So what is the best way to level this mountain of debt?
Studies show that a large majority of well-paid people get into debt by simply spending too much on plastic, and FOMO mixed with YOLO can be a dangerous combination.
This lifestyle has run up huge bills for Ryan Masajo, but he’s managed to clear $85,000 in debt in just 3½ years.
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First, buzzing his own hair saved him $720 last year, while ironing his own shirts cut his expenses by $30 a month.
“I know it’s okay, but I don’t like ironing,” he said.
What the self-proclaimed jet-set, Michelin-star restaurant diva loved was the good life.
“$85,000 in debt took time, travel, food, student loans, shopping, and YOLO,” he said. “Why would I save money? I work hard now. It was not the best choice. When I travel there is no budget, but I always said ‘yes’ so as not to be remains.”
He said things quickly got out of control.
“I got to a point where I had nine credit cards,” he said. “Six of them have been maxed out, up to 25% interest rate.”
Like many people carrying large balances, he was inundated with offers for loans and debt settlement. He chose SoFi randomly.
“SoFi is a one-stop-shop for personal finance through a digital platform,” said Senior Director of Financial Planning Brian Walsh.
He said that Masajo is the typical SoFi member.
“A huge segment of our population ignored by the financial industry, high achievers in education and career who don’t have a lot of money,” he said. “They have been largely ignored.”
Free financial planners helped Masajo create — and stick to — a daily budget, while consolidating his credit card payments into one personal loan with a lower interest rate.
“Four or five from a range of 9% to 25%, so that was a big money saver in terms of interest as well,” he said. “And my credit rating has skyrocketed because when you have a personal loan, it’s better for your credit if you have one instead of six credit cards that run out.”
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But SoFi says loans aren’t for everyone. You must commit to stop spending on your credit cards and change your financial habits.
“Really make sure you can stop the behavior that got you into debt before you even think about getting out of debt,” Walsh said.
Masajo and his partner created a video blog to share the $85,000 journey to zero debt in less than four years.
The big point to remember is that with credit consolidation offers, watch out for the sharks. If an offer sounds too good to be true, it probably is.
Other red flags include promises of guaranteed approval, skipping the traditional loan process, and no offer-related review.
Finally, always research the reputation and read the fine print before signing up.
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