Money Monday: Top 10 Ways to Conquer Your Debt
Happy Money Monday! We know that debt can be a challenge for both UC Davis students and those out in the real world. Even if you don’t have a mortgage because you’re stylin’ in one of our fabulous Davis apartment near the UC Davis campus, chances are that you have some debt. Whether you’ve got student loan debt, credit card debt and family loans that you need that need to pay back, the good folks over at Lifehacker.com have Top 10 Ways to Conquer Your Debt. Here are just a few of our favorites:
9. Cut the Cost of Student Loans
The average person carries $27,000 in student loan debt—a huge burden. The good news is you can refinance your student loans and save over a thousand dollars in doing so. You might even be able to get your student loans forgiven or paid for by your employer and eliminate that debt entirely. If you need help managing your loans, Tuitio.io can help you find the most effective plan to tackle your student loans or you can use simple Excel formulas to compare different student loan options.
6. Use the Debt Snowball Method to Tackle All Your Debt
With the snowball method of paying off debt, you apply the majority of your available money for debt repayment to one loan and minimum payments on the others. Then when the first loan is paid off, you tackle the next loan and so on until all you’re out of debt completely. This Excel spreadsheet can help you set up your snowball payment schedule. If you’re not sure whether you should pay off your smallest balance first (for the motivational boost) or the one with the highest interest rate (which makes more financial sense), consider the “blizzard” payment method, which combines both strategies.
5. Negotiate Your Credit Card Interest Rate and Loan Amounts
A lower interest rate will help you pay off your credit card balances faster. All you have to do is ask, and if you’re successful, you can save hundreds or thousands of dollars, depending on your credit card balance. If you’ve got medical bills—one of the biggest sources of financial distress and common causes of debt—you might be able to get financial aid from the hospital or negotiate that medical bill. You might be able to settle other debts if you can’t pay them back completely.
3. Pay Down Debt and Invest at the Same Time
You want to get rid of your debt but you need an emergency fund and don’t want to lose out on the power of compounding to help with your retirement savings. It doesn’t have to be an either/or situation. You can pay down debt and invest at the same time. Perhaps prioritize your most expensive debts (ones with interest rates above 6%) and save some money as well. Budget for an emergency fund, debt, and retirement. This hybrid approach appeals to our emotional needs while also meeting our financial goals.