If you want to figure out how to pay off student loans faster, put together a debt repayment strategy that focuses on two considerations: spending less on interest and making extra payments. The less you pay in interest, the more you can put toward your principal. And when you pay more than the minimum payment each month, you reduce the length of time you’re saddled with student loan debt. These seven tips can help you make a plan and put it into action. 

1. Understand the impact of interest rates

You likely know the interest rate on your student loan, but do you know how much money you’ll pay in interest over the course of your repayment term? If you calculate the actual cost, you may be surprised at the number. You can use this student loan calculator to see how much interest you’ll pay over the life of your loan; that amount alone may inspire you to pay off your loans faster. 

The average student borrows around $30,000 in pursuit of a Bachelor’s degree. Interest rates vary depending on the type of loan. But say you took out a $30,000 loan at the current federal direct subsidized and unsubsidized loan interest rate of 5.50%. If you make the minimum monthly payment and plan to pay off your debt over ten years, you’ll pay over $9,000 in interest on top of the principal balance. If you make extra payments to eliminate the same loan debt in five years, you’ll pay about $5,000 less in interest. And if you can refinance at a lower interest rate, you’ll also pay less in interest and could pay off your loans faster. 

2. Budget for extra payments

Set a realistic budget for paying back your student loans, and stick to it. Many people find the  50/30/20 budget rule helpful: 50% of your income for needs like rent and groceries, 30% for wants like entertainment, and 20% for saving and getting out of debt. If you want to pay off student loans faster, consider shifting those percentages so you can make extra payments. For instance, you might decide to reduce some discretionary spending so you can devote just 20% of your income to wants and devote 30% to debt repayment and savings.

3. Watch out for debt repayment scams

When you’re trying to figure out how to pay off student loans faster, you’ll likely encounter lots of companies that promise to help you do just that. But be wary: scams are everywhere, so if something seems too good to be true, it probably is. Watch out for debt relief organizations that ask you for money upfront or that promise to immediately eliminate your debt. Do your homework before you commit to any new repayment plan.

4. Take advantage of the PSLF Program

The Public Service Loan Forgiveness (PSLF) Program offers as much as $10,000 in loan forgiveness for government and nonprofit organization employees. Here’s how it works: Full-time employees of qualifying organizations who make 120 qualifying monthly payments under a qualifying repayment plan are eligible to have the remaining balance forgiven on their Direct Loans. If you’re just starting your career and are interested in the government or nonprofit sector, do some research to see if your desired jobs and the type of loans you have qualify. 

5. Consider refinancing your loans

If current interest rates are lower than the rate you’re paying, refinancing might be a way to pay off your loans faster. Are you making multiple student loan payments each month? When you refinance your existing loans, you can consolidate those loans into one new student loan. The new loan is used to pay off your old loans, and you’re left with one more manageable monthly payment. You can refinance if you only have one loan as well. In either case, you could benefit if you refinance at a lower interest rate. 

There can be downsides to refinancing. If you consolidate federal loans into a private loan, you give up some deferment and forbearance options, and it could affect your student loan forgiveness eligibility. Also keep in mind that there may be fees associated with refinancing, so be sure the money you save on interest in the long term is worth it. And avoid the temptation to reduce your monthly payments as part of a refinancing plan; that route is less likely to help you pay off your student loans faster. 

6. Reduce your housing expenses

For most people, rent is one of the largest monthly expenses. If possible, consider ways to reduce that financial burden. Solutions may include moving somewhere less expensive, living with family, or splitting costs with roommates. Reducing your housing expenses can free up some of your income to put toward extra payments on your student loans. 

7. Reduce other expenses

Reducing your expenses across the board can free up money to put toward extra payments so you can pay off your student loans faster. Look for a variety of ways to save money, like reducing impulse spending, finding better deals on expenses like insurance and utilities, and letting go of some nice-to-haves that you can live without. A little austerity now means you’ll have more financial flexibility later. 

Remember, student loan debt is temporary

With careful planning and discipline, you can get free of student loan debt sooner than you think. Student loan debt is temporary; when you plan out how to pay off student loans faster, you can take more control of the timeline. Federal Student Aid has handy calculators that can simulate various scenarios, such as eliminating your debt in less than 10 years or developing the fastest plan to pay off $200k in student loans. The most effective way to pay off student loan debt is unique to each individual; these tools can help you make a plan for your particular circumstances.

For many people, getting out of student loan debt quickly is worth the effort because it frees up money to save for goals like buying a house or contributing to a retirement account. And the faster you pay off your loans, the less you spend on interest over the long term; that’s money you can save and invest for your future. 
Stash can help you stay on top of your spending with built-in budgeting tools and helpful insights about where your money is going. Get ahead on your student loan payments today so you can focus on your long-term financial goals tomorrow.

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While each individual’s circumstances vary, trends show that, on average, Gen Zers hold the least amount of debt, while Gen Xers shoulder the highest debt burden.

For common types of consumer debt, here’s how the average debt owed per consumer breaks down per category.

Debt’s effect on your life

You may have heard references to “good debt” and “bad debt.” Generally speaking, things that may have a long-term positive impact on your financial health are considered “good debt.” That includes student loans, which may increase your long-term earning potential, and mortgages, which can add to your net worth if your home rises in value over time. When people refer to “bad debt,” they often mean things like money you owe on credit cards or an auto loan: purchases that depreciate in value. 

There’s no shame in being in debt, whether it’s the “good” or “bad” type. The difficulty is that carrying debt over time can have a negative effect on your life in a number of ways, such as:

• Cash flow: Monthly debt payments can eat into the money you have available to spend each month. If your minimum payments are particularly high, it can even be difficult to budget for necessities. 
• Credit score: Having a lot of debt or late payments can lower your credit score, making it more difficult to be approved for a loan or line of credit if you need one. Some employers even look at applicants’ credit scores as part of their hiring process. 
• Saving for the future: Every dollar you spend on debt payments and interest is money you can’t put into savings and investments that could help you work toward your long-term goals or save for retirement.
• Risk of falling behind: Even if you have only “good debt,” it can turn bad if you fall behind on payments. Late payments can lower your credit score and result in fees and increased interest rates; it can also be difficult to catch up later.
• Stress: Worrying about debt and finances can take a toll on your mental health as well as your financial well-being. The American Psychological Association reports that 65% of Americans cite money and personal finance concerns as a significant source of stress.   

But the good news is that you can counter the negative effects by learning how to get out of debt, making a plan that works for you, and taking steps now to start your journey toward debt-free living. 

How to pay off your debts faster

Paying off debt takes planning and discipline, but there are techniques you can use to succeed. Depending on the amount you owe and your current financial position, it may take you a longer or shorter amount of time to pay off your debt than another borrower. But regardless of your situation, the sooner you start figuring out how to get out of debt, the sooner you’ll be able to put the money you spend on interest back in your own pocket.

These six tips can help you make a plan and start taking action now:

1. Stop borrowing money 
2. List all your debts
3. Make a budget
4. Negotiate your interest rates
5. Use a debt repayment method
6. Put extra money toward monthly payments

1. Stop borrowing money

Don’t continue to accumulate debt. It may sound obvious, but your spending habits can allow additional debt to creep into your life, sometimes unwittingly. 

You may wish to take a look at how you use credit cards first. Remember that a line of credit is really a type of loan, and you’re paying interest on the money you borrow each time you whip out your card to make a purchase. By using your debit card instead of your credit card, you’ll only be able to spend the money you have in the bank. This may entail reducing spending on non-essential items in your budget, like entertainment. 

Another sneaky way more debt can accumulate is if you routinely use credit cards to earn points or rewards. If you pay off your credit card balance every month, before interest can accumulate, you won’t add to your debt. But it’s easy to spend more than you’d planned and wind up with additional debt if you can’t pay off the full balance when it’s due. 

Review all your auto-payments to see which ones are being charged to credit cards, and switch them to your debit card instead. That way, you won’t be adding to your credit card debt without realizing it. This is also a good opportunity to check for monthly or annual subscriptions you’ve signed up for but are no longer using; it’s easy to start a free trial and forget to cancel it.

Finally, avoid accruing additional debt in the form of loans. If you need to borrow money to make a larger purchase, like a new car or home improvements, consider whether you can delay those purchases.

2. Gather your debts

To plan how to get out of debt, you’ll need a clear picture of exactly how much you owe. Make a list of all of your debts, including student or auto loans, credit card debt, your mortgage, and any purchases you’ve made on installment plans. Track the amount you owe, the interest rate, and your minimum monthly payment for each debt. Having the complete picture will help you better understand how much you’re actually paying toward your debt each month, and whether you’re able to contribute more toward debt that carries a higher interest rate.  

To ensure you track down all your debts, you might want to take a look at:

• your bank account statements for the last year
• your credit card statements
• records in digital payment apps
• your credit report; you can get a free copy of your credit report without negatively impacting your credit score 

3. Adopt a budget that you can stick to

Creating a budget and regularly tracking your spending is a cornerstone of planning how to get out of debt and managing your money to put that plan into action. When you have a budget, you can see exactly how much money you’re bringing in, plan how to spend it, and track where it’s going. You decide what’s essential and what’s optional, giving you the power to make decisions that help you reach your debt-free goals. 

Making a budget is the first step; sticking to it is another matter. Luckily, there are many different budgeting approaches, and you can choose one that fits best with your lifestyle. 

50/30/20 budget

The 50/30/20 model is a popular approach because it provides clear guidelines for allocating your money. With this method, you divide your spending into needs, wants, and savings/debt, then allocate your after-tax earnings to each category.

• 50% to needs: Things you need for survival, like groceries, utilities, minimum loan payments, insurance, and health care
• 30% to wants: Things you want to make life more enjoyable, such as dining out, vacations, entertainment, and just-for-fun purchases
• 20% savings/debt: Savings, investing, and/or making additional payments on your credit card debt and other loans

4. Negotiate and reduce your interest rates

There may be options to reduce your interest rates for some of your debts. The more you’re paying in interest, the longer it’s likely to take to wipe out your debt, so it might be worthwhile to investigate your options.

• Credit card debt consolidation: You might be able to transfer your balance from one or more credit cards to a card with a lower interest rate. Keep in mind that you must be in good standing with your credit card payments and be able to qualify for the new lower-interest card, and there are often fees when you transfer a balance. 
• Credit card interest rate reductions: Some credit card companies have programs for reducing your interest rate. Some issuers might reduce your rate if you have a history of on-time payments or are facing financial hardship. Others have programs designed especially for people whose debt has become unmanageable. 
• Student loan options: Your student loan issuer may have a variety of options for reducing your interest rates, including debt consolidation if you have multiple loans and deferment if you’re facing financial hardship. There are also a variety of federal programs you may qualify for.  
• Other loan options: Any loan issuer might offer programs or be willing to negotiate a lower interest rate, so it’s worth calling to ask.
• Overall debt consolidation: If you have multiple debts, you may wish to research debt consolidation loans. With these programs, the financial institution provides a loan to pay off all your other debts, and then you pay off that single loan. If you go this route, make sure the interest rate on the loan is lower than the rate of all your other debt.  

Be aware that any debt consolidation or interest-rate reduction programs may have fees associated with them, so do the math to ensure any fees don’t outweigh the savings you’ll get by reducing your interest rate. 

5. Tackle your debts with the snowball method

When you have multiple debts, it may feel overwhelming. One approach that can have a big impact is to start small and work your way up: that’s the debt snowball method in a nutshell. Many people find this strategy effective and encouraging when they start their get-out-of-debt journey. 

Here’s how it works: Take your list of debts and organize them by the total amount you owe, from smallest to largest. Every month, make the minimum payment on each account. Then, pay extra on the smallest debt every month. When that’s paid in full, shift all the money you were paying toward that debt to the next largest one, and continue paying the minimum on everything else. 

Here’s a hypothetical example of how it could work in practice. Pat has the following debts:

• Store credit card: $500 balance, $25 minimum payment per month
• Major credit card: $1,200 balance, $65 minimum payment per month
• Car loan: $5,000 balance, $130 minimum payment per month
• Student loan: $15,000 balance, $190 minimum payment per month

Pat pays the minimum payment for all those loans each month, plus an extra $100 toward the store credit card. When the store credit card is paid off, Pat starts paying an extra $125 a month on the major credit card; that’s the total of the store credit card’s $25 minimum payment plus the extra $100. 

One reason this method is so effective is that you gain a sense of accomplishment each time you completely pay off a debt. And the amount you can put toward paying off debt gets bigger and bigger as you go along, just like rolling up a snowball. 

Try the avalanche method for high interest debts

The snowball method isn’t the only approach you could take. People who have some debts with especially high interest rates might want to try the avalanche method, in which you pay extra on the debts with the highest interest rates first. While the easiest method for getting out of debt depends on your situation, what matters is choosing a strategy that works best for you.

6. Pay more than your required minimum payment

The consequences of making only the minimum payment on your debts each month can add up quickly. Say, for example, you have $5,000 in credit card debt, with a minimum payment of $125 and an 18% interest rate. If you only make the minimum payment each month, it will take you nearly four years to pay off your debt, and you’ll spend a total of $2,013.21 in interest. If you up your payment to $300 per month, you’d accrue around $800 in interest and pay off your debt in less than two years. 

Even if you have a fairly low interest rate, the longer you have debt, the more you spend on interest. Putting extra money toward your monthly payment will help you get rid of debt faster, and you’ll pay less in interest as well. 

Your debt-free future

If credit card and loan payments are straining your budget, the tips above can help ease the burden, no matter how small you start. Even if you have relatively little debt now, making a plan for how to get out of debt may be a smart move so that you don’t wind up further in the hole. 

Whether you have “good debt” or “bad debt,” paying it off sooner rather than later can help you build a stronger financial future. When you get rid of debt, you can put the money you were spending on loan payments and interest into savings and investments that may earn profit over time. The institutions that hold your debt are making money from those loans; imagine how much better it would feel to have that money earning interest and returns for you instead.  

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Debt payment FAQ

What is the easiest way to get out of debt?

It depends on your circumstances and personal preferences for managing money. Both the snowball method and the avalanche method can be helpful strategies. Creating and sticking to a budget can help you put more money toward paying off debt and avoid going into more debt in the future. 

What can I do if I can’t pay my debt?

When what you owe is more than you afford to pay back, you can look for ways to reduce your payments by contacting lenders. Depending on the type of debt and the financial institution, you might have options that will reduce your monthly payments or interest rate, or even get a forbearance that pauses your payments for a period of time. 

You can also look into refinancing options for your mortgage or student loans if current interest rates are less than what you’re paying. A similar tactic can be used for credit card debt by transferring your balance to a card with a lower interest rate.

Some people also find that debt consolidation services can help. Institutions that offer a debt consolidation loan sometimes also negotiate with creditors on your behalf to reduce the balance of your debt.

Finally, you might also consider picking up a side hustle to earn extra income that you devote solely to paying off debt.

Can you remove debt without paying?

Generally speaking, once you have debt, you have to pay it off. Even if you declare bankruptcy, you’ll generally have to sell some of your assets to pay back as much of the debt as possible before the rest of the debt is discharged. And certain kinds of debt, like student loans and child support, cannot be discharged through bankruptcy.

That said, there are a few government programs for student loan forgiveness that apply to certain individuals and circumstances.

The post How to Get Out of Debt in 6 steps appeared first on Stash Learn.

The couple, who are based in Las Vegas, soon realized they were facing more than $50,000 in debt, living in a basement apartment and unable to afford what they truly wanted out of life. 

“We do have a lot of outside pressures telling us what we should want, what a successful gay looks like,” Schneider says. “Our spending was not at all aligned with what really mattered to us. We wanted to save for a comfortable retirement, travel much more than we had at that point, but to do it on cash and not come back with a credit card hangover, and to give back to their community.”

The couple, together for more than 17 years and married since 2017, are now the authors of “4: The Four Principles of a Debt Free Life” and the Debt Free Guys website, geared toward helping LGBT people climb out of debt and live smarter financial lives.

They confirm what the numbers show—that LGBT Americans are less financially stable than the general population and face unique challenges that affect their bank accounts.

Nearly half of the 500 LGBT respondents in a wide-reaching 2018 Experian survey said they struggle to maintain adequate savings, compared to 38 percent of the non-LGBT population surveyed, and more than a third said they have “bad spending habits” that they’d like to improve or change, compared to about one-fourth of their non-LGBT counterparts. 

Bias and discrimination has caused financial challenges for 62 percent of LGBT respondents, who also reported being passed over for jobs or promotions, being harassed at work and higher housing costs due to discrmination.

The LGBT population is also more inclined to spend money than save it, according to the Experian survey, and have more challenges when it comes to retirement planning.

Schneider and Auten focused their attention on LGBT finances after attending FinCon, the world’s largest financial content conference, in 2015, a year after they launched Debt Free Guys. They found groups dedicated to black finances, mommy bloggers, Christian bloggers, but not LGBT finances.

“That kind of put a little bit of a weight on our shoulders that said if no one else is going to do this we have to do it,” Auten says.  “We have the responsibility and the privilege to do that.” 

They also recognize that, as cis, white men, they have a privilege that can translate into helping other LGBT people who may be marginalized because they are people of color, transgender or living in poverty.

“I think that we need to be very encouraging to each other in the community that there are as many options and opportunities available to us as there is everyone else,” Auten says. “It may not feel like it at times, but it is.”

We’ve broken down the most pressing financial challenges for the LGBT community along with tips for financial stability.

Savings and Student Loans

Successfully entering adulthood often depends on strong family support and education — two things LGBT youth often don’t have. 

Though LGBT youth comprises just 5 percent to 10 percent of the population, they account for 40 percent of homeless youth. LGBT young adults are 120 times more at risk of being homeless than heterosexual, cisgender young adults.

That sets up the LGBT population for years, if not a lifetime, of struggling, financial stress and low paying jobs.

“You’re worried about where you are going to sleep at night or whether you’re going to be able to get through the day without getting beaten up, or every day you’re dealing with microaggressions because of who you are,” Schneider says. “It’s a little hard to then say, despite all this, I’m going to focus on saving enough for retirement.”

Saving and planning for a stable financial future is a privilege that many LBGT people don’t have the luxury to consider.

“Oftentimes when we think about finances in our community, it’s more from a position of desperation and not as much from a position of opportunity,” he added.

The lack of familial support also means much higher student loan debt for LGBTQ+ youth that make it to college. 

About 4 in 10 respondents in a Student Loan Hero survey of LGBTQ+ borrowers in 2019 said they’ve been denied financial help due to their sexual orientation. Nearly 30 percent say their student loans are unmanageable and a whopping 87 percent said their student loans have prevented them from reaching important milestones.

Still, college is a lifeline for many. Nearly 60 percent said they felt welcomed and accepted on their college campus.

Budgeting Differences

Once you do get to a point of budgeting and saving, it may look different than your hetero, cisgender counterparts.

“A lot of our budgeting needs will be different. A lot of our budgeting goals will be different,” David Rae, a Los Angeles-based certified financial planner whose firm caters to LGBTQ+ and LGBTQ+-friendly clients, says.

Fewer gay and lesbian couples have children than heterosexual couples. While exact numbers are hard to trace because some parents may feel scared to accurately report their status on the U.S. census, there are an estimated 2 million to 3.7 million children living with a parent that identifies as LGBTQ+, according to the most recent data.

Those families that do choose to parent children will spend more to bring those children into their families, through surrogacy, sperm donation, reproductive medicine and adoption fees.

LGBTQ+ Americans also face unique medical costs that can put a major strain on their budgets. This can include anything from higher HIV/AIDS treatment and medication, hormone therapy, and delayed or less effective medical treatment due to the stigma of being LGBTQ+.

For some transgender people who choose gender reassignment surgery, the medical costs can be crippling — almost six figures in some cases. That can be financially devastating for those who are uninsured or whose policies don’t cover the costs.

The Cost of Living (and Keeping Up with the Joneses)

Just a generation or two ago, rampant, dangerous homophobia and laws against gays and lesbians, Rae says, forced people into the safe havens of major cities like San Francisco, New York City or Los Angeles.  

“We don’t have to live in the ‘gayborhood’ necessarily anymore,” Rae says. ““But I do think for the most part, we are ending up in cities… which drives up the average cost. And some of that is to feel safe.”

There is also the very prevalent stereotype of the lavish gay lifestyle, especially among, gay men, according to Rae and the Debt Free Guys, and that plays a major part in spending beyond their means on things they may not even want.

“We want to prove that [LGBTQ+ people] are worthy, that we are just as good as our straight neighbors,” Auten says. “I think it’s a lot of [keeping up with] Mr. and Mr. Jones, Mrs and Mrs Jones.” 

The Atlantic even published a report about the myth of gay affluence, that pointed to a disparity between popular culture, such as Will & Grace and Modern Family and the reality that LGBTQ+ Americans live with a disproportionate amount of poverty and debt. Auten and Schneider says they have friends in New York City, a gay couple, who both earn six figures each, but who are drowning under six figures of credit card debt. 

The Experian study showed that nearly 50 percent of respondents ages 25-34 reported feeling financially out of control along with more than 40 percent of respondents ages 35-44.

“I think the media and the consumerism side of corporate America do a really, really good job, of showing us this is what really fabuous gay men look like,” Auten says. “If you want to be a good gay, you need to look like this.” 

Money Matters at Work

LGBTQ+ Americans continue to face financially devastating discrmination at work, from being denied jobs or promotions to making less money than their straight co-workers. Only 22 states and the District of Columbia have laws to prohibit discrimination on the basis of sexual orientation or gender identity, according to the Human Rights Campaign.

Lesbians reported making $45,606 to straight women’s $51,461, a difference of nearly 13 percent, according to a report from insurance company Prudential  about finanical experiences of the LGBTQ+ community. Meanwhile gay men reported making an average of $56,936 to heterosexual men earning $83,469, a difference of 46 percent. And the unemployment rate for transgender Americans is three times higher than the national average, according to a report from Out & Equal, a workplace advocacy group. (Note: The Prudential report, from 2016-2017 is the company’s most recent on the subject. The 2019 report from Out & Equal is also that organization’s most recent.)

“The best way you can bridge that gap is to build your skill set,” Rae says, “and be as marketable and as valuable an employee as possible.” 

LGBTQ+ Americans, especially those who are younger, don’t have to consign themselves to service jobs or low-paying gigs that don’t come with benefits simply because they are gay or may present outside of the binary, Auten says. 

“There are as many options and opportunities available to us as there are to everyone else,” he adds. “We should be supporting and encouraging each other to reach for those higher paying jobs.” 

Tips for Financial Success and Supporting the LGBT Community

LGBT Americans may face more of an uphill battle in erasing debt and building wealth, but the advice is the same no matter how you identify.

“Create your own opportunity. And a big piece of having that opportunity is having your finances in shape, ” Rae says. “If you’re drowning in credit card debt, you are dependent on that job. You need that paycheck. You don’t have the opportunity leave.” 

Support LGBT and ally businesses. Not only are they a potential source of employment, but they understand, accept and support other LGBT Americans. 

“We as a communty can benefit from supporting gay businsses, supporting gay-friendly businsess,” Rae says, adding that he keeps a constant eye on social justice investments for his clients. “Some of that is our spending and some of that is our investing.”

Save for retirement, even a little at a time. This should be a goal for all Americans, but LGBT Americans as a group are behind the savings curve. Saving for retirement was the top financial concern for LGBTQ+ respondents of the Experian survey. 

But it’s not easy. For one, Rae and the Debt Free Guys pointed out, the HIV/AIDS crisis killed almost an entire generation of LGBTQ+ Americans who would now be nearing or at retirement age and could have set the standard.

Also, retirement planning imagery often involves a “straight, white couple and their golden retriever walking down the beach,” Auten says. “If you don’t see yourself in any of the imagery then you don’t think it’s necessarily for you. As an LGBTQ+ person, you may not even engage with this.” 

Looking for an LGBTQ+ retirement advisor or certified financial professional (CFP) can go a long way toward helping you secure the future you want.

The post Why Saving and Debt are Big Problems for LGBTQ+ People appeared first on Stash Learn.

The original loan payment freeze was part of the $2.3 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, which among other things, originally suspended most federal student loan payments through September 30, 2020. That postponement period was then extended six more times. 

Here’s a quick update on where things stand.

What happened to loans during the forbearance period?

As of December 2021, about 43 million Americans had federal student loan debt totaling over $1.6 trillion.

During the federal loan grace period, qualifying student loan borrowers have been able to skip making monthly payments, and their loans have not accrued interest. If you have federal student loans, you may be included in the zero-interest period.  Good to know: Some federal loans, such as those that are part of the Federal Family Education Loan Program, a program that ended in 2010, are actually held by private banks, and are therefore not included. 

What happens on August 31, 2022?

Although the Biden Administration could once more extend the student loan pause beyond the end of August, 2022, it has not yet committed to doing so. 

However, a group of Senators, led by Senate Majority Leader Chuck Schumer (D-NY), Elizabeth Warren (D-MA), and Representative Ayanna Pressley (D-Mass) have long urged the president to cancel up to $50,000 in debt per student. 

In 2021, the decision to continue the student loan zero-interest period got a boost from an unexpected change at the federal level. The Pennsylvania Higher Education Assistance Authority (PHEAA),  which operates one of the largest loan servicers for the U.S. Department of Education, terminated its contract with the government in December 2021. That decision required the movement of 8.5 million accounts to other loan servicers, which gave the federal government an additional reason to keep repayments on pause.

Making a repayment plan

For now, borrowers should plan on making payments again in the fall. If you have managed to save money during the pandemic, consider paying off a portion of your loans before the zero-interest period ends. When you make payments on your debt during the zero-interest grace period, you’ll be paying down principal directly. Typically payments include interest. Making payments now could help you get paid off more quickly. If you have multiple student loans, you may also want to take advantage of the zero-interest period by paying off the loans that have the highest interest rate. 

Either way, consider revisiting your budget. Maybe you’ve been putting the money that you would be spending on your student debt into savings, or maybe you’ve been spending it. Now’s the time to make sure your budget has room for your monthly student loan payments.

If you don’t think you’ll be able to make your payments due to unemployment or some other life circumstance, you should still consider making a plan to pay off your student debt. The Department of Education recommends reaching out to your loan servicer quickly to see if you can change your repayment plan, potentially lowering your monthly payments. You might also look into forbearance, consolidation, or deferment.

Check out the U.S. Department of Education and the Consumer Financial Protection Bureau, a federal agency devoted to consumer financial help, for up-to-date information about student loans during the pandemic.

The post Making a Plan for Repaying Federal Student Loans appeared first on Stash Learn.

On average, Black college graduates have $25,000 more in student debt than white college graduates do, according to the Education Data Initiative. And four years after graduating, almost half of Black graduates owe an average of 12.5% more than they did when they graduated. 

Compounding debt problems, college is more expensive than ever. Adjusted for inflation, the yearly tuition  at a four-year college education has increased to $28,123 in 2019 from $5,504 in 1986. 

Of Americans between the ages of 18 and 29, 34% have student loan debt. As of November 2021, 42.9 million people owe $1.57 trillion in student debt.  

How student debt affects Black Americans 

Additionally, Black graduates default on their student loans more than white graduates do. Of Black students who started college in 2004, 38% defaulted on their student loans within twelve years after graduating. This percentage is reportedly three times higher than it is for white graduates.

If you miss a federal student loan payment, it’s typically considered delinquent. You are in default on a loan if you don’t pay overdue payments by 270 days after the missed payment. When you default on a loan, the entire loan amount can be due immediately, among other consequences. Defaulting can have a negative impact on your credit score. (Note: Federal student loans have been in forbearance since the beginning of the pandemic, meaning that payments are paused and these loans have not accrued interest since March, 2020 and will not resume accruing interest through April 2022. )

Why Black Americans are disproportionately affected by student debt

The wealth gap, or the historical disparity in average household income between white Americans and Black Americans, could be a key reason for the difference in student loan debt, according to some reports from the Federal Reserve. The median household income for white households in 2020 was $74,912, about 63% more than the median household income for Black households of $45,870. 

This income disparity continues once college graduates start working, according to The Atlantic. Black Americans with bachelor’s degrees earn an average of $29.76, compared to white Americans with the same level of education, who earn on average $38.18, according to the Economic Policy Institute. Hispanic graduates fall in the middle, earning $31.96 per hour.

This wage gap increases further when gender is considered. Black women with bachelor’s degrees earn an average of $27.76, compared to white women who earn $32.02.

How can you minimize student debt?

If you are one of the many Americans with student debt, you can try these tactics to help pay off your loans. 

While federal loans can give you more flexibility, including the ability to make deferrals on payments, and options for needs-based repayment that are based on income, some private lenders can offer you lower repayment terms, that could potentially save you hundreds of dollars each year.

Another method could be paying more than the minimum amount due to the lender each month, especially during the relief period during which federal loans are charging 0% interest when you can really make a dent in the principal you owe. Paying the minimum owed can make your payments stretch on for more years than you want. If you can, even adding an extra $20 to each monthly payment can help you chip away at your debt faster.

Some people might be eligible for student loan forgiveness. To be eligible for these programs, you typically have to be involved in some sort of public work, such as medicine or teaching.

Remember to include paying off your student loans and other debt in your budget. 

The post Why Student Debt Hits Black Americans Hardest appeared first on Stash Learn.

Student loan forgiveness programs allow  the government to eliminate some or all of the federal debt that a student owes, meaning that they’re no longer responsible for paying back that money. In recent years, widespread student loan forgiveness has received attention, with some political candidates campaigning on the concept. Currently, there are several federal student loan forgiveness programs that students can get access to. These programs only apply to federally held student loans, not privately held educational debt.

Good to know: Unlike other kinds of debt, which can be discharged if you file for bankruptcy, you generally can’t get rid of student loan debt.

Who qualifies for forgiveness?

Here’s who can have part of their student forgiven, according to the Department of Education (DOE): 

Public servants 

As part of the Public Student Loan Forgiveness (PSLF) Program, people who work full-time for a federal, state, local, tribal, or non-profit organization in the U.S. may be eligible to have a portion of their debt forgiven. In order to qualify, the borrower must have Direct Loans, which they pay back with an income-driven repayment plan. Direct Loans are made directly by the federal government and the DOE, and include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidate Loans. They must also have made 120 qualifying payments after October 1, 2007. Qualifying payments must be made in full no later than 15 days after they’re due and after October 1, 2007 by a full-time worker. 

People who think they may  qualify for this forgiveness can inquire with the DOE by filling out a form and sending a signed version to FedLoan Servicing, the servicer responsible for handling this program. 

Teachers

People who have taught in low-income elementary or secondary schools for five consecutive years can be eligible for up to $17,500 in student loan forgiveness on Direct Loans or Federal Family Education Loan (FFEL) program debt. The FFEL program ended in 2010, but worked with private lenders to provide loans guaranteed by the federal government. There are various requirements for those teachers who seek this forgiveness. For example, they must be “highly qualified,” as defined by the DOE, meaning that they’ve attained at least a bachelor’s degree, received their full state teacher certification, and not had certification or licensure requirements waived on an emergency, temporary, or provisional basis. You can find more information about eligibility here.

Eligible teachers can apply by filling out a Teacher Loan Forgiveness Application, which must be filled out in part by the administrator at the school where they work.  

Teachers with Perkins Loans, which are low-interest loans issued to students with exceptional financial need, can also see 100% of that loan canceled. (Note: As of June 30, 2018, schools can no longer issue these loans.) Full-time teachers serving low-income families, full-time special education teachers, and full-time math, science, foreign language, bilingual teachers, and any full-time educators with a focus that are in short supply, can have their Perkins Loans canceled. These teachers must work in public or non-profit elementary or secondary schools. 

Those educators interested in seeking forgiveness should reach out to the school that holds the Perkins Loan, or the loan’s servicer, to apply. 

Closed schools 

People with Direct Loans, FFEL Program Loans, or Perkins Loans whose schools closed down while they were enrolled may also be eligible to have loans canceled. In some cases, forgiveness may apply to students whose schools closed while they were on a leave of absence or withdrew.

Borrowers Defense program

Students whose schools shut down because their educational institution misled them, or because it engaged in misconduct or violations of state law, may also be eligible for debt cancellation. They can apply for forgiveness through a DOE program called the Borrower Defense Loan Discharge program. The fraudulent schools have typically included for-profit colleges, meaning they are privately operated and seek to make money, as opposed to nonprofit institutions, which channel funds back into student education and the school. In June 2021, the DOE expanded the list of schools to include more institutions, such as ITT Technical Institute. 

People with with disabilities 

People with total and permanent disabilities are also eligible for discharge of Direct Loans, FFEL program loans, Perkins Loans, and of the service requirement for TEACH Grants. In August 2021, President Biden made it easier for disabled borrowers to get forgiveness, removing some of the administrative hurdles that had made it difficult to apply for the program. 

Other circumstances

There are other conditions that can qualify for student loan forgiveness, such as when the borrower dies. Additionally, if you never received a loan refund from a school from which you withdrew, you may also be eligible for forgiveness.

State programs

Forty-five states and the District of Columbia have their own debt forgiveness programs. And they run the gamut for professionals working in a variety of fields, from education to dentistry and law.

Colorado, for example, forgives debt up to $90,000 for health professionals working in underserved areas of the state.

Maine has a program for teachers that forgives loans based on years of service in its elementary school system.

You can find out if your state offers its own student debt forgiveness program here.

Forgiveness under President Biden 

President Biden’s American Families Plan calls for four years of free community college, as well as support for parents seeking child care. Biden campaigned in part on the promise that he would cancel $10,000 in student loan debt for every borrower, and all the debt held by people who earn up to $125,000, and graduated from historically black colleges and universities (HBCUs). Beyond what his administration has already forgiven, President Biden has yet to make any moves towards widespread forgiveness. Some members of Congress are pushing for more than $10,000 of forgiveness. Democratic Senators Elizabeth Warren and Chuck Schumer have proposed that Biden forgive up to $50,000 in student debt via executive order. Generally, Congress doesn’t appear to be prioritizing widespread student loan forgiveness in the near future.

Since taking office in January 2021, President Biden has forgiven $8.7 billion in student debt. In August 2021, the Biden administration announced that it would automatically forgive the loans of 323,000 borrowers with total and permanent disability, amounting to $5.8 billion in debt. Qualifying borrowers need to a​​ppear on a data match between the DOE and the U.S. Social Security Administration or between the DOE and the U.S. Department of Veteran Affairs. 

In June 2021, the DOE approved $500 million in student loan forgiveness for former students of ITT Technical Institute, a private chain of colleges that was shut down in 2016 for misrepresentation. Borrowers qualify based on the type of loans they have, and must apply through the DOE. Additionally, in October 2021, the Biden administration said that people employed by government or non-profit organizations who’ve made 120 qualifying payments under certain programs may qualify for certain forgiveness as well. 

U.S. student debt keeps growing

As of September 2021, total student debt in the U.S. amounts to $1.73 trillion, and that rate is reportedly growing six times faster than the country’s rate of economic growth. More than 43 million people in the U.S. hold student debt. The average amount of debt per student is $39,351. 

In March 2020, at the start of the Covid-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act suspended most student loan payments through September 2020. That deadline was extended multiple times, but the grace period will come to a close on January 30, 2022. After that date, federal student loan payments will pick up again. 

Managing your debt 

While a new, national student loan forgiveness program might not be on the immediate horizon, you should do your due diligence and find out if you’re eligible for the forgiveness programs that already exist, and consider applying.

If you haven’t been making payments on your loans since the grace period began in March 2020, you should start preparing for those payments to resume. Make sure that you have room in your monthly budget for your payments. If you don’t have a budget, consider making one. One budget you might consider is the 50-30-20 budget, which encourages you to split your monthly income into 50% for essential expenses, like loan payments, 30% for nonessential costs like going out to eat, and 20% for savings and investing. If the money you would have spent on student loan payments has gone to nonessential spending in the last two years, adjust your budget accordingly before February 2022. 

Before payments pick up, you should check in with your loan servicer. “Logging in and reviewing your terms is essential in order to understand your repayment plan, and make any changes necessary prior to payments starting. Loan servicers are about to get slammed with many people calling in to ask questions, so make sure you log in early and ask any questions before loan payments start again,” says Carlos Aguila, a Certified Public Accountant (CPA), based out of Allentown, Pennsylvania. You should especially connect with your provider if you graduated during the pandemic and have yet to start making payments towards your debt, says Aguila.

If you’re concerned about your ability to make your monthly payments, you should also speak to your provider to let them know your situation, and see what you can do to address it. Consolidating your student loans might be a good option for you if you have more than one loan. It’s important to know some of the potential downsides of consolidation as well, particularly if you’re consolidating with a private lender, which can come with higher costs and more restrictions.

The post Understanding Student Loan Forgiveness appeared first on Stash Learn.

One consideration is consolidating your student loans, which can potentially lower your interest rate and the amount you owe each month. But it’s important to know some of the potential downsides of consolidation as well, particularly if you’re consolidating with a private lender, which can come with higher costs and more restrictions than your current federal loan. 

Here’s a quick look at what loan consolidation entails, as well as some of the pros and cons.

Consolidation basics

When you consolidate your student loans, you lump all of your existing student loans into a single, new loan. While there are two main types of student loans—either federal or private—you can consolidate both. 

Here’s the tricky part though: You can potentially consolidate your federal loans into either a new federal loan, or a loan from a private lender. Not so with a private student loan, which you can only consolidate with another private lender, such as a bank, credit union, or online lender. 

To consolidate a federal student loan into another federal loan, you can use the U.S. Department of Education’s Federal Direct Consolidation Application portal. Remember though, when you initiate federal student loan consolidation, you’ll be locking in a new interest rate that’s the weighted average of the interest rates on your loans, says Mark Kantrowitz, a student loan expert and author of How to Appeal for More Financial Aid, based in Chicago, Illinois. This could be higher than the lowest rate you may be paying on your cheapest loan, so it won’t lower your rate.

To consolidate your federal loan into a private loan, or to consolidate another private student loan, you must go through a private lender or bank. The interest rate on a private refinance is based on the credit score of the borrower, and cosigner, if any, says Kantrowitz. 

When looking for a lender to refinance private or your private and federal loans, it’s probably wise to shop around, says Kantrowitz. “The lowest advertised rate is usually limited to a small percentage of borrowers,” he adds. You can also peruse rates and terms through online loan consolidation platforms like SoFi and LendKey. To receive a quote, you typically need to provide personal information, such as your name, address, and financials such as your income.

When applying for a loan, the lender will do a hard pull of your credit, which can affect your credit score. 

Note: There are typically no fees to consolidate student loans. Federal loans don’t charge fees to consolidate as a matter of law. Private lenders, while they could charge fees, typically don’t when you refinance, says Markowitz.  

Interest rates and terms may differ

Many federal student loans are subsidized, meaning the federal government pays the interest while you are in school and for a period of time after you graduate. Federal student loans also generally come with lower interest rates and more favorable terms, such as fixed interest rates, grace periods and income-sensitive repayment plans. 

• The current interest rates for federal loans are 3.73% fixed interest for a direct subsidized or direct unsubsidized loan for undergraduates, and 5.28% fixed interest for a graduate direct unsubsidized loan.

Loans from a private lender are unsubsidized, and can have either fixed or variable rates, and you are responsible for all the interest on your loan.

• The average interest rate as of August 2, 2021 on a 10-year fixed-rate loan is 3.43% from a private lender, and the average rate on a 5-year variable rate loan is 2.62% for people with credit scores of 720 or higher, according to one student loan refinancing site. With interest rates at all-time lows, you could benefit from the low-interest rate environment.

Consolidation pros

• Lower interest rate. One advantage of lumping your student loans together is that it could potentially reduce your interest rate. Note this is the case only if you consolidate your loans through a private lender or bank. If you consolidate your federal loans by way of a Federal Direct Consolidation Loan, as your new rate is a blended one, you won’t be saving on interest. 
• One payment. Instead of making several payments to different servicers and lenders each month, there’s only a single payment you have to worry about, potentially making it easier for you to keep track of what you owe. 
• You might be able to switch to a fixed-interest rate. While all federal loans are fixed rate–meaning the interest rate stays the same for the life of the loan—that’s not the case for private loans, which can carry either a fixed or variable rate. One danger with a variable rate loan is that the rate you pay can go up if interest rates increase. With a fixed-rate loan, you can calculate exactly how much you’ll be paying in interest over the life of your loan. Plus, you’ll be paying the same amount each month. 
• Resets deferment and forbearances. This only applies to federal consolidation loans, as private loans generally don’t allow for deferment or forbearance.  A federal consolidation loan will reset the three-year limit on deferments and forbearances, Kantrowitz says. “That’s because consolidation loan is a new loan, and is eligible for its own set of deferments and forbearances.” 

Consolidation cons

• Giving up benefits of federal loans. If you’re consolidating your federal loans into a private one, Kantrowitz says that you’ll be giving up the benefits that come with federal loans. For instance, ​​income-driven repayment plans, death and disability discharges, longer deferments and forbearances, and numerous loan forgiveness options. 
• More expensive in the long run. Consolidation usually increases the length of time you have to pay your loans. While your monthly payments might shrink, you could end up paying more over the life of your loan. 
• Resets the clock on income-repayment plans and student loan forgiveness. Federal loan consolidation resets the clock on forgiveness on income-driven repayment plans, meaning you’ll be losing accumulated credits. “That’s because forgiveness is tied to the loan, not to the borrower, and a consolidation loan is a new loan,” says Kantrowitz. The same goes for your Public Service Loan Forgiveness (PSLF).

Consider all your options

Student loan consolidation can make sense if you’re concerned about being able to make your monthly loan payments, want to reduce your monthly payment, or shift to a fixed from a variable rate of interest. But it’s important to think carefully about the different types of consolidation loans available to you, as well as the trade-offs between federal and private loans. 

And if you’re considering a private lender, people with poor credit and unstable incomes may be less lucky. “Fixed interest rates on private refinances are at or near record lows,” Kantrowitz says.

“But, this will yield a lower interest rate than federal loans mainly if the borrower…has excellent credit, or if the borrower has federal loans from several years ago, when interest rates were higher.”

The post What to Know about Student Loan Consolidation appeared first on Stash Learn.

If you’re one of the millions of student loan borrowers who haven’t made a loan payment since the beginning of the pandemic, time may be running out. Payments for federal education loans, which have been on pause since the spring for 43 million people, are expected to resume on September 1, 2022.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March, 2020 provided what’s known as a grace period for people who have federal student loans, or loans underwritten by the government. The grace period was initially scheduled to end on September 30, 2020, but was extended through the end of 2020 as the pandemic and record unemployment have continued on.

During this time, federal student loans have not accrued interest or penalties. 

Approximately  43 million Americans had federal student loan debt totaling $1.6 trillion. The zero-interest period was intended to give financial relief to those who lost all or part of their income as a result of shutdowns caused by the pandemic. If you have federal student loans, this grace period has likely applied to you.

Whether you’ve continued to make payments all along, or  you’ve taken this time to save some money, here are some things to consider as you prepare for the likely return of student loan bills every month.

Know what’s happening with your loans

Consider reaching out to your loan provider so you know exactly when your next student loan payment will be due. And find out how your payment has changed if it has. The sooner you can start paying  off your student loans, the better. Making payments during a period of zero interest can help you make a serious dent in the principal, or original amount you borrowed, as there are no additional interest charges during a grace period. If you have multiple student loans, you may also want to take advantage of the zero-interest period by either paying off, or putting more money toward, the loans that have the highest interest rate.

Research a new repayment plan

If you’re daunted by upcoming payments, it might be time to revisit your repayment plan. “For those who have lost their job or part of their income, I suggest that they reach out to their student loan company now and ask about an income-based repayment plan,” says Orlando, Florida-based financial advisor Danielle Barak from financial planning company Northwestern Mutual.

Consider applying for an income-driven repayment plan, which may take into account different factors such as your income and the size of your family, according to the U.S. Department of Education’s division of student aid. If you’re approved for this change, you’ll pay your student loans back according to a percentage of your discretionary income. 

Barak warns, however, that “income-based repayment can get expensive as income drastically increases, so it’s important to know your options and if you can change the option you select.” Once your employment status changes, you may want to adjust the way you pay back your loans.

You may already be repaying your loans on an income-driven plan based on pre-pandemic employment. In this case, “recertify your income using your most recent pay stub showing your decreased income, or file your taxes early in 2021 and use your tax return to recertify your income,” says Jared Andreoli, a financial planner from Simplicity Financial in Milwaukee, Wisconsin. 

Contact your provider

If you’re unemployed or you’ve had a change in income, you might feel like you won’t be able to make any student loan payments whatsoever. Financial planner Joseph Orsolini from College Aid Planners in Glen Ellyn, Illinois, says that “borrowers that may have difficulty making their payments again should get in contact with their loan servicer about options available to them.”

“Most federal borrowers will be eligible for deferment or forbearance, which would allow them to continue not making payments,” says Orsolini. You’ll need to apply for student loan deferment or forbearance through your provider. Deferment and forbearance are slightly different. When you defer your loans, you’ll be able to skip make payments for a period of time without accruing interest. Student loan forbearance means that you’ll skip payments, but you’ll still accrue interest during the period of forbearance.

Orsolini suggests first looking into deferment. He also says, however, that borrowers might have more luck applying for forbearance as it has fewer qualifications than deferment. Deferment is usually granted in the case of certain qualifying events, such as unemployment, military service, or ongoing cancer treatment.

Do what you can to make the minimum payment

As the Covid-19 student loan grace period comes to an end, one thing you can consider is preparing to make at least the minimum payment each month towards your student loans. If you’re receiving unemployment payments or have money saved, such as your CARES Act stimulus check, think about using that money for loan payments, if you’re able to.

For people who might not have the option to defer on their loans, or want to continue making payments, Barak says, “I’d suggest working through their budget and examining their savings account to see what they can do. If there’s any side income that they can make to pay at least the minimum payment that would be ideal so this way their credit won’t be compromised.” 

If you don’t already have a budget, now is a great time to consider building one, such as the 50-30-20 budget, which allocates 50% of your income towards your essential, fixed expenses, 30% to your nonessential, variable expenses, and 20% to investing and savings. Include your student loan payments, as well as any other payments towards debt, in the 50% portion of this budget. You can also try other budgets such as the envelope method.

Stash can help you stay on top of your budget. In your Stash account, you can create partitions¹ for your bills, such as your student loans. You can also create partitions to help you save as the pandemic continues. Additionally, you can use Stash’s Bill Pay² function in the app to pay your student month bill every month. Bill Pay allows you to schedule payments so that you don’t miss them and hurt your credit.

The post How to Plan for Student Loan Payments in 2022 appeared first on Stash Learn.

We’re both cash-strapped creative people, and we haven’t combined our money since getting married. Instead, we have a joint account that we occasionally contribute to (especially when we make money doing something comedic together), and we keep that as a rainy day fund, and also a honeymoon fund… assuming we ever get to travel again. 

Though I couldn’t imagine managing our money jointly at this point, I was curious about how other couples handle money and deal with cash problems, so I interviewed four couples.

After speaking to other couples, it seems my husband and I have common problems: One partner might come into the relationship with debt while the other has none; one person comes from a household that was open about money, and as a result has very set ideas about how to handle it, while the other doesn’t really think about it; and everyone has some growing pains putting their finances together, and talking about it. 

1-Jeremy Hammond and Mo Farrell in Queens, NY.

WHAT FINANCIAL CHALLENGES HAVE YOU FACED COMBINING FINANCES? 

JEREMY: Mo had student debt, I didn’t. Mo has a much higher wage than I do, and had much more savings coming into this [marriage]. 

HOW DID YOU SOLVE THESE DISCREPANCIES IN EARNINGS, DEBT AND SAVINGS? 

JEREMY: So it was kind of a trade off, I took on a lot of new debt responsibilities when we got married, but our combined savings is now our family savings. At the beginning it was hard to figure out what money should go where, and whether we should combine everything or just some parts of our finances. There was also a lot of anxiety around whether we needed to clear purchases with each other, what level of purchase is okay to do without approval, etc. This year my computer started to break down, and I wanted to invest in a new one, but I definitely dealt with the broken one for longer than I would have, because I wasn’t sure how I would justify the purchase to Mo. 

I think the biggest problem-solver was just time and comfort with the idea [of combining your financial lives]. It’s not really something you have much prep for before you do it, so there’s some growing pains, but those are pretty quickly solved by the immense financial strength you have as a two-income-no-child household. Combining finances has meant we’re able to save money like we never have before, and having two peoples’ brain power devoted to it has really helped to see the bigger picture of our financial lives. When you’re alone, you just see the paycheck come in and do what you’re going to do with it. Having your partner involved means each weekend when one of us gets paid we can spend a minute and talk about what would be the smart thing to do with it. 

HAS COMBINING FINANCES CHANGED YOUR ATTITUDE ABOUT MONEY? 

JEREMY: I’m definitely way more focused on saving than I was—the future is really hard to visualize sometimes when you’re in your own head, but when there’s somebody with you who you’re committed to for life it’s a lot easier to picture in a more tangible way. I was raised in a house where we absolutely never talked about money. My parents both grew up poor and never wanted their kids to feel the way they did about their family’s financial situation, so they hid it from us. Combining finances really forced the issue for me, and got me talking and thinking about money in a way I never had before. 

2-Katie and Lew Morgante in Wilmington, N.C.

WHAT FINANCIAL CHALLENGES HAVE YOU FACED COMBINING FINANCES? 

LEW: I think the biggest challenge for us was making sure we were on the same page about goals. We both like to go out to restaurants, enjoy traveling and vacations. Those were easy ones to figure out. Getting on the same page for saving, retirement and consumer debt was another thing. 

I was someone who paid a bill as soon as it came in no matter the due date so it would be out of the way. This sometimes put me in a situation where I would have little to no money available until the next paycheck. I would always pay into my retirement, savings and was not willing to dip into those during those times. 

We also have an Alexa and sometimes it rats us out. When a package is on the way it will alert us, so we have both been caught buying something because Alexa will tell us the item will be delivered today. We laugh about it and now know we can’t get away with hiding things from each other!

HOW DID YOU SOLVE THESE PROBLEMS? 

LEW: She (Katie) was able to help me figure out a plan so that I could split the bill payments up by due date, to pay what was due during the first half of the month and the second half, so I wouldn’t deplete all my money at once. It has made it so much easier and reduced my financial stress and anxiety. 

When it comes to retirement savings, I was always the big saver for this because I learned young from my mother how it can pay off to front load your retirement savings as much as possible. She [Katie] did not have a retirement plan at all and it was hard to convince her that the money she put in would not impact her take home pay in a negative way and that she was missing out on free match money her company offered. We compromised and she put in 1% to start. She just started a new job and she was excited to start her [401(k) retirement plan] with them, and at the full match of 4%!

We both came into the relationship with some credit card debt, and when we looked at our wedding plans this was an eye opener that we needed a plan to consolidate and eliminate these debts. We at first focused on them individually taking care of what we could before the wedding. I consolidated a bunch of credit cards that were carrying a balance and interest into a few 0% balance transfers and tried to pay down as much as possible. She got a loan to pay off a bunch and have one bill. We both got our debts down. After the wedding we looked at it all again to see where we were at and decided that together we could help each other rather than dividing and conquering. We moved some of her credit cards to some of my open credit cards with 0% balance transfers.  I have been making spreadsheets to keep track of the balances, promotions and the end of 0% promotions making sure we pay off or move them before we start getting [charged for] interest. We use just one credit card for monthly expenses and pay it off in full each month. It’s a cash back card so we end up with high hundreds of dollars in cash back a year that we use to pay down our debts. We sit down at least every quarter and update where we are. 

I think the biggest key is just being open and honest. No judgment, we just know what our goal is and how we will try and get there.

Since I will not spend money on myself, and I love new gadgets, I have found ways to get them without spending money. I signed up for Microsoft Rewards account and it allows you to get points for searching and using the Microsoft Bing Browser and App. I turn those rewards points into gift cards, like 5,250 points is equal to a $5 Amazon gift card, or other gift cards. When I want something, I make a goal and get searching, or even find games or surveys on my phone that pay out in gift cards. I have gotten some great gadgets and did not spend a dime, so I feel like I get my cake and eat it, too!  

HAS COMBINING FINANCES CHANGED YOUR ATTITUDE ABOUT MONEY?:

LEW: Yes, I am now much more focused on having not only an emergency savings but an account with enough to cover a few months of living expenses if needed. It is slow going but staying focused on the goal is key. I am much more of a penny pincher now I don’t spend on myself much. She has definitely seen the light on where we could be if we stay disciplined with our spending and look at our future.  

3-Liz Barrett and Doug Forand in New York, New York

WHAT FINANCIAL CHALLENGES HAVE YOU FACED COMBINING FINANCES. AND HOW HAVE YOU SOLVED THEM? 

LIZ: We have been married 21 years and we always combined finances. It never made sense for us not to do it. I know couples who don’t, but it always seemed more complicated. I’m on top of things, and Doug never wants to open the mail. I have never made more money than Doug. As a feminist, that fact always make me feel odd, but he reminds me we are a team. 

It’s a give and take. I went to law school after we were married, and he supported us. When he started his own business, I supported us, because I had a steady job with health insurance.

At this point, Doug has a better credit score than me. That drives me nuts some days, but he always says it’s because of me.

HAS COMBINING FINANCES CHANGED YOUR ATTITUDE ABOUT MONEY? 

LIZ: You have to try to look at it as you are a team. I think if you combine finances it almost brings you closer together. You are both contributing to your future. Even though I don’t make the money, I know Doug trusts me [handling our finances] and appreciates me. That is one tip, if your partner handles the finances, it’s work. All that person really wants is to be appreciated.

DO YOU HAVE ANY OTHER TIPS FOR COUPLES WHERE ONE PARTNER HANDLES THE MONEY?: 

LIZ: Doug really trusts me, and really has no interest in knowing about the details of our finances. However, I always tell him that if I die, to go to a specific place in our apartment where he will find information about our bills so that the lights don’t go out. 

4-Katie and Gideon Hambright, married in Iowa, currently in Queens, NY

WHAT FINANCIAL CHALLENGES HAVE YOU FACED COMBINING FINANCES. AND HOW HAVE YOU SOLVED THEM? 

KATIE: We kept everything separate [during] our engagement for 2 years. Once we were married, we combined everything. During our engagement, we split everything 50/50 (bills, rent). 

Before combining our money Gideon was very frugal (in a good way). Since moving to NY, we have become a one income household (I am a nurse while Gideon is a comedian and stay at home parent). I now seem to be the one monitoring our finances daily. 

WHERE HAVE YOU DECIDED TO PUT YOUR MONEY NOW THAT YOU HAVE A  ONE-INCOME HOUSEHOLD AND A CHILD? 

KATIE: We have been able to pay off Gideon’s student loans, while I still have one outstanding student loan. We have also decided that we want to look into buying a house. I feel now, more than ever, that I need to start putting more money into our savings and Roth IRA. We just now started saving money for our child’s education. In the last year it feels like money has been a huge thing on my mind. 

ANY OTHER TIPS OR NOTES FOR COUPLES COMBINING FINANCES? 
KATIE: It does take some getting used to see your combined account as “our money” instead of “my money.” 

The post How 4 Couples Combine Finances (And Live to Talk About It) appeared first on Stash Learn.

But have you heard about the avalanche method? It’s almost the opposite of the debt snowball.

Jargon Hack.

What is an interest rate?

Interest Rate

It’s the amount that’s charged on any unpaid amount, or balance every month. The interest rate is also called the annual percentage rate, or APR, which is the amount your monthly interest translates to annually.

Find out

Here’s how it works: With the avalanche method, you list all of your debts such as credit card or auto loans, from the highest interest rate to lowest rate. Then you start paying off the debt that charges the highest interest rate first. After that, you tackle the next-highest interest rate loan, and then gradually work your way up the ladder. The logic behind the avalanche method of paying off debt is that higher interest costs you more money the longer you hold it. So, by paying off the higher interest rate debt, you’ll be saving yourself money in the long run.

• For example, a $100 loan charging 5% interest will cost you $5 in interest annually. The $100 loan charging 10% will cost you $10 a year. After five years, the 5% loan will cost you $25. After five years, the 10% loan will cost you $50—twice as much money.

By eliminating the higher interest debt first, you’re likely to save money.

Special note: Credit card debt is like a loan, extended to you by a bank or some other financial institution on a revolving basis. That means as you repay the debt, generally speaking, you are free to borrow again from your credit line.

Tactics and considerations:

• The money you use to pay off your debts should come from the area of your budget known as your fixed expenses. These are expenses you must pay each month, such as rent or mortgage, health insurance costs, and utilities. (Yes, whether you like it or not, you have to pay your debts each month.)  That should be a concrete number, representing the cash you have from your monthly income.
• Next, organize your debts by interest rate amount, from the highest rate to the lowest rate.
• Make minimum payments on all loans except the highest interest-bearing loan.
• After deducting the total amount of your other minimum payments, use the extra money you have and put it toward the highest interest loan.
• Once that’s paid off, you tackle the next highest interest loan using the same method until it too is paid off.
• Consideration: In contrast to the debt snowball method, the debt avalanche may take more patience, since paying down your highest interest rate debt may take longer than paying off your smallest loan.

Jargon Hack.

What is a minimum payment?

Minimum Payment

It is the lowest amount of money you are required to pay each month on an outstanding loan balance.

Find out

Debt Avalanche Example:

Let’s say you have $15,000 in debt as follows:

• $5,000 on a credit card; annual interest rate of 18%
• $5,000 for a car loan; annual interest rate of 10%
• $5,000 for a student loan; annual interest rate of 8%

Now, let’s say you’ve determined you have $500 a month in your budget to pay your debts, and your minimum payment for each of your three loans is $30, or $90 total. Next, add up the two loans on which you’ll be paying the minimum (the car loan and student loans, in our example). Subtract that amount from your total:

$500 – 60 = $440

You’ll pay $440 each month on your high-interest credit card debt, which will get you paid off in about a year.

$440 x 12 = $5,280

In addition to paying more on the highest-interest rate credit card, you’ll continue making minimum payments on all the other loans during that time. After that, you apply the same method to your remaining loans. Pay off the car loan first with the majority of your budgeted income for debt, and then the student loan, until all of your debt is paid off.

Whether you use the debt snowball, or the debt avalanche, the important thing to remember is that you should consider having a plan to pay off your debt.

The post How to Use the Debt Avalanche Method appeared first on Stash Learn.

In this season of goblins, demons and pumpkin spice, nothing induces a blood-curdling scream as quickly as a bill for that credit card with the super-high interest rate, or that automatic monthly debit for the gym you never use.

But fear not: As one well-versed in the art of awful money choices, I am here to help you bust the spooky spirits groaning and moaning in your financial life.

Haunted by: pricey student loans

Student loan debt can be quite a nightmare. It’s true that a useful education is a fine investment. But perhaps you took out a student loan you didn’t really need, over-borrowing to cover some not-so-necessary expenses like that luxurious California king futon from grad school. Or perhaps you’ve simply been screwed by a company that preyed on your lack of financial education to lock you in for what feels like a lifetime of debt. This isn’t about shame or blame—it’s about looking at what happened and dealing with it in the present day.

There are various methods for reducing your burden, but first, make sure you actually know what all your loans are. (Ordering a free credit report is one way to find out.)

Here are just a few ways that may help ease your burden:

Pay more than the minimum
It may seem impossible. But chances are you can pay a tiny bit more each month, and lessen the length of your unholy marriage to the student loan company. Here’s an example, citing information from the financial lender Sallie Mae: “If you owe $10,000 and have an interest rate of 8% annually, it will take you ten years to pay off your loan, assuming minimum payments of $121.32 a month…But if you bump up your monthly payment to $141.32 (just $20 more), you’ll pay off your loans in eight years, or two years earlier, and will save yourself close to $1,000 in interest payments.”

Make extra payments
Again, may seem impossible. But what if you assemble $20 worth of couch change and car change and back pocket dollar bills gleaned from the laundry? That’s an extra payment. Get some money back at tax time? That’s an extra payment. Sell your clothes at the consignment shop or on eBay? That’s an extra payment. It all adds up.

Also, remember to include your student loan interest with your annual taxes, as you may be able to deduct some or even all of it.

Haunted by: too many credit cards

You know how gremlins multiply? Yeah, that. Some financial coaches will tell you to pay as much as you can each month on your card with the highest annual percentage rate, and then stick to the minimum on the other cards until you’ve got that big guy paid off. Others encourage you to pay off the lowest balance first, using the debt snowball method.  You can see if any of your cards has a 0% APR balance transfer offer, and shift some money accordingly. There may be fees involved even if the APR is 0%, so be sure to check with your individual credit card company. You can expect to be charged 3 to 5% of the amount you’re transferring. Once you’ve got a card paid off, you may wish to cut it up but leave the account open. Part of your credit score is determined by the length of your active accounts. But ultimately you’ll probably continue accruing debt as long as you keep using those credit cards. If you need help with debt like this, consider a program like Debtors Anonymous.

Haunted by: skipping the 401(k)

So you never enrolled in a 401(k) and matching funds when you had the opportunity. Or you’re an independent contractor without any retirement savings. Hey, it’s never too late to start! Educate yourself on options for retirement savings—opt into your company’s plan, choose your own IRA, or enroll in another type of fund—and put in a little bit each month as a start.

An IRA is available to almost anyone with a taxable income, and can be a particularly great option for a freelancer/independent contractor. A Traditional IRA allows you to make regular contributions on a pre-tax basis. You’ll have to pay taxes on the total amount when you withdraw – but you’ll be hit with major fees if you withdraw before the age of 59 ½. A Roth IRA is a bit different – you can make contributions after taxes have been deducted. You generally won’t have to pay taxes or fees when you make a withdrawal, so long as you’re 59 ½ or older.

Thanks to the power of compound interest, your relatively small contribution to a retirement fund can yield big savings over time. After all, a little Halloween candy in your puffy paint-decorated pillowcase is better than none.

Haunting by: recurring debits for stuff you don’t use

Around here, we call it sleep spending. Maybe you’re not that into your meditation app, or your gym, or those boxed meal kits you never actually use. Quitting is (usually) relatively easy. Granted, your gym will probably push back at you if you’re locked into a one year program, but a relentless dedication to polite but firm communications with customer service can often at least knock a few months off the thing.

Looks like it’s your turn to haunt somebody, baby!

The post Are Spooky Financial Ghosts Groaning In your Attic? appeared first on Stash Learn.

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Maybe you don’t have to go to college after all. In this episode of Teach Me How to Money, financial expert and author Anthony ONeal shares his experiences of getting into—and out of—massive college debt. Now, he advises most young people to think carefully before taking out those educational loans, and explains what the other alternatives are.

Jargon Hack.

What is financial literacy?

Financial Literacy

The ability to take stock of your financial situation so you can make smart decisions about money regularly.

Find out

Since 2003, Anthony ONeal has helped thousands of students make good decisions with their money, relationships, and education to live a well-balanced life. He’s the National Best-Selling Author of, “Graduate Survival Guide: 5 Mistakes You Can’t Afford to Make in College,” and travels the country spreading his encouraging message to help teens and young adults transition into the real world. You can follow Anthony on Twitter, Instagram and Facebook and online at anthonyoneal.com.

The post Podcast: How to Tackle Student Loans and Other Debt with Anthony ONeal appeared first on Stash Learn.

A 2018 survey from the American Psychological Association found that 81% of Gen Z said money was a major stressor for them, compared to 64% of all adults. About 33% said personal debt was a source of anxiety. In terms of general anxiety, less than half of Gen Z said their mental health was “excellent” or “very good”, falling behind all other generations.

So what factors are influencing this troubling trend, and more importantly, what can members of Gen Z do to avoid becoming a statistic?

What Gen Z is Anxious About

My husband’s cousin, Rachel, is 23. We recently talked about how financial anxiety plays a big role in the lives of her and her friends. Their biggest concerns are rent, student loan payments and the scarcity of available financial opportunities.

This fits with the rest of Gen Z. The APA survey said that personal debt, including student loans and credit cards, and housing instability were “a significant source of stress” for more than 30% of the cohort.

“I think the opportunities can be limited,” she said. “Sometimes internships are not an option for people because they don’t have enough money to live off the little to no pay interns receive.”

Rachel and her friends don’t think about saving for retirement, buying a house or how they’ll pay for health insurance. They assume that money for those things will come in the future, when their incomes hopefully increase.

When it comes to financial anxiety, social media makes matters worse. Rachel said seeing status updates and photos on Instagram only fuels the desire to keep up appearances.

“Whether it’s a trip, activity or a cute outfit, the perception that other people are living their lives ‘perfectly’ makes me want to as well,” she said.

How Gen Z Can Get Past Their Money Anxiety

Since social media can affect how Gen Z spends money, limiting exposure to it can reduce anxiety and depression. A 2018 study published in Preventive Medicine Reports on the association between screen time and psychological well-being reported that 45% of teens said social media made them feel judged and 38% of them said it affected their self-esteem.

Limiting social media use or being more selective of who to follow could also reduce this figure. A 2018 study from the University of Pennsylvania found that adults between 18 and 22—squarely in the Gen Z age range—who limited social media use to 30 minutes a day reported decreased depression and loneliness.

Financial therapist Amanda Clayman said news coverage about millennials and student loans also affects Gen Z, especially those deciding where to attend college. The student loan debt crisis makes them more aware of their financial future – not necessarily a bad thing—but according to Clayman, even productive money conversations can be anxiety-producing.

Clayman said anxiety of any kind can serve as a wake-up call. If you’re feeling anxious about your student loans or get nervous logging onto your bank account, see if there’s something you can do about it.

Make a list of questions, like if you qualify for student loan refinancing or how to sign up for your company’s 401(k) plan. Taking just a small step towards addressing your financial concerns is often enough to positively impact your outlook, and those benefits will only increase as you gain momentum.

Learn to differentiate

If you can’t change your financial circumstances, try to identify your specific anxieties and how they manifest. Writing down your concerns in a journal and working with a licensed therapist can also help.

Clayman said that while anxiety can be a sign to do something, it can also just be noise. The key is learning to differentiate what your anxiety means, and knowing when—and how—to let those worries go.

The worst thing Gen Z can do is reinforce anxious habits, like checking a bank account several times a day. It may feel like an itch that needs to be scratched, but this type of behavior only strengthens the neural pathways to anxiety.

“We don’t want to feed that tiger,” Clayman said.

Clayman suggests a more productive approach: set aside a certain time every week to tackle your financial chores, like checking your budget and tracking your expenses. You should also attach something pleasant to the task, like doing it at your favorite coffee shop or having a friend with you.

Consider counseling

If possible, find a counselor or therapist to work with. You can find discount therapy services through a university’s psychology program, where you’ll meet with a student under professional supervision. Apps like Moodnotes and Talkspace are also more affordable solutions. Look through your insurance plan and see if there are any low-cost medical clinics in your network. Some of these have therapists on staff.

A therapist can help you accurately identify your mental health issues and give you a more specific framework to deal with them.

Talk to your friends

Money anxiety isn’t a problem that can go away just with some professional help. It’s a holistic issue that requires a multi-pronged approach. Learn how to negotiate your salary, track your expenses, face your financial concerns and above all, talk to your friends. Even if they can’t fix your problems, sharing your concerns will make you feel less alone and more supported.

The post Why Money Anxiety is Real for Gen Z appeared first on Stash Learn.

• Try to pay more than your monthly minimum payment, which can primarily be interest.
• By paying more than your interest, you’ll be paying down your principal.
• Consider making extra payments if you can, as it will help you pay down principal faster.
• Aim to pay off your loans in ten years or less, which is the standard for federal student loans. The longer you take to pay off your loans, the more interest you will pay, and the more expensive your original loan will become.
• If you’re confused by what you owe, call your lender and discuss how your payments are applied to your loan or loans.

Jargon Hack.

What is principal?

Principal

Principal is the original amount that you borrow on a loan. It’s different from interest, which is a percentage charged annually and added to the principal.

Find out

Principal

Principal is the original amount that you borrowed on your loan. It’s different from interest, which is a percentage charged annually and added to the principal. (Special note: Principal can also be a sum of money that you save or invest, on which you earn interest.)

Example: Say you borrow $30,000, with an interest rate of 5%. The principal of the loan is $30,000. The interest rate is 5%, and your loan will accumulate interest charges on a daily basis.

To calculate your daily interest, divide the interest rate by the number of days in a year: 0.05/365=0.000136986.

Then multiply that number by your outstanding balance: 30,000 x 0.000136986=4.1. (So, $4.10 is approximately how much interest you owe per day.)

Next, multiply that amount by the number of days in the month: 4.1 x 30=123, or $123. That’s roughly how much interest you will owe each month.

If you had the option of making minimum payments of $123 per month, you’d only be paying interest and not paying down any of the $30,000 of principal. To pay off your loan with interest  in ten years, you’d have to pay $308 per month, according to the federal student lender Sallie Mae.

Good to know: As you pay off your principal, the dollar amount of interest you owe will also decrease each month. (You can see how that works with this calculator.)

The post How to Manage Student Loan Debt appeared first on Stash Learn.

This handy checklist can help you achieve short and long-term money goals, help protect your loved ones from the unexpected, and start the next generation off on the right path to financial success.

Consider making these money moves now.

Make saving and investing automatic

Whether you want to save for a rainy day or for a longer term goal (like a down payment on a home), automatic beats manual. By automating money from your checking account toward your goals, you’ll take the pain out of saving and get into the habit of putting money away.

Turn on “Set Schedule” from the Auto-Stash tile and save automatically.

Take care of the ones you love

Don’t stay up nights worrying about what could happen to your family if something should happen to you. A term life insurance policy, which covers you for a set period of time, is generally more affordable than a permanent life insurance policy, which covers you for your entire life. A bonus: The younger you are when you get a life insurance policy, the more affordable it is likely to be.

Start saving for retirement

Did you know that one in three Americans has less than $5,000 put aside for retirement? You can break away from the trend by opening an IRA today. And best of all, your money will grow tax-efficiently until you’re 59 1⁄2.

Got a 401K through your work? You can open a Roth or traditional IRA in addition to your workplace retirement account. All you need is $5 to start. The best time to start saving for retirement is today.

Want to learn more about what you expect to have saved by retirement? Check out our retirement calculator, then get Stash Retire.

Help your favorite kid

Wouldn’t it have been nice if someone had handed you money when you were first starting out?
Now you can do it for a child you love.

A custodial account lets you open an investment account that you can contribute to (while teaching your child about how compounding works along the way). Best of all, when the child grows up, he or she can use the money for just about anything.

Open a custodial account on Stash.

Congratulations! Take a victory lap, you deserve it.

The post 5 Responsible Money Moves You Can Make in Less Than 1 Day appeared first on Stash Learn.