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5 Reasons 2021 Can Make Clearing Debt Easier

That stimulus check isn’t the only pandemic perk. Learn four other benefits that can help shrink those balances.

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Janna Morton
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Paying off debt may seem like a huge challenge, especially in the middle of a pandemic.

However, the COVID-19 outbreak actually presents a number of hidden opportunities for forward-thinking sisters to get ahead financially — and not just because those $1,400 stimulus checks have arrived.

Maybe no one you know has spilled the tea. But now is a surprisingly great time to reduce personal debt if you can, because you can save yourself thousands in the long run and kick your overall wealth up several notches, too.

Here’s a look at five reasons borrowers should double down on debt repayment efforts in 2021. (The first reason applies to anyone with debt. Reasons 2-5 apply to workers trying to tackle both credit card bills and student loans.)

  1. Gimme that stimmy! Any financial windfall presents an opportunity to pay debt down quicker. If you are eligible to receive a stimulus payment and it has yet to arrive, here’s how to track it.
  2. You can take advantage of 0 percent interest rates. There are nearly 45 million Americans who owe roughly $1.7 trillion in student loans. Research from, shows that Black college graduates today owe an average of $52,000 in student loans, $25,000 more than white borrowers.
    But due to the coronavirus pandemic, the government is giving a much-needed break to most folks with federal loans, by dropping the interest rate on that debt to 0 percent through Sept. 30, 2021.
    In effect, this freebie means that if you pay on your federal student loans during this period, the entire amount of your loan payment will go toward your principal balance, not toward interest, so you’ll be accelerating your debt reduction efforts even more.
  3. You can aggressively slash college debt.
    The COVID-19 outbreak has also prompted Uncle Sam to offer you lots of leeway in paying — or not paying — your federal student loans this year. Currently, by law, you can legally skip federal student loan payments through Sept. 30, 2021, without having bill collectors chasing you down. While this shouldn't hurt your credit, make sure you keep an eye on your score. Given these facts, and since the average student-loan borrower shells out about $390 a month, it’s understandable if you’re tempted to take advantage of that payment reprieve.
    But here’s why you shouldn’t: As Black women, our college debt already lingers way longer than many of us initially expected. Twenty years after beginning their degrees, the typical African American woman still owes a whopping 95 percent of her original loans, a 2019 report by the Institute of Assets and Social Policy at Brandeis University found.
    So take a pass on the government’s seemingly generous offer. Go ahead and pay on those student loans now, even while a payment pause is in effect. As someone who paid off $40,000 in student loans after grad school, trust me — you’ll feel so much better when that debt is gone.
  4. You can get rid of credit card debt much faster.On the credit card front, as long as you have decent-to-good credit, credit card balance transfers are back in 2021.
    At the beginning of the pandemic, and well into the summer of 2020, many credit card issuers limited access to additional credit. They stopped sending out all those balance transfer offers, the ones where you can switch to a new credit card and get a 0 percent deal for 12 to 18 months.
    Thankfully, those so-called “teaser” deals have returned. They give you an opportunity to swap out the balance you may be carrying on a high-rate credit card and shift it to a new 0 percent card.
    For example: Assume you have $10,000 worth of credit card bills at a 15 percent interest rate, and you’re making minimum monthly payments of $200, which will take 79 months to pay off in full. If you accept an 18-month balance transfer offer at 0 percent, and pay off your debt by the time the teaser rate ends, you’ll save $5,491 in interest and finish paying 61 months sooner, too.
  5. Seizing unique opportunities keeps you motivated to slash debt and boost wealth.Taking advantage of these tailwinds means smoother sailing toward all of your money goals, including building your net worth. So how’s this for motivation to stay on course: Reducing your credit card debt (and your student loan debt, too) actually increases your net worth.
    Too often, we act as if adding to savings or accumulating assets is the only way to build wealth. But that’s not true. After all, your net worth is defined as everything you own (your assets) minus everything you owe (your debts).

Therefore, while it’s certainly correct that adding assets increases your net worth, it’s equally true that getting rid of your liabilities (i.e., your debts) has the same effect and also boosts your net worth.

So ladies, I know it may feel nice to pay nothing on your debts for a while. Or perhaps you want to only make minimum payments. But really, you should resist those urges.

As I always say to my coaching clients, “Minimum payments in the short run really means maximum payments in the long run, because all you’re doing is making the banks rich by paying unnecessary interest month after month and year after year.”

Let’s make 2021 the year we switch things up if you can afford to, especially if you’re still employed.

Commit to knocking out debt sooner rather than later. By doubling down on debt repayments, you’ll come out of this COVID-19 era stronger and more financially secure than when it began.