dump your debt• credit card balance transfers • personal loans • debt consolidation loans •...
TRANSCRIPT
DUMP YOUR DEBT
Migdalia Gomez Community Engagement Manager
WHERE ARE YOU NOW?
LIST YOUR DEBTS
And monthly payments!
Visit www.HUECU.org/HUB for this and other handouts.
Amount APR Terms Monthly Payment
$10,000 7.5% 120 months $119$5,000 18.0% 60 months $127
CALCULATE THE COST OF YOUR DEBT
Total Interest Paid
$4,244$2,618
Total Amount
Monthly Payment
Total Interest
$15,000 $246 $6,862
ROAD(S) TO REPAYMENT
• Credit Card Balance Transfers • Personal Loans• Debt Consolidation Loans• Student Refinancing Loans
LOOK FOR LOWER RATES Extending the terms
• may lower payment, butincrease total loan payments.
Benefits and conditions • of the original debt, may not
apply once you refinance.
STUDENT LOANS• Federal Consolidation
• Combines your loans into one.
• Studentaid.gov
• Private Refinancing
• Combines your loans into one.• Typically based off your credit.• May reduce your interest rate.• Lose federal benefits.
RESEARCH TAX LAWS• Student Loan Interest Rate Deduction
• Up to $2,500
• Home Mortgage Interest Deduction
• Home Equity Loan Interest Deduction
Visit IRS.gov or consult a tax professional for details. Some deductions may not be applicable to your specific situation.
CREDIT IMPACT: RATES AND PAYMENTS
CREDIT SCORE APR MONTHLY
PAYMENTADDITIONAL COST
IN A YEAR720-850 4.23% $741 $0690-719 5.68% $757 $192660-689 7.73% $780 $468620-659 11.29% $822 $972590-619 16.28% $882 $1,692500-589 17.71% $900 $1,908
<500 Not eligible ---- ----
If your credit improves, you may be able to refinance your debt.Source: Myfico.com – 36 month car loan - $25,000
ADDITIONAL COSTAFTER 3 YEARS
$0$576
$1,404$2,916$5,076$5,724
----
ANNUALCREDITREPORT.COMReceive a free annual copy of report from each of 3 bureaus.
COMPARE YOUR OPTIONS
1.99% balance transfer for 12 months, then 10.99%
TEMPTING OFFERS
Debt consolidation loan at 7.99% for 5 years.
OR
$10,000 at 21% and you can comfortably pay $300/month.
WHAT WOULD YOU DO?
IT DEPENDS…
1.99% for 12 monthsPayments would be $842
Total interest $108
$300 / monthWould pay balance in 38 months
Total interest $964First 12 months at 1.99% then 10.99%
$203 monthly payments for 5 years
Total interest $2,162
$300 / monthWould pay balance in 38 months
Total interest $1,343
OR OR
REPAYMENT STRATEGIESSNOWBALL Focus on smallest debt first. Build momentum
AVALANCHE Focus on highest interest first.Start high then level off
SPRINKLE Spread extra payments asyou’d like.
WHAT MOTIVATES
YOU?
WHERE SHOULD A $10,000 PAYMENT GO?
* DOWN PAYMENT OR PAY OFF DEBT?
TOTAL INTEREST AT END OF LOAN
MORTGAGE* STUDENT LOAN**
MORTGAGEINTEREST
STUDENT LOANINTEREST
TOTAL INTERESTS
$400,000 $50,000
*5% APR for 30 years; mortgage only, assuming $0 PMI; taxes and insurance not included.** 7% APR for 15 years
EXAMPLE ONLY FOR ILLUSTRATIVE PURPOSES. TOTAL INTEREST WILL VARY BASED OFF RATES AND TERMS.
$400,000 $40,000 $373,023 $24,716$390,000 $50,000 $363,698 $30,895 $394,593
$397,739$403,918$373,023 $30,895
OUTSMART YOUR DEBT
INTEREST RATE
MONTHLY PAYMENT
INTEREST OVER LIFE OF THE LOAN
TOTAL COST OF LOAN
Current Loan
18% $254 $5,236 $15,236
Refinancing (same term)
10% $212 $2,748 $12,748
Pay more minimum
10% $254 $2,170 $12,170
$10,000 loan at 18% for 5 years
Round Up 10% $275 $1,963 $11,963
Paid off in 3.7 years and save $3,273 in interest.
HUECU.ORG/CALCULATORS
WHAT IF DEBT IS GREATER THAN INCOME?
DEBT MANAGEMENT PLAN (DMP)
• Reduce interest rates on debts
• Provide financial counseling
• Cost based off state ($75 max monthly in MA)
• Debt Management Plans are not the same as Debt Settlement.
CREDITOR PAYMENT BEFORE DMP
PAYMENT ON DMP
Creditor A $132 $76Creditor B $235 $185Creditor C $80 $76
Creditor D $62 $22
Creditor E $518 $413
Creditor F $81 $68
$1,108 $840
DMP: PROS and CONS
75%
76%
GREENPATH FINANCIAL WELLNESS
Empowering people to lead financially healthy lives.
• Free for HUECU community• Budget counseling• Credit report review
• Immediate counseling• Confidential • Flexible Hours
Monday –Thursday 8 a.m. - 10 p.m. Friday 8 a.m. - 7 p.m.Saturday 9 a.m. - 6 p.m.
HUECU.org/GreenPath877-337-3399
75%
76%
1. Ace Your Credit Score
2. Understand What You Owe
3. Do The Math.
4. Know Your Personality.
5. Reduce, don’t add, Debt.
NEXT STEPS
