Financial Goals

Apache is functioning normally

An estimated 14 million Americans have at least $10,000 in credit card debt.

Five-figure credit card debt, and the interest that accrues along with it, can feel overwhelming. It’s the kind of debt that keeps people up at night, and prevents them from pursuing their other financial goals.

But, that debt doesn’t have to stick around forever. With a strategy, chipping away at a $10,000 in credit card debt is achievable. Here are some options for how to pay off $10,000 in credit card debt.

Tips for Paying Off $10,000 in Credit Card Debt

Paying down $10,000 in credit card debt takes discipline and time. These tips and tools could help speed up the journey toward debt freedom.

Consider a Side Hustle

If your budget doesn’t have much wiggle room to make extra payments toward credit card debt, you might consider finding ways to generate more income. Starting a side hustle could be a powerful way to pay down a $10,000 credit card debt faster. Whether it’s grabbing a job in the gig economy or taking a catering job on the weekends, you can put those paychecks toward your credit card debt.

Ask for a Raise

If time is limited for a side hustle, think of how you could make more money in your current role. Is it time to ask for a raise, for instance?

Similarly, switching jobs may land you a higher salary. Nearly half of all Americans who switched roles last year saw an increase in salary. Just make sure that extra income goes toward debt payoff, and not lifestyle creep.

Switch to Cash

When you’re paying down $10,000 in credit card debt, it’s important to avoid accruing a higher balance. Adding more debt can not only feel discouraging, it can extend your payoff timeline.

As you tackle paying down debt, consider avoiding any further spending on credit cards. That can take the form of paying for things in cash, or using a debit card where you can only spend what you actually have. Making a switch to cash means you’re less likely to add to your burden of debt.

Debt Management Plans

While tips and tricks may help you pay down $10,000 in credit card debt, you may have to consider a larger overall strategy to move you towards payoff. Having a debt management plan in place can take some of the pressure away and could put you on a track toward paying off debt faster.

Two popular methods to accelerate debt repayment include the snowball and avalanche method.

The snowball method prioritizes paying off small debts first and working your way up. Here’s how:

1.    Make the minimum monthly payments on all debts.

2.    Take inventory of all your debts and order them from lowest outstanding balance to highest.

3.    Put any extra cash toward the smallest balance debt.

4.    Repeat this until the lowest debt is paid off.

5.    Next, move onto the next lowest debt, adding the surplus cash from step 2 to this card’s monthly payments.

6.    Continue to repeat this process, scaling up to the high-balance debts once you pay off the lower ones.

While this method can seem counterintuitive because of the interest that high balances can generate, starting off with small wins has psychological benefits for some. Having those wins early on may motivate you to move forward.

If you tend to be more disciplined and don’t mind playing the long game, you might prefer the debt avalanche method to pay off $10,000 in debt. Here’s how to deploy the avalanche method:

1.    Make minimum payments on all debts.

2.    Compile all your debt, and order it by interest rate from highest to lowest.

3.    Put any extra cash toward the debt with the highest interest rate.

4.    Repeat until the highest-interest debt it paid off.

5.    Move onto the debt with the next-highest interest rate. Put any extra cash toward this balance until it’s paid off.

6.    Continue this process, prioritizing the highest interest debt first, until all balances are settled.

Typically, the debt avalanche saves more money in interest payments in the long run. However, it can take time to see a win with this method, as opposed to debt snowball.

Credit Card Debt Forgiveness

Credit card debt forgiveness is not as simple as waving a magic wand at your balances and watching them disappear. Forgiveness does not mean the debt’s completely erased, and it comes with its own drawbacks.

Credit card debt forgiveness only becomes an option when a cardholder stops paying their debt and the credit card company sells the outstanding balance to a debt collector. From there, you can negotiate with the debt collector as to how much debt to repay.

Debt collectors buy debts for pennies on the dollar, and thus are willing to recuperate just a portion of the initial amount owed. For example, if you owe $10,000 in credit card debt and it goes to collections, you may be able to negotiate to settle the debt for just $5,000. That payment may be a lump sum or small payments over time.

While credit card debt forgiveness means paying less than the total owed, it has a fair share of drawbacks. Neglecting credit card debt can wreak havoc on a person’s credit score, and you’ll still need to pay some portion of the debt.

Additional Options for Paying Off Debt

Credit card debt forgiveness isn’t the only route toward paying off $10,000 in credit card debt. Depending on your situation, one of the following solutions may work.

Balance Transfers

Some credit card companies allow cardholders to make credit card balance transfers. That means you transfer the outstanding balance from one credit card to another, often with an introductory low interest rate or no interest.

Balance transfers do come with fees, but depending on how much you owe and how much you could save on interest, it could be worth it in the long run. However, keep in mind the interest rate the balance transfer offers may be for a limited time. You’ll want to pay off the remaining balance before the rate rises, or you could owe more than you did before the transfer.

Personal Loans

There are a number of common uses for personal loans, including paying off credit card debt. Often, a personal loan will have a lower interest rate than credit cards, which could help you pay down your debt faster and save on interest. If you’re struggling to figure out how to pay off $10,000 in credit card debt, consolidating multiple balances into a single loan also may streamline the process.

Your credit score can impact if you get approved for a personal loan, as well as what interest rate you receive. If you have a less than stellar credit score, you may not get approved. Using a personal loan calculator can help you determine if this strategy will net you savings and, if so, how much.

Recommended: Types of Personal Loans

The Takeaway

Paying down $10,000 in debt might not be easy, but with the right strategies, it is possible. This could mean adopting an aggressive payoff method or looking for additional options to pay down the debt, like personal loans.

If a personal loan sounds like the right fit for you, consider SoFi personal loans. SoFi has a simple online application and offers easy-to-use tools. You can view your rate in just 60 seconds, and get your loan funds as soon as the day your loan is approved.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

Photo credit: iStock/ArtistGNDphotography

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
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Source: sofi.com

Apache is functioning normally

Paying off existing debt is the top near-term priority for Gen Z college students, along with having financial freedom, goals which set them up for future home ownership, a study conducted for FinLocker, which provides a financial fitness app, found.

More than 27% declared that their financial goal for the next two-to-five years is paying off student loans, auto loans and credit cards. Meanwhile, 10% said it was a goal for the next five-to-10 years.

Financial freedom is the short-term goal for 24.5% and a longer term aspiration for 27.8% of respondents.

But the top goal in the five-to-10-year range is home ownership, with 29.6% of respondents prioritizing that. However, a significant share has this as their short-term objective, at 9.4%, the study found. The mortgage and real estate industries should find this last point encouraging, the report accompanying the survey said.

Among those Gen Zers planning to buy a home, 43.5% are looking to act between the ages of 28 and 32. The next largest cohort, 36.1%, expects to buy between the ages of 23 and 27.

Just under 14% said they were planning to become homeowners between 33 and 37.

Mortgage lenders need to figure out how to engage these Gen Z borrowers. In general, these firms reach out to potential customers using “high-cost lagging indicators,” such as trigger leads from credit report pulls and multiple listing service searches, FinLocker said.

“However, as the survey validates, a more equitable opportunity exists to engage a consumer: connecting at the top of the marketing funnel through social media,” the report noted. A recent report from National Mortgage News’ parent company Arizent also noted the importance of having a mobile strategy to reach this group.

Friends and family was the top source respondents said they learned about finance from, at 41%, but social media was second at 15.8%.

“The recent rise of ‘finfluencers’ exemplifies how social media has become a financial education source for millions of young people,” the report stated. “As 40% of Gen Z need to ‘trust’ the source of their financial advice, this is an opportunity for mortgage professionals to establish themselves as trusted resources by creating short and long videos on the topics Gen Z want to learn more about.”

When asked how they would determine if they were ready to purchase a home, 63.5% said when they had significant savings for a down payment. This was down over 5 percentage points from 73.9% reported in a similar FinLocker study conducted in 2022.

Only 4.6% said they’d be ready to buy when they had a good credit score, down from 11.9% in the 2022 survey.

On the other hand, nearly one-quarter of the 2023 respondents, 24.1% said it would be when I have a family versus 12% the prior year.

Among the barriers they feel exist to achieving all of their financial goals, other priorities were cited by nearly 32%. Next was a lack of financial education at 19.4%; uncertainty about how to create a financial plan also came in at 19.4%.

Unable to save enough money was the response of 14.8%, while 10.2% declared they had no barriers.

FinLocker partnered with the students in the American Marketing Association group at the University of Southern California to conduct the survey over a three-week period in April.

The survey featured answers from 171 respondents, with 83.5% being between the ages of 18 and 22; 10% between 0 and 17; 4.6% between 23 and 30 and 1.8% between 31 and 40. The U.S. Census Bureau uses 1997 as the start year for this generation, making the oldest members approximately 25 to 26 years old.

By gender, 62% said they were female, 35% male, 2% non-binary and 2% preferred not to say.

Source: nationalmortgagenews.com

Apache is functioning normally

Last Updated: May 27, 2023 BY Michelle Schroeder-Gardner – 55 Comments

Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.

Personal finance comes up a lot in my life.

Once someone finds out that I write about personal finance for a living, the conversations about a person’s financial situation never seem to stop coming.

That’s no problem, though, as I love talking about financial topics and helping others.

However, one thing that comes up often is that many are somewhat clueless about their financial situation.

There have been many times when someone has told me that they had no idea what their monthly mortgage or rent payment is, they don’t know how much they are putting towards retirement, they are unaware about how much debt they have, and so on.

More shockingly, some can’t even give me an estimate and have no clue whatsoever about what the amount would be. Or, when they do give me a number, their significant other chimes in about how they are extremely wrong.

This is a problem.

Everyone should be aware of their financial situation. I believe a person should know what their:

  • Mortgage or rent payment is;
  • How much debt they have;
  • How much savings and retirement they have;
  • What their financial goals are; and more!

I understand that sometimes a person is not aware because they are not the person who manages their family’s finances. However, I believe there are many benefits of understanding your family’s financial situation.

Below are some of the many reasons for why you should be aware of your financial situation.

Knowing your financial situation will help you keep a budget.

It would be very hard to create and keep a realistic budget if you had no clue about your financial situation. By being aware, you will understand what you are working towards with your budget.

Knowing your financial situation can help you when it comes to creating a budget, keeping track of expenses, lowering costs, saving more, and so on. It would be very hard to do any of this if you had no clue what was going on.

Being aware may prevent everything from falling on one person.

What problems would arise if something happened to the person who is in charge of your family’s finances?

By not taking part in the finances of your family, you may be in for a rude awakening. You would already have enough on your plate if something happens to a loved one so it is much better to stay aware now than having to worry about the little things later.

Plus, what if the person who is in charge of your financial situation wants YOU to be aware as well? Maybe they want some help every now and then so that the family’s finances are not always weighing them down.

It is not a healthy situation for one person to have to deal with all of the stress from an unwanted financial situation.

Related: Do You Have A Financial Emergency List?

Knowing may stop financial infidelity.

No one wants to be a victim of financial infidelity. However, if a person is unaware of their financial situation then the other person may be able to keep big financial secrets quite easily.

It’s best to always know your financial situation so that you have open communication.

Being aware can help you with your goals.

If someone in your family has no clue what the family’s financial situation is, how would they really know and understand what the family’s financial goals are?

They most likely wouldn’t have the same financial motivation as someone who is aware, which may be holding you back from completing your goals.

Are you aware of your financial situation? Do you think others should be aware?

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Source: makingsenseofcents.com

Apache is functioning normally

Is it time to play defense? Economists have a fairly simple story to tell about the 2023 economy: things are weird. Inflation raged out of control in 2022, but has been falling in 2023. A volatile stock market remains below its 2021 highs, but still trended positive since the start of the year and may have entered a new bull market. Mortgage rates have tripled, but try telling that to the housing market. Economists and investors alike have issued steady warnings about a coming recession, but it feels like each month’s labor statistics beat the last.

A financial advisor can help you prepare your portfolio for a potential recession. Find a financial advisor today.

In other words, nobody really has a handle on what’s happening out there. That said, there are some potentially troubling signs ahead, especially for the third quarter of 2023. Several long-term factors may come to a head in late summer, ranging from top-level issues such as banking instability and delayed-impact Federal Reserve rate hikes to bottom-up issues such as resumed student loan payments. Together, it might all be enough to finally tip the economy into a long-awaited recession.

The right approach to this, as Morgan Stanley argued in a recent brief, might be to start thinking defensively.

“The stock market has managed to stay positive for much of this year. However with interest rates at their highest level in more than a decade and economic growth slowing, not to mention recent turmoil in the banking sector, uncertainty looms large,” writes Daniel Skelly, managing director and head of Morgan Stanley’s wealth management market research and strategy team.

“Additionally, equity valuations are already high relative to earnings – and current earnings estimates may be inflated. As a result, investors may see another drop in the stock market before they can truly declare the bear market over,” Skelly also writes.

In the face of this uncertainty, Skelly says investors may want to consider playing defense in the back half of 2023. In particular, he recommends seeking out dividend stocks. The reason is volatility, as dividend stocks tend to be an excellent buffer against unpredictable markets for four key reasons.

Price Supports

Dividend stocks tend to have built-in support against price volatility. In the short term, when companies issue a dividend to their shareholders, the price of a stock tends to drop. This has to do with a number of factors, most often the fact that new investors don’t want to invest if they’re being left out of the upcoming payments.

That’s not a bad thing, though, because when the share price drops for a dividend-paying stock the asset’s overall yield rises. For example, say you pay $10 per share for a stock that pays $1 in dividends. That’s a 10% yield on your investment ($1 dividend payment / the $10 you paid to receive it). If the share price drops to $8, but the company maintains its $1 per share dividend, that yield floats up to 12.5%.

That builds in a counter-cyclical pressure on the stock. As the share price falls, the yield increases. As the yield increases, more investors will get interested in the stock. That new interest will presumably drive new investment, boosting the share price back up. It’s not a guaranteed cycle, there’s much more going on here, but it can help smooth out volatility relative to stocks that generate their value entirely based on returns.

Stronger Returns

Historically, dividends have played a much larger role in market returns than many investors realize. As Morgan Stanley notes, in recent years dividend payments have lost ground compared to capital gains. From 2013 to 2022, only about 17% of the stock market’s overall returns came in the form of dividend payments. However, this has less to do with reduced payments and more to do with the explosive gains in stock value over that decade.

Historically, though, dividend payments have accounted for anywhere between 37% and 40% of the market’s overall returns.

Morgan Stanley expects a reversion to norms. “The next several years are likely to be marked by lower equity returns and higher volatility,” Skelly writes, “which could lead dividends to account for a greater portion of total stock market return.”

If the economy does slip into a recession, or even if the stock market simply enters longer-term bear territory, then capital gains-based returns will suffer. Long-term investors who can afford to wait out a downturn will probably be fine, but anyone who is looking to generate returns in the next year or two will probably face much less reliable, often less profitable, share prices. Dividend stocks can help offset that risk.

Signals for Good Fundamentals

Long-term investors should take note too, though.

As Morgan Stanley writes, dividends are a very strong bellwether for the underlying strength of a company. “When a company can reliably pay dividends or even increase them, it likely has a certain level of financial strength and discipline. For investors, this regular income stream can offer some hedge in what continues to be an uncertain stock market. In fact, in 2022, the S&P 500 overall lost about 18%, but the S&P 500 Value Index (which is often used as a proxy for dividend stocks) kept its losses to about 5%, and the S&P 500 High Dividend Index lost about 1%.”

In essence, when a company can afford to pay or maintain dividend payments, it’s signaling that it has significant cash on hand above and beyond its business needs. Now, to be sure, this is not always the case. It is not unheard of for corporate leadership to recklessly reward themselves and other investors at the expense of long-term business interests. So make sure you evaluate a company’s whole picture. If dividend payments take place in the context of weak leadership or an atmosphere of poor judgment, pay attention.

Otherwise, dividends can show that the company has strong revenue, good cash reserves and a handle on its debt, and that it expects this situation to continue. Especially if the economy enters recession, that’s an excellent signal for fundamental value. It suggests that this company can be a good long-term investment, regardless of current share prices.

Inflation Hedge

Finally, dividend stocks have historically been an excellent hedge against inflation.

Dividend-paying stocks tend to make up an enormous portion of the stock market’s return during periods of high inflation. One analysis by Fidelity found that when inflation was at 5% in the 1940s, 1970s and 1980s, dividends made up 54% of the S&P 500’s overall returns. This is in large part because companies can adjust their dividend payments on a quarterly basis, letting them keep up with the changing value of money.

In an atmosphere of ongoing inflation, dividend stocks are historically a strong choice.

Where to Focus Your Attention

For active stock pickers who would like to pursue a defensive dividend strategy, Morgan Stanley recommends four key areas of investment:

  • Industrials: Manufacturing and logistics firms are likely to benefit from increased infrastructure and defense spending, according to Morgan Stanley.
  • Health care: Medical firms have tended to outperform the market in past recessions, and are poised to take advantage of new technologies.
  • Consumer goods: Morgan Stanley expects these firms to raise consumer prices and recover well from high commodity prices over the past year.
  • Global stocks: Investing in global high-dividend stocks can allow investors to diversify their portfolios and capitalize on the momentum in this area.

When you look for dividend stocks, be somewhat judicious. In particular, be careful of stocks with yields that are too high, Skelly advises. This can signal an imbalance between the stock’s share price and its dividend payments, suggesting high payments that the underlying business may not be able to sustain.

Also, look at the stock’s price-to-earnings (P/E) ratio. Despite concerns over bear market territory, investors are also worried that many of the market’s high-performing stocks may be overvalued relative to the company’s underlying earnings. In those cases, investors can often expect the stock to lose value, and to lose value particularly quickly in the event of a recession.

Bottom Line

Many investors are worried about a recession in late 2023. To insulate your portfolio, Morgan Stanley recommends investing in dividend stocks to take advantage of their historic stability and potential for outsized returns in down markets. Active stock pickers who wish to pursue this strategy may consider dividend stocks in the industrial, health care and consumer goods sectors.

Dividend Investing Tips

  • If you need help investing in dividend stocks or want more guidance when it comes to your whole portfolio, consider speaking with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Interested in dividend investing? You’ll want to familiarize yourself with how dividends are taxed. The exact dividend tax rate you pay varies by the type of dividends you have: non-qualified or qualified. Here’s everything you need to know about dividend taxes.

Photo credit: ©iStock.com/Cn0ra, ©iStock.com/kate_sept2004, ©iStock.com/pigprox

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

Source: smartasset.com

Apache is functioning normally

When my husband and I got married nine years ago, we had an audacious dream of paying cash for our first home. At that time, it was very much a far-off dream — we were just trying to survive the rigors and expenses of law school without going in debt. That alone was a seemingly gigantic feat.

But after three years of law school, my husband did graduate without debt, passed the bar, and we started planning for the future. Since we’d been renting for almost four years, my husband had a good job, and our second baby was on the way, pretty much everyone expected that buying a house would be in our immediate future.

I mean, after all, isn’t buying a house the responsible thing for a young couple to do? Well, maybe — or maybe not. We didn’t have much money in savings, and we weren’t sure how long we would be living in the town we were in, so we chose to go against conventional wisdom and continued renting.

Setting a Goal

Within the next six months, my husband lost his job, we relocated to another city so he could find work, I had some significant health problems in my pregnancy which resulted in numerous hospital and doctor’s bills, and we had our second baby. Needless to say, we were incredibly thankful that we hadn’t taken out a mortgage and then had to deal with the headache of trying to sell a house at the last minute — especially since the housing market was poor in our area.

It was around this time that we were first introduced to Dave Ramsey. While we didn’t have any debt and had always lived on a strict budget, going through his Financial Peace University Class fired us up to set big financial goals and work hard to accomplish them.

One of the big goals we decided to aim for was paying cash for our first home. We crunched a bunch of numbers and realized that, if we continued to live simply and frugally and worked hard to bring in extra money through side jobs, we could save enough over the course of five years to pay cash for a starter home.

It felt like a mammoth goal and we weren’t sure if we could do it, but we decided to go for it anyway. We figured that, even if we didn’t make our goal in five years, we’d at least be a lot closer to it than if we didn’t try at all! Plus, from our calculations, we’d be in a lot better position to wait to buy — even if it took seven years to save up enough for a house — than if we were to go ahead and get 15-year mortgage and pay it off early.

We knew that we could buy a decent starter home in the area where we were planning to move for around $100,000 to $110,000, so we divided $100,000 by 60 (since there are sixty months in five years) and set a goal to save $1700 every month. Because we didn’t have any debt or school loans, and because we lived simply and frugally, we were able to live on significantly less than we were making, thus freeing up a good chunk of money to put towards our house savings each month.

Gazelle-Like Intensity

Once we set this goal and I blogged about it publicly, we were incredibly motivated to work as hard as we could and delay every purchase we could in order to put as much as possible into our house savings fund. We used coupons, ate a lot of meatless meals, shopped at thrift stores, cooked from scratch, brown bagged it, continued to use our old and worn-down furniture, didn’t replace anything that wasn’t an absolute necessity, limited our going out to eat, only had one car, stayed home a lot, used gift cards from Swagbucks to buy any non-necessities, bought eye glasses from Zenni optical, learned to be content with what we had, and continued to live on a strict written budget.

Meanwhile, we also looked for ways to increase our income. I blogged, wrote ebooks, and took on freelance writing jobs. My husband did contract work, started his own law firm, and helped me running the blogging business.

That first year, we didn’t always make our monthly savings goals. We had some unexpected medical bills and car problems that ate up a portion of our savings. But we kept plugging away, throwing whatever extra we could squeeze out of our income toward savings.

The few years of long hours and hard work we’d put into blogging started to really pay big dividends and by the second year, we were meeting and exceeding our monthly savings goals every single month. As our house savings fund increased, we began to get so excited that we kind of went overboard and worked long, long hours in order to meet our savings goal even faster. I wouldn’t recommend putting in such long hours, missing so many social events, or sleeping so little, but the effort paid off because, at the end of two and a half years, we paid 100% down on our first home!

Even though I wish we had given ourselves a little more breathing room and margin while saving, it was thrilling, fulfilling, and exciting to achieve this goal — in half the time we had initially planned. And we are thankful we chose to take a counter-cultural route and pay cash for our house. Not having a mortgage payment has freed us to continue to save aggressively toward other goals, increase our spending in areas that really matter to us, and give generously to needs in our community and around the world.

Source: getrichslowly.org