5 Reasons 2021 Can Make Clearing Debt Easier

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.)

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.

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 EducationData.org, 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.

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.