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Pawns v. Players: Are you controlling your debt? Or is it controlling you?

The Avenue presents... the October episode of Adulting 101 on ESPN radio

In this month’s episode of Adulting 101, we invited debt management expert, Eran Sinai, to discuss a couple different facets of debt management and elimination including credit card debt management and student loan forgiveness options.

Eran comes to us from Consumer Guardian Law which offers customized credit repair programs. Eran has dedicated the last 25 years of his life to protecting people and their reputations within the purview of financial loss, debt + identity theft by creating products and services that help people rebuild and recover their lives.

These days, the word “debt” has some seriously bad connotations. If you are part of the 80% of Americans in debt, your debt is probably a significant point of shame in your life.

As if our debt is somehow connected to our cosmic worth, we shrink at the thought of discussing it with others and even eschew internal conversations about it. If we avoid talking about it, thinking about it and continue paying the minimum payments – it’ll go away and the universe will forget about this dark stain on our otherwise fairly clean record, right?

If this is you, the first thing you should know is that there are so many options that you are missing out on because you refuse to face the problem head on. Second, as I mentioned before, you are not alone. Over 80% of Americans are in debt. How many of those do you think are taking advantage of the opportunities available and controlling their debt rather than letting their debt control them? Jenna, co-host of Adulting 101, says it perfectly: “I am longer a pawn in my chess – I am actually in control and I am controlling this board and I am making sure that the decisions that are within my control are smart decisions. And that’s a big piece of paying off debt. Being aware, being accountable and then taking small steps.”

So what are some these small steps? Here is a breakdown of some of the tips provided by Eran Sinai in this episode of Adulting 101.

Credit Card Debt

Credit Card Stacking

Scenario: You have several credit cards (2,3, 4.. 5?) that are maxed out or otherwise. You are drowning in so much debt that you are making the minimum payments on all and don’t even know where to start to being eliminating your debt.

Small Steps:

  1. Compare all of your credit accounts and rank them all in order of interest rates.
  2. Attack the card with the highest interest rate. Begin paying more than the minimum on this card only. Keep paying the minimum on the rest.
  3. Pay off that card.  
  4. Once you have paid off that card, target the card with the second highest interest rate and move that payment over into the payments for this card. Pay it off.
  5. Proceed to pay off all your debt.

In this way, you preserve the amount you are spending on credit card payments but slowly pay off all your cards. This method shaves off years from your previous repayment timeline by intelligently targeting cards with higher interest rates first. (As opposed to cards with the highest balance)

Student Loan Debt

(Image:  hxdbzxy via Shutterstock/Salon)

Can your student loan be forgiven after 10 years? Is your fear of facing your debt going to put you at the mercy of your debt for 20+ years more longer than necessary?

Student Loan Forgiveness

Scenario: You are paying the minimum payment on your student loans (extending your repayment timeline in favor of the lower payments).

Small Steps:

  • Figure out the terms of your loan. 
    • Is it Federal or Private?
  • If it is Federal, see if you qualify for either an IBRP or PAYE payment plan.
    • IBRP = Income Based Repayment Plan
      • Depending on whether the date of your loan falls before or after January 1, 2014 your payment may be 10% or 15% of your discretionary income. After 20-25 years of income based payment, your remaining balance will be forgiven.
      • Note: Payment will not exceed whatever your payment is at 10 years time.
    • PAYE = Pay As You Earn
      • In this program, your payment will not exceed 10% of your discretionary income and student loan debt will be forgive after 20 years.
    • Hint: If you are married, file taxes separately from your partner so that your income and therefore your payments are lower.
    • Hint: If you are in a public sector job, you qualify for loan forgiveness at 10 years.  

These are just a few of the tips that Eran Sinai shared in this month’s episode of Adulting 101 watch the full episode for more. In the words of Eran, there are no stupid questions only stupid results from not asking questions. So ask us your questions! We would love to here what problems YOU are facing and we will do our best to find an expert to help you face your fears and take the the necessary steps towards financial freedom. Contact us here.

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