Episode 82: Facing Your Money Fears & Figuring Out Your Finances with Melanie Lockert
This week I sat down with blogger and author Melanie Lockert to discuss the struggles people face when it comes to debt.
Melanie is the founder of the blog and author of the book, Dear Debt. Through her blog, she chronicled her journey out of $81,000 in student loan debt. Her work has appeared on Business Insider, Time, Huffington Post and more. She is also the co-founder of the Lola Retreat, which helps bold women face their fears, own their dreams and figure out a plan to be in control of their finances.
HERE’S WHAT YOU’LL LEARN FROM THIS EPISODE:
Melanie’s background and how she began educating others about debt
Episode 64: Paying Down Six-Figures of Student Loan Debt with Travis Hornsby
This week I sat down with Student Loan Planner, Travis Hornsby to talk about student loan debt.
Travis founded Student Loan Planner after helping his wife figure out her six figure med school loans and realizing that all their friends needed help too. He’s consulted on more than $250 million of student debt, which is more than any one person in the country. He loves helping clients realize that financial freedom and security is possible no matter how high their student loan balance. He lives in St. Louis, MO.
HERE’S WHAT YOU’LL LEARN FROM THIS EPISODE:
How Travis got into the student loan business
The difference between undergraduate and graduate student loans
Where most people get into trouble with student loan debt
The two best approaches when you are in a ton of student loan debt
How much debt you should have if you’re considering the refinancing option
A large tax bill doesn’t have to be as scary as you think
The importance of shopping around during refinancing
Places to turn to if you feel your student loan debt is unbearable
How to manage stress from student loan debt
Options to deal with student loan debt as a couple
Conversations to have with your spouse if one or both of you have student loan debt
Common professions that find themselves in student loan debt
The shift in the education industry that is increasing student loan debt
Why you should look at a financial aid/school admissions department like a sketchy used car lot
Episode 02: Master Your Career & Debt With Adrienne Dorison
This week I had the incredible opportunity to talk with Adrienne Dorison of www.adriennedorison.com and The School of Self-Mastery Podcast.
Adrienne Dorison is a business strategist and podcast host who helps experts, entrepreneurs and business owners get better results in less time. Adrienne has a corporate background with LEAN Six Sigma as a continuous improvement expert and she has developed proven systems for entrepreneurs that deliver real results, fast. Adrienne has been recognized as a thought leader in the millennial entrepreneurial space. She hosts her own podcast, The School of Self-Mastery, and contributes to a myriad of media and publications.
WHAT YOU’LL LEARN FROM THIS EPISODE:
How Adrienne became debt-free in less than six months!
Why figuring out your survival expenses is important before making a career change.
Why you don’t necessarily need to have it all figured out before making a move.
Why having a timeline matters when you’re tackling financial goals.
What being vocal with your goals looks like and how it impacts your spending patterns.
If you’re someone who receives a tax refund, the sudden surge in cash, no matter how large or small, is sure to put a smile on your face. You overpaid your taxes for the year and now you have some extra money you weren’t necessarily expecting. So, what do you do with your tax refund? Here is a list of 20 smart money moves you can make with your tax refund:
1. Start or add to your emergency fund It’s always a good idea to have rainy day money for the ‘just in case’ moments in life.
2. Put it towards something you’ve been saving for Maybe you’ve been saving for a large purchase like a car or new technology. Your tax refund may not cover all of it, but it can certainly help you save up for that big-ticket item a little faster.
3. Pay down a debt If you have credit card debt, this is exactly where your tax refund should go. Get rid of those high interest payments first!
4. Make a home improvement Home improvements can increase the value of your home and your level of enjoyment in your home. You can definitely use a tax refund to tackle that landscaping project, put in those French doors or put it towards any home improvement project you’ve been dying to get to.
5. Give it away to a charity Giving money away to your church or a cause you believe in is a wonderful way to use your tax refund and may become a tax write off on next year’s return.
6. Invest it in your business Own a business? This extra surge in cash can be put towards new equipment, software, inventory or something else that can make your business run more efficiently and be more profitable.
7. Buy something you want (within reason) Although not the most financially savvy option, it’s ok to splurge on yourself every once in a while when you’ve been working hard to save and tackle debt.
8. Make an extra mortgage payment Making extra mortgage payments help you pay down the principal amount of your loan faster, reducing the length of your loan and interest payments.
9. Have an experience Buy an experience with your tax refund instead of an item. Experiences create memories that have much stronger lasting gratification than a shiny new toy.
10. Buy someone a gift If you’re the generous type, show someone you care about them by buying them a gift just because.
11. Invest in yourself Prioritize your own personal and professional development by investing in your growth.
12. Open a Roth IRA If you haven’t opened a Roth IRA yet, you can use your tax refund to open one now. I like how these retirement accounts work and recommend them even if you already have a 401(k).
13. Save it for your child’s education Open or make a contribution to a 529 plan that specifically allows you to set money aside for education purposes.
14. Pay it forward Next time you’re at Starbucks, pay for the guy or gal in line behind you. Spreading goodwill and good cheer is an excellent use of money any time of the year.
15. Host friends and family Invite everyone over to your place and host a get together! Fun times all around and you won’t worry about dipping into your regular grocery budget this month.
16. Update your wardrobe Use a portion of the money to add one or two staple pieces to your wardrobe.
17. Re-energize your health Join yoga, Pilates or a gym. Try purchasing a couple of workout DVDs or spending a few extra dollars on healthier items at the grocery store. A healthier you could translate into reduced costs for medical expenses over the long term.
18. Visit friends or family Not everyone lives close to their friends and family. Maybe you can take that trip upstate or buy a plane ticket cross country to spend some good quality time together.
19. Be extra generous Give your mailman or garbage man a tip, leave a little extra for the waiter, buy an extra box of Girl Scout Cookies!
20. Do a little bit of everything Typically, I recommend a 50 / 30 / 20 allocation: 50% towards debt, 30% towards savings and 20% towards a splurge on yourself. This gives you the best of all worlds and ensures you’re putting the money to good use! What are you planning on spending your tax refund on this year? Tweet me @marybstorj!
Being saddled with student loan debt can feel like an enormous burden. Many millennials are holding themselves back in life because they’re struggling to afford their minimum payments along with trying to save for everything else in life.
If you’re in this situation, there’s a way out. While plenty of young adults are dealing with student loan debt, many more are successfully paying them off. Not sure how to create a plan to pay down your student loans? Start here.
Saving vs Paying Off Debt
Chances are you know saving your money is just as important as paying off your debt. But how do you know how much to save? Or what you should be saving for? Or how to save and pay off your debt? It can be difficult to prioritize.
You should put creating a cash cushion of about $1000 at the top of your financial to-do list. A small emergency fund can help you get through unexpected situations without pushing you further into debt.
What if you have bigger goals? Look at the big picture. The standard repayment period on student loans is 10 years — you probably don’t want to wait that long to save for a house or for a wedding.
You need to find a way to balance paying off your student loans with saving, if that’s the case. You can re-evaluate your budget to see if you can cut any costs or lessen some expenses. Be critical about what’s truly a need, and what falls under the “wants” category.
If you have multiple goals along with paying down student debt, you can also start earning extra money to fund savings with a separate income stream. This allows you to make progress in a number of areas, instead of being limited to just one financial priority.
(And yes, you can earn more money! You can start by negotiating for what you’re worth at your current job — or even consider looking for new positions that pay better. You can also take the initiative to start a side gig in your free time to earn a little extra.)
What Are Your Interest Rates?
Your interest rate is a percentage charged when you borrow money. The higher your interest rate, the more money you’re paying to borrow money. Additionally, the longer your repayment term (again, the standard is 10 years for student loans), the more you’ll end up paying over the life of the loan.
It’s worth noting some people believe in paying the minimum if your interest rates are around 2.2% or lower. This is because saving and investing your money will get you a better return on your money. (That’s assuming you actually save it, though!)
If your interest rates are on the higher end — around 5% or more — you might want to prioritize paying them off. You don’t want to pay more money toward interest if you don’t have to.
Making Extra Payments
That’s where making extra payments comes into play. The more you can pay toward your student loans, the less you’ll be paying toward interest. This allows you to chip away at the principal balance of your loan.
You don’t necessarily have to pay extra all the time, or only during your regular payment, either. Pay more when you can, even if it’s just once or twice a year.
Options Available If You Can’t Afford Payments
There are several thousand graduates out there with six-figures in student loan debt with no way to repay it. If you’re stressing about affording your student loan payments, there are a few options to consider.
If you have federal loans, there are many flexible income-based repayment options available to you. Call up your loan servicer and explain the situation you’re in. They might be able to recommend a specific repayment plan to look into.
Federal Student Aid has a guide on what repayment plans are available, and what it takes to qualify for them. Additionally, you may qualify for deferment or forbearance if you’re experiencing financial hardship.
If you’re struggling to make payments on your loans, you may be eligible for deferment, which is a temporary period where you don’t have to make payments, and interest doesn’t accrue on subsidized loans. Interest does accrue on unsubsidized loans. Forbearance is similar to deferment, except interest continues accruing on all of your loans during the time you don’t have to make payments.
Not having to make payments gives you a chance to get back on your feet and to begin managing your cashflow better.
Getting your loans forgiven, discharged, or canceled is possible, but only in select circumstances. (Again, see Federal Student Aid for an overview of those circumstances.) These options mean you no longer owe anything on your student loans.
What if you have private loans? They don’t come with the variety of repayment plans federal loans do, but many lenders are willing to work with borrowers by granting them forbearance periods. If you need help, pick up the phone and call your loan servicer and see what they can do for you.
Refinancing or consolidating are two options to look into as well. The purpose of refinancing your student loans is to improve your terms (to lower your interest rate, for example). The purpose of consolidating your loans is to make it easier to pay them. If you owe money to 7 different lenders, consolidating them rolls them all into one easy payment. You can do both with federal loans, too.
Steps to Paying Down Student Loans
Now that you’re armed with some essential knowledge on student loans, it’s time to talk about how to get rid of them.
Look at Your Entire Financial Situation: Do you have any other debt? What’s your salary? How much can you afford to pay toward your student loans? These are all things you need to get clear on to formulate a plan of attack on your loans.
Start Budgeting and Tracking Your Expenses: That’s where budgeting and tracking your expenses comes in. You need to know where your money is going, and how you’re using it. This is especially true if you’re finding you don’t have enough money to last you a month.
Evaluate Your Expenses: After you’ve established your budget and have an idea of how much you’ve been spending and where, go back and evaluate your expenses. Question how much value you’re getting out of things. If paying down your student loans is your top priority, you need to make room for extra payments in your budget.
Focus on Earning More Money: If you’ve cut back on all your expenses, and are still struggling to make payments or find room in your budget for basic needs, try earning more money. You can work overtime at your job, take on additional shifts, or get a second job.
Having trouble finding employment? Many individuals are making their own jobs based off of hobbies or skills they have. Do you enjoy pet-sitting, babysitting, crafting, consulting, freelancing, or organizing? Advertise your services and get the word out.
Have a Plan and Follow It: Paying your student loans off is going to be a long journey. It’s important to have a plan to refer back to when times get tough. Choose exactly how you’re going to pay off your debt. Pick one loan out from the rest and singularly focus on paying it down, while paying the minimum on the rest. This one loan might be the loan with the highest interest rate, the lowest balance, or one you just want to see gone.
Stay Hopeful: Remember, paying off debt can be a difficult journey filled with ups and downs. It’s important to build a support system and stay hopeful when you hit a roadblock. Surround yourself with friends who can relate to what you’re going through, and stick with people who help you achieve your goals.
By following these six steps, you’ll be on a clearer path to paying down your student loans. Don’t get discouraged; there are plenty of options available to you if you’re experiencing difficulty paying your loans back. The worst thing you can do is not make any payments. Always reach out to your loan servicer to see if they can help you out.
Stay focused, determined, and hold yourself accountable. Don’t let your student loans own you — own them instead.