putting extra payments toward your debt (on top of the minimum), refinancing and so forth, please keep in mind that everyone’s situation is totally different. What works for some may not work for others because there are a bunch of variables involved like credit scores, minimums, interest rates, payment terms, what kind of loan you have, etc. Please make sure to crunch all the numbers and seek guidance from an expert if need be.
Now let’s get to those tips!
Tip #1 Break Down Your Debt Repayment Goals Into Easy Steps
The first step in paying down student loan and credit card debt is to break down your big lofty goals into smaller steps.
Simply ask yourself, how much do I want to pay off by the end of the year? This should include the minimum payment as well as any extra money you’re putting toward your debt repayment.
Once you have that number, break it down into a monthly amount. For example, at the time of recording this podcast the person I met at the CollabMiami event wanted to pay down his student loan debt by $10,000 by the end of the year. That meant he would have to pay a little more than $1000 a month toward his student loans.
He realized this wasn’t possible with his current salary and employment situation, so he brought it down to an extra $500 a month. This was much more doable, got him motivated and he knew what steps he would be taking next in order to pay down his student loan and credit card debt.
Tip #2 Find Ways to Make Extra Money
I roll with a lot of finance bloggers and they all seem to have something in common, those who had enormous amounts of student loan and credit card debt found ways of making extra money on top of their day jobs. All the extra money they made was then put toward their debt.
I, myself, did this a few years when I couldn’t find a job. I started freelance writing as a way to make some extra money while I looked for work. Once I found a job, I kept freelancing to have additional income.
Tip #3 Refinance Your Debt
If your student loan and credit card debt is getting in the way of paying your other bills, you may want to consider refinancing. This could bring down your monthly payment as well as decrease your interest rate. Just keep in mind that this could prolong the length of the loan.
There are two ways people tend to refinance their debt:
- Refinancing with a private company like SoFi
- Refinancing by taking out a personal loan and using it to pay off high-interest debt.
Tip #4: Consolidate Your Debt
Consolidating is a good option if your debt is spread across multiple loans of credit cards. The idea is you take out one loan using the methods above, pay off the multiple debts and then pay off that one loan over time. This helps you organize your finances so that you’re dealing with one bill instead of several.
Tip #5 Find examples of people who’ve paid down their debt.
When you’re dealing with a task like paying down student loan or credit card debt, it’s super helpful to find examples of people who’ve been able to do it for themselves.
I recommend checking out the attendee list for The Financial Blogger conference to find individuals who share tips, resources and also talk about the emotional side of paying down debt.
Resources Mentioned Or That Add Value to This Podcast
- CollabMiami – Freelancer co-working meetup in the Miami area.
- SoFi Student Loan Refinancing (affiliate link) – Private company that can help you refinance or consolidate your student loan debt. Use my referral link and get a $100 bonus.
- SoFi Personal Loans (affiliate link) – They can also help you refinance or consolidate credit card debt. Use my referral link and get a $50 bonus.
- MoneySavingPro.com Loan Comparison Tool – A very cool tool that allows you to compare multiple personal loans without giving out personal information.
- The Financial Blogger Conference (affiliate link) – My FAVORITE blogging conference of all time. You can check out the blogs of other financial experts and network with them. This is hands down one of the best business investments I make every single year. (P.S. I’ll be speaking again this year! Come hang out with me in San Diego in September!)
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