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From the Money Snapshot: Readers’ Tips on Paying Down Debt – Corporette.com


What are your best tips for paying down debt, readers? Which decisions regarding tackling debt — from student loans to mortgages and beyond — have you made that have worked out well, and which haven’t?

Our Personal Money Snapshot series has become a reader favorite (we’re always looking for submissions!), and we’ve started taking advantage of the many posts we’ve published to highlight the info and advice these professional women have generously shared. Our first topic was favorite personal finance resources; today’s subject is paying down debt.

In our Money Snapshot questionnaire, we ask the following questions about debt:

Corporette reader favorites - most bought items in July 2021
  1. What does your debt picture look like? How did you incur it?
  2. How much money are you spending each month to pay down debt?
  3. Have you paid off any major debt?
  4. Have you ever done anything noteworthy to avoid or lessen debt?

We recently took another look at these readers’ answers to summarize their tips and share them today!

Professional Women’s Tips on Paying Down Debt

Refinance your student loans

When you refinance your student loans, you consolidate them into a new loan with a single payment. The advantages are a lower interest rate, a lower monthly payment, and better repayment terms. A while ago, we shared a guest post from a reader who wrote about her experience refinancing her student loans. Setting aside that general advice for a minute, this August 2021 CNBC article explains why you shouldn’t refinance public student loans right now:

[W]hen you refinance a public loan, it becomes a private one and is thus no longer eligible for certain programs such as the current pause on payments and interest. It also means borrowers can’t enroll in different repayment plans or get certain types of loan forgiveness.

Refinance your mortgage

As of September 15, 2021, low interest rates make refinancing a good idea — depending on your particular situation, of course. (My husband and I refinanced earlier this year — we bought our house in 2008 — and we drastically reduced our interest rate and shortened our loan term. We switched from a big corporate bank to a local credit union, which I also recommend!)

{related: how to pay off big student loans}

Pay down your highest-interest debt first

We’ve previously mentioned this strategy in our post on paying down debt vs. saving. This strategy will help you pay less overall in interest charges. (Doing a balance transfer to help tackle credit card debt is an option you can use in tandem with this — here are some basics.)

Pay extra principal on your loans if you can

When you do this, you’ll pay less total interest on a loan and pay it off faster. A couple of readers wrote that they pay $100 extra on their mortgage every month, while another said that she and her husband make payments on their 30-year mortgage as if it were a 15-year. Another contributor mentioned paying 1.5x her monthly student loan payment. (Just make sure that your bank is solely applying the extra funds to the principal.)

{related: how to make a budget}

Reduce your expenses and direct the savings to loan payments

Money Snapshot readers’ strategies include moving in with your parents temporarily, living with roommates rather than getting your own place yet; buying a home for which the mortgage payment equals your monthly rent, “living with a third person in a sub-900 square feet, 1-bathroom condo,” “choos[ing] experiences and time over material items,” and moving to a LCOL area.

{related: paying down debt vs. saving}

Follow the advice of a personal finance expert

Dave Ramsey is a polarizing guy, but several Money Snapshot contributors said they follow his principles to pay off debt. (We included him in our posts on the best financial resources for professionals — with a caveat — and the best financial books for beginners.) For focusing on debt specifically, one of the readers recommended The Value of Debt in Building Wealth by Thomas J. Anderson [affiliate link].

Readers, do tell: What have you done to pay down debt? Have you paid off any large loans?

Stock photo via Deposit Photos / payphoto.





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