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Tackling the double-whammy of student loans and credit card debt

Millennials in Tennessee who have graduated from college may have been able to secure a job, but they may find that one thing from their college days that still haunts them is their student loan debt. Data from one source reports that, 65 percent of individuals who are carrying student loan debt feel stressed out about their financial situation. Moreover, according to the source, of respondents who had credit card debt, 25 percent of them were also carrying student loan debt, creating a double-whammy of financial stressors.

One survey has deemed there is a correlation between student loan debt and credit card debt. However, we do not know exactly whether one of these types of debts causes the other. For example, individuals who are carrying student loan balances might not be able to pay their monthly credit card balances. Moreover, these days those with student loan balances do not necessarily find they are making more money.

So how can these debts be addressed? One expert recommends prioritizing the debt with the lowest balance, which for many people is their credit card debt. Pay as much as possible on your credit card balances, but keep paying the minimum amount allowed on your student loans. High interest rates are also an issue when it comes to paying down debt. If your credit card has the higher interest rate, funnel more money to that debt first.

In addition, individuals can focus on ways that they can save money or bring in additional income. For example, one's annual tax refund can be used to pay down debt. In addition, upping the allowances you claim on your W4 may decrease the amount of taxes taken out of each paycheck, providing you with more money to funnel towards your loans. Making some sacrifices, like discontinuing your cable television subscription or getting a roommate may help. Some people may even decide to get a second job.

In the end, it is possible to tackle both of these debts, in order to become more financially secure. Keep in mind though, that if these tactics don't work, it may be possible to file for bankruptcy. While student loans are generally not eligible to be extinguished through bankruptcy, in credit card balances may be, meaning you can then take the money saved to address your student loan debts.

Source: TheStreet, "Toxic Twins: How to Battle Combined Credit Card and Student Loan Debt," Brian O'Connell, June 27, 2016

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

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