Whether it’s student loans, divorce, joblessness, or medical bills, experts give Glamour their best get-out-of-debt advice.
By Samantha Leach September 17, 2019
April is Financial Literacy Month onCNBC. To mark it we’re diving deep on how women get paid, spend their hard-earned cash, and fight back against the disadvantages we still face in the workplace. Glamour’s Editor In Chief Samantha Barry has joined CNBC’s Financial Wellness Advisory Council to talk credit scores, debt-prevention, and how to turn big ideas into even bigger business. Let’s get started, shall we?
While most Americans (yes, most) have some amount of debt, it’s women who are stuck with the largest share. New research finds that women owe more than men when it comes to credit cards, medical bills, and student loans. (We owe almost $400 billion more in student loans than our male peers, to be exact.)
But it’s not impossible. We spoke to experts about how to deal with debt in some of the areas that can hurt women most. From divorce to loans to job loss, here’s how to face the bills and devise a plan to get your finances back on track.
If you’ve had a medical emergency
On average, women owe 10 percent more in medical bills than men do. The reasons are complicated, but from endometriosiscomplications to a broken bone, hospital bills or E.R. visit fees can add up and lead to debt. But Carolyn McClanahan, M.D.—who started her career as a physician and now a certified financial planner who runs the financial planning group Life Planning Partners Inc.—wants people to know that those bills shouldn’t always be taken at face value. “The first step to fixing medical debt is to ask for an itemized bill and make certain the bill is correct,” she says. “Medical bills are riddled with errors, and you may be charged for services you did not receive. The next step is to negotiate. One leveraging tool can be offering to pay in cash. The provider will often charge you less than what they will charge the insurance company if you have the cash to pony up.”
Also make sure you look into all payment plans and financial-system options. “Many hospitals have programs to provide help to those with limited financial resources. The hospital will require detailed financial information, but the cost reduction can be significant if your request for help is approved,” says McClanahan.
If you’ve gone through a divorce
After a divorce, the average woman’s income decreases by more than a fifthand can take a while to bounce back. One factor that can contribute: your debt as a couple. It’s common knowledge that assets are divided during a divorce, but fewer people know that debt gets split up too. So if your spouse racked up debt while you were married, you could be stuck with some of it even after your split.
But whether or not you’ll have to shoulder that particular financial burden, it’s important to think about what new expenses you might now have before you agree to a divorce settlement. Avani Ramnani, director of financial planning and wealth management at Francis Financial Inc., emphasizes that a settlement is a negotiation, and women should consider what they’ll need in both the immediate and more distant future to feel secure.
“If you need a few years to polish up your job skills, or kick-start a new business, make sure you’re planning for it,” Ramnani says. “Ask for supplemental spousal support in the first few years—which typically means getting less later on—so you can meet any additional expenses for getting your career back on track, without going into debt.” Or if you’re planning to stay at home with your children or have opted not return to the workforce for other reasons, “fight to get a larger share of the assets instead of more alimony. This gives you a more dependable cushion, and thus more control of your finances,” she says. And remember to pay attention to legal fees. As Glamour has reported, some attorneys will take a flat fee to handle your divorce, while others charge per hour. Make sure you find the right lawyer for you and your budget.
If you’ve maxed out your credit card
Credit card debt hit a record high in the United States in 2017, with the Federal Reserve reporting it surpassed $1 trillion. And a recent report from Experian found that the average household owes almost $17,000 in credit card debt. If your bills look too daunting to tackle, experts recommend starting with a simple budget; the exercise will determine what kind of expenses you can handle, while paying down your debt as quickly as possible. Parse your spending to look for places to save (or download a budgeting app that will do some of the hard work for you). After you’ve outlined your monthly expenses, Priya Malani, a partner at Stash Wealth, recommends a little bit of math.
“Take a look at how much credit card debt you actually have, and then calculate how much interest you’re paying,” she says. “If you have $20,000 in credit card debt, each year you’re spending an average of $3,500 to $5,000 extra in interest. Sometimes actually knowingthat number—and using it as a scare tactic for those who can’t stop making big purchases—can be a big motivator to curb your spending.” If you’re ready to make a life change, there are a lot of tools to help. Credit Karma, Bankrate, and FinancialMentor offer easy-to-use debt-repayment calculators to help you map out your plan. You can also reach out to your creditors to negotiate payment terms and advocate for a lower APR (annual percentage rate). If that isn’t possible, consider whether you can consolidate your credit card debt to cut back on interest. One of the easiest ways to do this is with a balance-transfer card, which offers an introductory zero-percent interest rate on the amount you transfer to your new card and tends to have a low APR for the first year of use. Some of the highest-rated balance-transfer cards include the Chase Freedom Unlimitedand Capital One SavorOne Cash Rewards Credit Card. Warning: Read the fine print. These cards can still charge you a small transfer fee, such as 3 percent, on the amount you transfer.
If you lost your job
In these first months of 2019 alone, more than 2,200 journalists lost their jobs—and that’s just one industry. For those who have been laid off, both in media and outside it, it can be hard to budget without a dependable paycheck.
Ashley Feinstein Gerstley, author of The 30-Day Money Cleanse, recommends Marie Kondo–ing your expenses. “Think about what expenses you can let go of while in this transition,” she asks. “Perhaps you’ll eat more meals at home, swap out your boutique fitness classes for a run outside, or cancel cable. As much as possible, if you can stick to spending on your debit cards, rather than increasing your credit card balances, you’re more likely to stave off debt.”
In the meantime, consider looking for ways to supplement your income during your period of transition. “If you’re in an industry where it can take a long time to find a job, take on short-term work. Look into driving for Uber, becoming a Task Rabbit, or delivering for Grubhub,” says Feinstein Gerstley. Finally, you can contact your creditor to see if they offer a hardship plan, a form of short-term payment-relief credit that offers lower interest rates and other concessions for those who have lost their jobs.
If you have student loans
When it comes to student loan debt, there are more programs that can help than you might realize. “If your student loan debt is primarily or entirely federal debt, the first question to ask yourself is whether you may qualify for any loan-forgiveness programs,” says Janet Alvarez, the executive editor of Wisebread. “One example is Public Service Loan Forgiveness, which forgives loan balances after 10 years of payments for public-sector or nonprofit workers. Many law and medical schools also offer such programs for their graduates.” If you don’t qualify for PSLF, there are other options to explore. “Enroll your federal debt in the IBR or PAYE repayment schemes, which offer reduced monthly payments tied to your income, and eventually discharge you of any remaining balance after 20 years,” says Alvarez.
In the meantime, Alvarez, who has her own student loans, recommends using bonuses and tax refunds for repayment exclusively, and cutting expenses wherever feasible. If you have private student loan debt, consider refinancing your loans through programs like SoFi to enjoy lower rates and faster repayments. Bonus: Some companies will now help employees pay down their loans. Research found that 4 percent of employers provided student-loan-repayment assistance, while 8 percent of companies with 40,000 or more employees offer the service. Larger businesses like Fidelity, Aetna, Penguin Random House, and more now help with student loan forgiveness. If your workplace doesn’t offer this benefit, raise it the next time you’re renewing your contract or are up for a raise or a promotion. Cite these companies, and propose a meaningful plan. Odds are several coworkers are in similar positions, and the more normalized conversation around debt becomes, the faster we can all pay it off.
Samantha Leach is an assistant culture editor at Glamour. Follow her on Twitter @_sleach.