Day 6 of my Work & Money posts!
Today I want to talk about debt!
Debt can be a major headache, even when it was accrued for something worthwhile like higher education. A recent analysis of debt by NerdWallet shows that Americans owe $1.5 trillion dollars in student loans and $444 billion in credit card debt. That is A LOT of debt. Outside of mortgages, most of us have some debt and another study shows that for most Americans, an unexpected expense of $1000 would put them into debt if they weren't already. So, how can you become the minority and become debt free?
Here are some ideas: There are different strategies to tackle debt, both are equally helpful and by committing to one you've already made progress: ACTION.
1. Snowball - which means you tackle your smallest debt first and once finished, move on to the next highest and so on. This strategy helps you feel like you are making progress and can offer an easier starting point.
2. Avalanche - which means you take stock of all of your debt and pay it off by highest interest rate first. This strategy can be a smart way to make some real headway with the one that is accruing the most interest. Often, they are your credit cards which have 20-30% interest, rather than your student loans which are more like 5-10% interest.
Sometimes money is tight and it's hard to direct money towards your debt. Sometimes it feels like a never ending, futile, battle but I want to impress upon you the value of being debt free. In simplest terms, it offers you freedom.
Cutting back spending on nonessentials (yes I'm talking about your spotify, netflix, ipsy, hbo subscriptions - even if its temporary) and boosting your income by selling things you don't need or working on a side gig are both ways to help you shuttle money towards your debt. You can do this!
Maybe you're debt free? Congrats! Stay that way!
Ways to do so include only spending money you know you have. Having a credit card can be a great way to rack up rewards or points, but the key is to pay them off every month. Carrying a balance can be a slippery slope - I speak from experience.
Continued in comments!