What’s one word no one likes to hear?
But for most millennials, escaping debt feels like a fantasy. In fact, the average amount owed for a person aged 25 to 40 is $87,448 – and that number grew 11.5% just from 2019 to 2020.
Student loans are the primary cause of debt for that age group by a large margin, followed by auto loans and personal loans.
So when president-elect Joe Biden pledged to forgive at least $10,000 in student debt per borrower while on his campaign trail, it piqued a lot of millennial voters’ interest.
And while we’ve seen the Biden administration take baby steps in pre-existing loan forgiveness programs, loan forgiveness advocates are still waiting on any real, tangible action to take place.
While we can’t say whether or not student loans will be canceled anytime soon, we do know that debt is a big issue for too many people.
That’s why we’ve created a way for you to build a plan through the (totally free) Lasso App to pay off your debt. Whether it’s student loans, car payments, credit cards, or any other type of debt you’re working to pay off, we can help you get started on your financial goals.
A Variety of Debt
While some think that only an extravagant lifestyle leads to debt, the truth is that there’s several different ways to incur debt – and it can happen to anyone. And when you have a variety of debts to pay off, it can be tough to know where to even begin.
Educational loans aren’t usually optional for those seeking a college degree, and the sticker price is only climbing year after year. For the 2021-2022 school year, the average cost of tuition for an in-state resident was over $10,000 per year. That number doubled for out-of-state students, and nearly quadrupled for students attending a private institution.
With numbers that high, it’s no wonder that 42.9 million Americans are saddled with federal student loan debt, owing an average of about $37,000 each. For many, paying off the interest on their student loans each pay period is difficult, and making headway on the principal amount feels almost impossible.
Credit cards – you love ‘em, you hate ‘em. They’re there for you when the going gets tough, like when the Covid-19 pandemic struck and many were left without jobs, or when you’re cashing in those bonuses for free travel points. But credit cards have a way of coming back to bite you. And with the cost of living rising faster than salaries, a lot of people are relying on them more and more just to get by.
According to the latest consumer debt data from the Federal Reserve Bank of New York, America’s total credit card debt lies north of $800 billion and appears to be continuing in an upward trend.
Now, we all know the rule – pay off your credit card each month. And while that is solid advice everyone should try to follow, it’s not always possible. Failing to pay your monthly credit card payment in full can lead to big debt pretty quickly; as of 2021, there’s an average APR of 14.51% on that borrowed money. Falling into credit card debt can happen, and it can be difficult to find your way out.
While most people need a car to go about their daily lives, relatively few can afford to purchase one without an auto loan. And although they can be costly to buy and maintain, they usually don’t offer any sort of investment, with the average car’s value depreciating 20-30% in the first year alone. Within 5 years, it’s estimated that a car loses upwards of 60% of its value.
With high costs and no return, it’s not a surprise that the average household with an auto loan owed over $28,000 in September of 2021, not including any other debt.
The cost of medical care in the United States is notoriously expensive. Whether it’s a sudden medical emergency you didn’t see coming or treatment for a chronic condition, medical debt affects half of all Americans. And with the pandemic straining our healthcare system even more, we’re likely to see that number grow.
The last thing you want to think about when you’re sick or injured is how you’re going to pay for your medical care – but for many, it’s a reality they face every day.
The Domino Effect of Debt
Whatever types of debt you’re dealing with, it has the ability to affect more than just your wallet. When interest accrues on your debts, it’s money taken away from other goals like retirement, homeownership, or even your emergency fund. This can lead to borrowing even more money to cover your necessary expenses, creating a cycle of debt.
Moreover, debt can seriously affect your mental health. In addition to negative self-esteem and impaired cognitive functioning, it’s also been found that households with higher levels of unemployment and financial insecurity spend more on over-the-counter painkillers.
Debt can seriously wreak havoc on your life – financially and emotionally. The sooner you create a plan to pay off your debt, the better. That’s where Lasso can help.
With the Lasso App, you can easily build a customized plan to pay off your debt. The best part? It’s totally free.
Build a Plan with Lasso
So you’re ready to start paying off your debt – fantastic! Let’s build a plan in just 5 minutes with the Lasso app, which is available for download on the Apple App store.
Here’s your guide to getting started in the app:
1. Download the Lasso app and start a “New Plan”
2. Choose a “Custom” goal for your plan to pay off debt.
3. Now answer 5 simple questions to build your plan:
- How much debt do you need to pay off?
- How much do you have saved so far?
- When do you want to pay off your debt?
- How much can you contribute toward debt payments every year?
- How much risk are you willing to take on?
4. Review your plan. Your plan has a score out of 100 points that will let you know whether or not you are on track for your goal. 100 points means your plan is on track for success.
Once you see how close or far you are from achieving your goal, it’s time for the fun part. You get to edit the ingredients. Play with each of the options to see how it would affect your points and maximize how you pay off your debt. Could you contribute more or less? Change your risk portfolio? You’ve got all the options.
5. When you’re satisfied with your plan, you get to review it one more time before clicking “Finish plan.”
6. Want to find more ways to reach your goals and potentially pay off your debt even faster? You can share your plan with an advisor. Search through our list of available advisors to find the perfect match, then send your plan their way.
They’ll look at your plan and make improvements before sending it back to you. If you like what you see, you’ll be connected with the advisor to continue working together.