Q&A for How to Be Debt Free

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Why is hard to be debt-free?

Benjamin Packard
Financial Advisor
Benjamin Packard is a Financial Advisor and Founder of Lula Financial based in Oakland, California. Benjamin does financial planning for people who hate financial planning. He helps his clients plan for retirement, pay down their debt and buy a house. He earned a BA in Legal Studies from the University of California, Santa Cruz in 2005 and a Master of Business Administration (MBA) from the California State University Northridge College of Business in 2010.

Benjamin Packard

Financial Advisor

Expert Answer

Part of the reason debt is so hard to get out of is that it gets bigger over time. If you don't pay it down quickly, you end up paying a lot more in the long run, making it very difficult to get out from underneath.

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Question

Is consolidation the same as settlement?

Brian Stormont, CFP®
Certified Financial Planner
Brian Stormont is a Partner and Certified Financial Planner (CFP®) with Insight Wealth Strategies. With over ten years of experience, Brian specializes in retirement planning, investment planning, estate planning, and income taxes. He holds a BS in Finance and Marketing from the University of Denver. Brian also holds his Certified Fund Specialist (CFS), Series 7, Series 66, and Certified Financial Planner (CFP®) licenses.

Brian Stormont, CFP®

Certified Financial Planner

Expert Answer

Nope! Debt consolidation involves bringing all of your debt to one location and trying to reduce your overall costs with intent to eventually pay everything off. Debt settlement is basically just telling your creditors that your payments need to be reduced or you won't be able to pay anything at all.

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Question

How can I pay off debt if I have no money?

Benjamin Packard
Financial Advisor
Benjamin Packard is a Financial Advisor and Founder of Lula Financial based in Oakland, California. Benjamin does financial planning for people who hate financial planning. He helps his clients plan for retirement, pay down their debt and buy a house. He earned a BA in Legal Studies from the University of California, Santa Cruz in 2005 and a Master of Business Administration (MBA) from the California State University Northridge College of Business in 2010.

Benjamin Packard

Financial Advisor

Expert Answer

When it comes to debt, focus on little bits of progress. If your goal was to run a marathon, you wouldn't expect to run your first marathon in a week. For example, continue ordering out, but skip the glass of wine and appetizer. You can also look into refinancing. There are lots of great ways to refinance credit cards and student loan debt, for example. If you can lower an interest rate by just a single percentage point, it can have a big impact.

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Question

How much credit card debt is normal?

Benjamin Packard
Financial Advisor
Benjamin Packard is a Financial Advisor and Founder of Lula Financial based in Oakland, California. Benjamin does financial planning for people who hate financial planning. He helps his clients plan for retirement, pay down their debt and buy a house. He earned a BA in Legal Studies from the University of California, Santa Cruz in 2005 and a Master of Business Administration (MBA) from the California State University Northridge College of Business in 2010.

Benjamin Packard

Financial Advisor

Expert Answer

About 50% of Americans are currently in credit card debt owing an average balance of about $6,000. Unfortunately, some credit cards have interests rate as high as 25%. It's important to know your limitations and stick to a debit card if you have a hard time tracking your finances.

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