Quick Tips for Getting Out of Debt
Updated: Jul 13, 2022
I participated in a “Getting Out of Debt” webinar this week and I had a ball doing it! You can watch the entire event if you like, but here are the cliff notes version of my favorite questions:
Question: What do you think of Dave Ramsey’s debt reduction plan?
My answer: The only debt reduction plan that works is the one you’re going to stick to. And Dave Ramsey doesn’t know what that is for you. But, he advocates for the snowball method of debt reduction, rather than the avalanche method.
➞ Avalanche method - list your debts and pay off the one with the highest interest rate first.
➞ Snowball method - list your debts and pay off the smallest one first (paying the minimum on all others).
I wasn't as clear as I should have been in the webinar, but to hear my thoughts on which method is best for a particular situation, check out the video at the 8 minute mark. And if you want to know what I really think about Dave Ramsey, check out this video, around the 3 minute mark.
Question: Is student loan debt “good” debt or “bad” debt?
My answer: Debt literally means that you owe something to someone. Which means you received something and now you have an obligation to repay it. It doesn’t matter whether it was a “good” idea or a “bad” idea at the time - right now it’s an obligation to pay. And debt affects your ability to focus on other priorities. So “good” or “bad” debt isn’t a real thing - getting out of debt and staying out of debt is the objective.
Question: Should I refinance my student debt? How should I handle student debt when I can’t afford to pay?
My answer: First, contact your lender to learn what options and programs that they may have related to your specific situation. If you’re unable to find a resolution, you may consider refinancing the loan. But it’s like any other refinance, make sure that you understand the rates, fees and terms of the refinance. Same for loan consolidation...give it the side eye...the strong side eye. For more info on student loan refinancing, visit Sofi.
Question: Where can I go to learn more information on... finances, investing, debt, etc …?
➞ https://clark.com/ - he’s fair, unbiased (in my opinion) and easy to understand
➞ https://www.credible.com/ - compare rates on refinancing, credit cards, mortgages, etc.
➞ And of course - me...I LOVE talking to folks about financial goals and how to make your finances work for you. Join the next round of webinars or the Facebook Group for free personal financial tips.