When it comes to debt, borrowing is a different reality dependent upon your age, ethnicity and gender. It’s not fair but it is reality. Veterans, minorities tend to have rates of interest. Latinos and African-Americans paid almost one-tenth of a percentage point more for mortgages between 2008 and 2015, for example, and that hasn’t changed much in recent years.
And, studies show that 27% of veterans have $10,000 or more in credit card debt, while only 16% of civilians do. How about young millennial civilians? Millennial student debt, for example, is mostly a bigger burden for blacks and African Americans. The median student loan debt for those with a bachelor’s degree is $31,000 for blacks and African Americans as opposed to just over $26,700 for whites with a bachelor’s degree.
With higher interest rates and lower overall disposable income, it’s no wonder that so many minorities, women and veterans find it so challenging to get ahead. That’s why we are here. CMPD Wealth has got your back. Whether it’s student loan debt, credit card debt, or any other type of personal debt, statistics show that the scales certainly aren’t tipped in favor of minorities or veterans.
What does all of this tell us about veteran and minority millennials’ personal debt? They need to learn how to reduce personal debt fast. If you fall into this category, here are seven easy-to-implement tips that can help you get out of debt.
How to Reduce Personal Debt
1. Get Honest About Your Personal Debt
If your personal debt has reached a point where you feel overwhelmed and don’t know where to begin, the best course of action is to take a step back, take a deep breath, and get honest with yourself. Sit down, crunch some numbers, and figure out exactly what you owe and who you owe it to. The good news is that you can fix this. The CMPD Wealth platform is here to help you. We’ll show you the path to a debt-free and prosperous future. You just have to follow it and be consistent.
Focus on putting a stop to the cycle and remember that there will always be a day one. Get through the worst part, which is getting a handle on how much debt you owe. This will allow you to form a solid game plan with the tools and tips below.
2. Use a Budgeting Tool
First things first, you’re going to need a useful budgeting tool. Not only does it allow you to gain control of your financial future, but it’s also a great way to organize your spending, track your financial goals, and receive customized alerts when you’re close to committing a personal financial crime (like overspending on your entertainment budget or ordering Uber Eats for the third time this week).
We’ve created a helpful guide to the best budgeting apps of 2021 with details regarding where each of them shines in terms of their features and offerings. Find a budgeting style that works for you, such as envelope budgeting, where you keep money (physically or digitally) in envelopes for different categories and only spend what you have in the envelope. Over time, budgeting will help you see where you’re spending money unnecessarily, and most budgeting apps have built-in alerts and tips that help you optimize your efforts.
3. Bulk Up Your Savings
If you don’t currently have money in your savings account, you’re not the only one. It’s an issue that plagues minorities in America more than their white counterparts. In fact, Business Insider's Marguerite Ward reported that "The median white family had more than ten times the wealth of the median Black family in 2016.” According to the Federal Reserve, black respondents to a survey had an average of $8,600 in savings compared to the $16,700 average Latinos reported and the whopping $51,400 that white respondents reported.
However, to pay off or reduce your debt fast, you’ll need to learn how to save effectively. This can include several strategies, such as:
- Follow the 50-30-20 rule where you spend 50% of your post-tax monthly income on necessities, spend 30% on wants, and then put 20% towards savings. This is a better goal for those who have a hard time focusing on specific numbers, and it allows you to save regardless of what you earn.
- Focus on saving smaller amounts weekly rather than a larger amount monthly. This is a helpful trick for those who feel overwhelmed by the daunting idea of saving large amounts of money. If you need to save an additional $600 a month to pay off credit card debt, that number seems a lot less scary when you break it down to $200 a week.
4. Consider Balance Transfers or Consolidation
It’s not usually recommended to get out of debt by taking on more debt, but it can help in some instances. Depending on your credit score, you might be eligible for a balance transfer to a new credit card with a 0% interest rate.
This is incredibly helpful if you currently have lots of high-APR credit card debt. Keep in mind that these transfers often come with fees, however, so it might not be the right choice if you’re already low on savings. This method also isn’t helpful if your problem is that you tend to overspend. A balance transfer only buys you time to pay off the debt.
If that doesn’t sound like it works for you, look into debt consolidation while interest rates are low. You will essentially take out a new personal loan to pay off all of your other debts and payback that loan at a (hopefully) lower interest rate. Sound like exactly what you’re looking for? We partner with QuinStreet, and they’ll pre-qualify you for personal loans on the spot with your consent.
5. Try the Debt Snowball Method
If your goal is to pay off your debt fast, try the debt snowball method. It’s different than the debt avalanche method in that it requires you to list the debts you owe from smallest to largest. Make the minimum payment on all of your loans and put any additional money you have towards the smallest loan. You’ll pay that one loan off faster, and then you can move onto the next largest loan on your list.
Psychologically, this is a great debt repayment option for those who feel they need “wins” to continue to engage in good financial habits. You’ll get rid of your smaller loans and debt faster, and once they’re off your list, you’ll feel much lighter.
6. Start a Side Hustle to Pay Off Personal Debt
Need to make more money fast to pay off that personal debt? There are few easier ways than starting a side hustle. Nearly half of the entire country, 45%, has a side hustle these days. The best part is that you can engage in an activity you’re passionate about.
If your current job pays the bills and provides you with some sort of financial security, but you’re keen on teaching guitar lessons, you can do that! Check out websites such as TaskRabbit, UpWork, Freelancer, and even Fiverr. They’re all great platforms where you can sell your services or complete tasks for additional cash.
7. Use WealthStack
We’ve just thrown a lot at you. Take a moment to process.
Now, think about what kinds of financial products you need to help you achieve your goal. Do you need to monitor your credit score, track a budget to find spending categories you can save in, or help to repay your personal debt fast?
It’s hard to find all of the tools you need in one place, especially as a millennial who's had little to not luck in the financial world (hello two major depressions all before we turn 40, or even 30!). That's why we created WealthStack. It’s an all-in-one financial app catering to millennials who don’t have access to other top-tier tools. Within the app, you’re able to select your goals and we’ll guide you to the right products and brands. Sounds great, right?
Download the Wealth Stack app for free on the App Store or on Google Play.