Strategies for Getting Out of Debt

Strategies for Getting Out of Debt

By Angela McGregor

Something that is owed or due, usually money.

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Why do I care?

​What is debt?

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• People or companies to make large purchases or purchases they can't afford to pay now

• ​People or companies that are making more in interest from investments than they would pay in interest.

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​Why do I care?

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​Who uses debt?

• Secured

• Unsecured

• Revolving

• Mortgage​

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Why do I care?

​Types of Debt

• Amount owed is secured by collateral

• ​Collateral is property or other valuable assets pledged as security

• Collateral may be sold if borrower doesn't pay​

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Why do I care?​

​Secured Debt

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• Does not require collateral as security

• ​Borrower's credit profile is a primary decision factor

• ​Examples include automobile loans, student loans and most credit cards. This is why you care!

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​Unsecured Debt

• An amount a borrower can continuously borrow from

• Use money to credit limit, pay it back, borrow again

• Most common are credit cards​

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​You will likely have a credit card within a few years!

​Revolving Debt

• Debt issued to purchase real estate

• ​What is purchased is the collateral for the loan

• Several types of mortgage loans.​

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Usually the largest debt consumers will ever owe.

​Mortgages

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​"Total debt has increased over the past 12 months, although revolving credit card debt is down, and the cost of living is growing faster than household incomes."

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According to NerdWallet

Poll

What is NOT a reason that someone would or should incur debt?

• To help establish a payment history

• To cover expenses that they can't pay for in cash now, like a student loan or car.

• To go on a dream vacation

• To purchase a house

​Actually...

Most experts advise against taking out loans for something that you want (vs need) and doesn't result in ownership. So taking a dream vacation is something you would not take out a loan for. However, if you are using your credit card for the trip and pay it off right away (before interest), go have fun!

Subject | Subject

Poll

Which type of debt usually has the highest interest rate?

• A mortgage

• A student loan

• A car loan

• A credit card

Actually

Federal student loans usually have the lowest interest rates. Credit cards have the highest rates.​

• Snowball

• Avalanche

• Debt Consolidation Loan​

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​Some text here about the topic of discussion.

​Debt Repayment Strategies

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​https://www.youtube.com/watch?v=PvEUj_mRfIo

Multiple Choice

Which debt repayment method will typically cost you the least?

• Avalance

• Debt Consolidation

• Snowball

Multiple Choice

Which debt repayment method is usually most successful?

• Avalanche

• Debt Consolidation

• Snowball

Multiple Choice

Which debt repayment method starts with paying off the highest interest loan first?

• Avalanche

• Debt Consolidation

• Snowball

Multiple Choice

Which debt repayment method combines all of your debts into a single loan?

• Avalanche

• Consolidation

• Snowball

Multiple Choice

Which debt repayment method usually takes the longest to complete?

• Avalanche

• Consolidation

• Snowball

Multiple Choice

Which debt repayment method works by paying off the debts from lowest balance to highest balance regardless of the interest rate?

• Avalanche

• Consolidation

• Snowball

Multiple Choice

Which debt repayment method is considered to be the most motivating because successes are seen earlier and more often?

• Avalanche

• Consolidation

• Snowball

Multiple Choice

Which debt repayment method often results in more debt because borrowers see empty credit card balances and start charging again?

• Avalanche

• Consolidation

• Snowball

Poll

Which method of debt payment do you think would be most successful for you?

• Avalanche

• Consolidation

• Snowball

Open Ended

Why did you choose the method you chose?

​It's a Wrap

• Some people think all debt is bad, but is it realistic for most people to buy a house or go to college without debt?

• At some point, it will make sense to have a goal to be debt-free​

• ​Be smart about debt!

Subject | Subject