The BA Q and A: Keeping That Debt Down

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and thank y'all again for your patience. As I have been learning how to just sit here and talk to myself.

bothered when it comes to debt. I'm only comfortable carrying my student loan debt, which I've got about sixteen thousand dollars of. My partner is also trying to pay off about nine thousand dollars of personal consumer debt that has skyrocketed since he's been unemployed through the pandemic. This year, we've managed to also rack up an additional four thousand dollars in credit card debt low interest to no interest because we've taken advantage of a zero percent financing offer

pre tax. This year, will have made about eighty five K, and my credit score is seven twenty. Okay, So you want to know when it makes sense to use credit unions, I'm going to have to do a little bit of mental gymnastics to figure out specifically what you're wanting to do with a credit union. So I'm thinking based on the fact that you guys have got let me see da DA Math is easy, Math is fun nine thousand

dollars plus four. So you got about thirteen thousand dollars of credit card and personal loan debt and you're probably wondering, you know, should we go to a credit union and potentially take out like a debt consolidation loan that we could use to pay down this consumer high interest consumer debt and then you're just left with one loan payment

after that. With your credit score seven to twenty, you know, you're probably really likely to get a pretty decent rate on a debt consolidation loan, and a credit union is a perfectly fine place to go for that kind of loan. You can also use online lenders too, you know, online lenders, because they don't have all the expenses of brick and

mortar banks, they tend to offer lower fees. But my best advice when it comes to shopping for debt consolidation loans is to get quotes, you know, actually run your numbers, get a quote for how much you need, and see who's going to offer you the best terms. So your interest rate obviously is number one, but are they going to attack on any other fees on top of that?

You know, are they gonna are they going to give you a penalty if you prepay your loan, which means you pay it off sooner than what your term dictates. So definitely get some loan options and lay them out next to each other and just make the best decision

based on the options that you get. Now, listen, what's interesting about your question is, you know, so I hear you're married, your partner's got some debt, you've racked up some debt together, but you're talking about your credit score, and that tells me that you're looking to take on this debt consolidation loan potentially on your own. Just be aware that, you know, whatever happens in your relationship, that loan is going to be in your name, so it's

going to be your responsibility to pay it down. Obviously, your partner can help. I hope that he's been able to get work. I know you said he was unemployed during the pandemic.

sixteen K it's not that bad, right. Plus, I think at least until the spring, you won't have to make any more payments or make any payments on federal student loan debt thanks to the relief that was given during the pandemic to federal student loan borrowers. So hopefully that gives y'all some time where you could really attack this personal consumer debt that you've got, especially the high interest debt.

So that four thousand dollars of debt that you guys have accrued, you said that was on like a zero percent financing plan. That's maybe not your top priority right now. Maybe you want to tackle that nine thousand dollars that you said has skyrocketed because your partner's been out out of work for so long, you know, So tackle the high interest debt first, but really be aware again of

take on that responsibility with your credit score. You know, if you're not able to make those payments, obviously, that would hurt your credit score, and that's who the banks would be coming to for payment if you guys can't pay. When it comes to managing debt, well, actually I don't know if I say this yet, but when it comes to managing debt as a couple, I think teamwork makes

a dream work. I think, at least in my relationship, it helped me to start thinking of his debt as my debt from an early time in our relationship, and not that he had a lot of debt, just as an example. And the same thing with my savings, my income, you know, just thinking of it as one pot. It just made it easier to kind of tackle those goals together.

So as long as your partner is working and you guys are bringing an extra income and you feel like you are capable of making a debt consolidation loan payment, you know, month after month and making that a consistent part of your budget, then I think it could work for you guys to go to a credit union or any other lender and get a debt consolidation loan as long as it's a lower rate than the cost of your consumer debt right now and just paying that down aggressively,

and then once that's paid off, then you can move on to that zero percent financing debt. As we've said on the show before, when it comes to those zero percent you know, credit card offers or any kind of like zero percent financing, which is an introductory rate. Really pay attention to the fine print because what you don't want to happen is that you're left after that promotional.

all that interest back onto your balance. So it could actually increase how much you owe, which really sucks, right, So just be conscious of that. But I think together you guys can definitely tackle this. It's definitely not the worst debt story that we've gotten here on Brown Ambition.

That I hope that helped. And good luck as you guys get back and you know, get back on your feet, you know, financially, and I mean, honestly, don't beat yourself up too bad, because the pandemic is is and was a huge burden too, so many households and the fact that you had to rack up some consumer debt does

not mean that you are bad with money. It just means you did what you had to do to survive during unprecedented times, right, and now you just kind of got to pick yourself back up and get on the right track, which I feel really confident that you guys will be able to do. All right.

the next six months. My question is this, considering I don't have much saved after the pandemic wiped us out, and I'm planning a move from southern California to make in Georgia. Should I pay all my credit card debt off or pay it down to about the thirty percent mark and save the rest? Also some additional info, my dad is helping me pay for my cross country move. Okay, it's a lot to unpack here. First of all, I mean, it's amazing that you are taking on responsibility for a child,

you know, at the goodness of your heart. And I think that is just a really selfless and amazing thing that you've done. And it sounds like, you know, you've got your you've got a go job, you're enrolling in school, you're using your military GI bill to pay for it, which is amazing, and you've got that income coming in to pay for it.

blow your GI bill on debt. I mean, technically that money is earmark for school, and you're supposed to use it for school. Now, anyone who knows who's ever gotten a student loan refund check knows that you could use that money for just about anything once you get that refund check in the mill, right, But look, I wouldn't want you to miss out and on this great benefit that you've earned, you know, being a service member, to be able to pay for your school and be student

loan debt free. Now, I would actually ask can your dad help you with your credit card debt instead of the cross country move, so that you can feel like you're getting you know, a good chunk of that debt paid down before you're making that move, and then just try to do the move as cost consciously as possible. I'm not entirely sure where it is that you're working, but they may offer some sort of relocation benefit. That's

something that's worth asking for. If you've got credit card debt, you don't tell me how much you've got, so it's hard for me to tell. You know, is this something that is really weighing down on you? That you have to pay off right away. You know, why not just pay it off slow and steady after you guys move down there and you get settled, and then just make a goal to pay that down slow and steady, you know, as you get settled in your new job and you guys make your.

down slow and steady. So before you use that GI bill on credit card debt, I would say, you know, get in school, use a bill to pay for that tuition, get settled, and then start to budget or start to look at your budget and your cash flow and say, how much will I actually have leftover that I could

use to pay down this credit card debt? And is there anything that potentially your dad, for example, could help you subsidized by like giving you a little bit extra to make that card payment, or is there another lever that you could pull. For example, could you take out a zero percent interest balance transfer, you know, credit card and transfer that balance onto another credit card that has

zero percent interest, just to buy yourself some time. We were just talking about that in the last question, and it's an option, you know, especially if you've got decent credit. And I don't know anything else about your financial history than what you've said here, so I'm just going to assume that you've got decent credit, you may qualify for a good zero percent offer and be able to move

that over. Maybe there's even an option if you're a military member, you may have They have great they have some financial institutions, like one of the banks that comes to mind is USAA, But I know there's others that, you know, work with military service members and may be able to give you a low interest debt consolidation loan that you can use to pay down that debt. But yeah, that's where I'm going. I'm not feeling so good about using, you know, school funds to pay off debt. But at

the same time, I see what you're saying. You know, you're wanting to pay down debt and start saving. You just may be feeling like you have to do everything you know all at the same time. Just break it down into small measurable, you know, doable, and it won't feel quite as overwhelming, I hope. All Right, Amelia, thank you again for your question. I'm going to take a quick little break. It's some more of this coffee, and I'll be right back with another of your questions. All right, y'all,

I am back. It's Bandy with Brown Ambition, and I'm here for our third and final question from listener Cherish.

switch to a healthcare plan, a new healthcare plan? Or am I being overly cautious? I think I'm still anxious from a time when I got two thousand dollars bill for a simple lab test because they sent it to an out of network lab. It happened to me too before, so I get it. Chaer says, how can I know how much more I'll pay for a high deductible health plan versus a health plan that has a copay And if I do switch to a copay plan, will my

HSA continue to grow? And if I switch to a high deductible plan in the future, can I continue contributing to it again? Alrighty, this is a really cool question. I love it why because it sort of brings the real world into a situation. It brings the real world to like one of these pieces of financial advice that's becoming more and more common. So Christina and Ammon, they

are part of this financial independence retire early movement. So they were able to retire at thirty nine, I believe, and they moved to Portugal and it was all amazing and one of the strategies they talk about where they were able to invest and save enough to retire that early was they invested heavily in index funds, but they also opened a high an HSA, a health savings account. And in order to get access to an HSA, you have to enroll in a high deductible health care plan.

So you have to have a high deductible in order to get this HSA. And the whole point of the HSA is that you were putting pre tax dollars into an account to set aside for your health care expenses. Because, as we all may know, with a high deductible plan, it means you've got to come out of pocket before

your insurance are going to pick up the tab. So, if you've got a high deductible health care plan, and let's say the deductible is like five thousand dollars, you'll want to have money set aside because you will be on the hook for making any payments toward health care needs before that deductible is met. So there's a bit of risk there, right. I mean, they were young and healthy, the same as you cherish when they when they decided to opt in to the high deductible health care plan.

So they said, eh, probably you were not going to have to go the doctor that often, and if we do, we'll have money set aside to actually pay for that. And when you have an HSA, what helps supercharge your retirement savings is that you can actually invest through your HSA, which is a cool benefit because you're putting money in it before taxes, and then the money is growing tax

free while you're investing. And then the third and why they call it a triple tax benefit, is that you can withdraw that money tax free so long as you're using it for medical expenses. So it is a great tool that you potentially could use to invest for retirement, especially because when we retire, you know we're going to be older, you may have more health care concerns, and then you'll actually have a pot of money through HSA that you can withdraw and use for those those healthcare

expenses in retirement. So it sounds like a good idea, right, sounds solid. But here's where Cherish's questions interesting because the fact of the matter is that when you enroll in a high deductible insurance plan, you have to pay more out of pocket along the way, and you may act actually not have the funds to cover those kinds of expenses. And if you anticipate that you're going to have more medical expenses, you will have to think carefully about whether

a high deductible plan makes sense for you. It still can make sense, you know, it can make sense if you've got money set aside. You know that you're setting aside through your HSA or other ways so that you can pay for those copays out of pocket or pay for any expenses out of pocket. And I think everyone when you're on a medical plan like cherish this nightmare where you've got a two thousand dollars bill for a lab test because they send it to an out of

network lab. Those types of things happen all the time, and you have to be really diligent and reading all of your bills really carefully and triple triple quadruple checking where they are sending certain lab work, or you know, making sure if they're going to refer you to a physician that you have done your due diligence and triple dipple quadruple checked yourself to make sure they're in network.

Because I mean, at the end of the day, like you're going to be the one who cares most about your money, right and in a rush at the medical office, they may just send you to a doctor that they think is in your network, but come to find out

they've left your network last week, you know. So you've got to be really diligent, and it takes it takes some babysitting, I feel like, of your medical your medical bills and all that kind of stuff to be sure that you're not going to find yourself in that situation. But yeah, HSA can be a good tool to use for retirement, but it does come with that reality that you will have to pay a little bit more out

of pocket then you might have liked to. And if you're not feeling financially capable of doing that, then yes, it could make more sense to enroll in a different health care plan, a healthcare plan that is probably going to cost you a little bit more out of.

change like this. But when it comes time for open enrollment, what you want to do, and a lot of plan pages will actually let you do this online is do a side by side comparison and they should be able to tell you here's what your here's what your deduction is going to be from your paycheck for this plan, so here's what your premium is going to cost, and

here's what your copay is going to be. And then you've just got to make that, you know, make the decision based on your best guess of how much healthcare you're going to need in the year to come. I know, it's kind of it's annoying and it's a little overwhelming, like how can I predict what kind of health care I'm going to need? But that's what you got to do.

I mean, you just got to kind of make the best decision based on what you know and if you anticipate, like like I said, if you anticipate having some medical expenses or having some procedures done that will be more costly, then you may want to, at least for the next year or however long it'll take, you know, change to a plan that costs you a little bit more out of pocket for your premium, but actually gives you better benefits because it pays for a lot more of those

services upfront versus a high deductible plan, you know, where you're maybe paying a lower premium, but you're coming out of pocket a lot more often when you go the doctor. Okay, So another question you had is if I do switch to a copay plan, will my HSA continue to grow?

But yes, you can contribute to your HSA again at that point. Just maybe I just may be contributing to a new HSCA account somewhere else. But if it's the same insurer and the same employer, I would imagine that you could probably just start contributing again to that HSA directly through the same HSA that you had kind of put on pause for a while while you switch to.

served them, you know, in their journey. And I just want everyone to be aware of that at the end of the day, like you've got to do what's best for you and your financial situation situation, and just because something was the right decision for other people does not mean it's going to be the right decision for you.

These things are complex, Our lives are complex. Everyone is so different, So just make peace with the fact that your financial journey is going to look different than everyone else's, you know, and you can definitely like take ideas from other people, but you've got to do what's best for

you financially. And I'm really glad that you are taking a step back here and saying, Okay, maybe it worked for Journey to launch, but I don't know if I'm actually going to be the right this will be the right path for me, and being willing to kind of be critical and think about that before you just kind of jump and dive into something just because you know someone else said it worked for them. All right, Cherish, thank you so much for your question. That was a good,

juicy one for the end of the show. Thank y'all again. I'm Mandy with Brand and if you want to send us your question, hit us up at Brown Ambition podcast dot com. You can send us a question, droke it through our website or go to ig We are at Brown Ambition Podcast and you can leave us a question right there, slide into our DMS. I can't wait to get more questions from y'all, and I will see y'all next week. Thank y'all so much for listening. This is Brown ambition.