Does the thought of dealing with your debt make you want to go back to bed? About 22 per cent of Americans are likely to put off creating a debt payoff plan, according to a June 2022 survey from NerdWallet conducted online by The Harris Poll.
That is a lot of procrastination and it's no wonder why. Facing your debt isn’t exactly a fun way to spend an hour.
Still, there are actions you can take that will make getting out of debt feel more attainable. And there are ways to lower interest payments, which will save you money as you work towards paying down your balance.
“Americans struggle to pay back debt, struggle to save and struggle to do the things we know are the right thing,” says Kate Mielitz, a Washington-based accredited financial counsellor with a doctorate in personal financial planning.
“We just have to say, ‘OK, that was yesterday. What can I do to take one step today?’”
Forgive yourself first, then make a plan
The first and most difficult step is understanding how you got here.
When Valerie Rivera, a certified financial planner and founder of FirstGen Wealth in Chicago, works with clients, she helps them go through credit card statements to categorise purchases and look for spending patterns. That makes it easier to create a new spending plan that leaves room for debt repayment.
Here is why this part is essential: it takes you out of autopilot. You may have been making minimum payments on your debts because that’s what you felt you could handle. And while that approach allows you to avoid late fees and knocks to your credit scores, it will keep you trapped in debt for a much longer time.
If you can shift your spending even slightly, you may be able to afford bigger payments.
If you have $10,000 in credit card debt at a 17 per cent interest rate and you pay $150 per month towards your balance, it will take 17 years (and cost $20,820 in interest) until you are debt-free. That is assuming you don’t add to your debt balance during that time.
But if you were able to double your monthly payment to $300, you would spend $3,629 in interest and be out of debt in about four years.
“If you have debt, you are normal. It is possible to get out of it and to face it,” Ms Rivera says. “The number one thing is to face it and give yourself grace in the process.”
Make some bigger money moves
Freeing up more money to put towards debt is a start, but you may have to make additional changes to make more of a dent.
Ms Rivera sometimes recommends temporarily limiting contributions to retirement accounts if your credit card interest rate exceeds the return you would receive from investments.
She also looks at whether her clients can make more significant lifestyle changes, such as taking on a side hustle for more income, or finding a roommate to cut down on living expenses.
Lower your interest rate
Combine the actions above with lowering your interest rate so you can save even more. Here are some strategies to consider.
Ask for a lower rate: Call your credit card company and see if you would be eligible for a lower interest rate. They might say no, but it doesn’t hurt to ask.
Look into balance transfer credit cards: These offers generally charge a one-time fee and require good credit. But they let you move debt on to a card charging 0 per cent interest for up to nearly two years, depending on the card.
You will save on interest, but do not let your debt sit there without a plan. Aim to pay off your debt before the interest kicks in again, and use debit cards or cash to make purchases so you don’t add to your debt.
Explore loan consolidation: A personal loan allows you to consolidate your high-interest debts into one lower-interest monthly payment for a set period of time, if you qualify.
Tap into home equity: A home equity loan or line of credit can provide lower-interest financing that you can use to pay off your credit card debt. But you risk losing your home if you can’t pay your debt going forward, so be cautious.
Killing of Qassem Suleimani
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Retirement funds heavily invested in equities at a risky time
Pension funds in growing economies in Asia, Latin America and the Middle East have a sharply higher percentage of assets parked in stocks, just at a time when trade tensions threaten to derail markets.
Retirement money managers in 14 geographies now allocate 40 per cent of their assets to equities, an 8 percentage-point climb over the past five years, according to a Mercer survey released last week that canvassed government, corporate and mandatory pension funds with almost $5 trillion in assets under management. That compares with about 25 per cent for pension funds in Europe.
The escalating trade spat between the US and China has heightened fears that stocks are ripe for a downturn. With tensions mounting and outcomes driven more by politics than economics, the S&P 500 Index will be on course for a “full-scale bear market” without Federal Reserve interest-rate cuts, Citigroup’s global macro strategy team said earlier this week.
The increased allocation to equities by growth-market pension funds has come at the expense of fixed-income investments, which declined 11 percentage points over the five years, according to the survey.
Hong Kong funds have the highest exposure to equities at 66 per cent, although that’s been relatively stable over the period. Japan’s equity allocation jumped 13 percentage points while South Korea’s increased 8 percentage points.
The money managers are also directing a higher portion of their funds to assets outside of their home countries. On average, foreign stocks now account for 49 per cent of respondents’ equity investments, 4 percentage points higher than five years ago, while foreign fixed-income exposure climbed 7 percentage points to 23 per cent. Funds in Japan, South Korea, Malaysia and Taiwan are among those seeking greater diversification in stocks and fixed income.
• Bloomberg
The Details
Article 15
Produced by: Carnival Cinemas, Zee Studios
Directed by: Anubhav Sinha
Starring: Ayushmann Khurrana, Kumud Mishra, Manoj Pahwa, Sayani Gupta, Zeeshan Ayyub
Our rating: 4/5
UAE currency: the story behind the money in your pockets
Dubai World Cup Carnival card:
6.30pm: Handicap (Turf) | US$175,000 | 2,410 metres
7.05pm: UAE 1000 Guineas Trial Conditions (Dirt) | $100,000 | 1,400m
7.40pm: Handicap (T) | $145,000 | 1,000m
8.15pm: Dubawi Stakes Group 3 (D) | $200,000 | 1,200m
8.50pm: Singspiel Stakes Group 3 (T) | $200,000 | 1,800m
9.25pm: Handicap (T) | $175,000 | 1,400m
The biog
From: Upper Egypt
Age: 78
Family: a daughter in Egypt; a son in Dubai and his wife, Nabila
Favourite Abu Dhabi activity: walking near to Emirates Palace
Favourite building in Abu Dhabi: Emirates Palace
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Turkish Ladies
Various artists, Sony Music Turkey
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
LIVERPOOL SQUAD
Alisson Becker, Virgil van Dijk, Georginio Wijnaldum, James Milner, Naby Keita, Roberto Firmino, Sadio Mane, Mohamed Salah, Joe Gomez, Adrian, Jordan Henderson, Alex Oxlade-Chamberlain, Adam Lallana, Andy Lonergan, Xherdan Shaqiri, Andy Robertson, Divock Origi, Curtis Jones, Trent Alexander-Arnold, Neco Williams
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
