We know that the pandemic hit women of color and the LGBTQ+ community particularly hard, including economically. With millions facing mounting debt and a sluggish economic recovery, The 19th’s economy reporter Chabeli Carrazana spoke to veteran financial journalist Mandi Woodruff and financial educator and author Tiffany “The Budgetnista” Aliche, co-hosts of the podcast Brown Ambition, during a recent Live with The 19th event.
They answered questions from 19th readers on a wide-range of topics, from reducing student loan debt to growing wealth to re-entering the workforce. Below are six questions Woodruff and Aliche addressed to help you navigate your financial health.
You can watch the entire conversation here.
How do I start chipping away at student loan debt?
In March of last year, the Department of Education announced it would offer a temporary pause on student loan payments and the interest rate was set to 0 percent. These relief measures were extended through September 2021, but it is unknown whether this deadline will be extended again.
“You have this moment to take a breath and focus on putting food on the table for you and your family. Focus on saving for a rainy day. Focus on high-interest debt,” said Woodruff.
For those who are struggling to meet the payments on your federal student loans, Woodruff said to contact your loan servicer and ask if they have any flexible repayment plans. “They may actually adjust your payment to better align with your income.”
Is it a good time to buy a home?
The housing market is crowded with buyers, particularly in larger cities where there isn’t a lot of inventory. High demand and low supply means prices are steep. It’s a competitive time to buy a house, but, as Woodruff said, “ultimately, you need to decide that you want to buy a home because you want to buy a home. And because it is the right answer for your lifestyle and it’s the right answer for your finances.”
Woodruff added that if you’re doing it because it’s on your to-do list or because it’s what you’ve been told is “the American dream,” forget it. “Do what’s right for you and know what you’re getting yourself into.”
Besides home ownership, how else can I build wealth?
“Home ownership is not the direct arrow to wealth anymore,” said Aliche. There are many ways to start building wealth, including investing in your retirement account. “Are you maxing out your retirement account? Investing in your retirement fund means investing in your older self when you no longer have to work anymore.”
Aliche also recommended investing in wealth, which means that you’re setting aside money for your lifestyle now. Home ownership may not be the right path for you, but Aliche said some form of real-estate investing may be more in line with your goals, like house hacks or home rehab, which Aliche expands on in the video.
What should my savings-to-debt ratio look like?
Aliche said she would prioritize being aggressive with setting aside savings and then paying off debt. “Savings is your first line of defense. If you’re walking the tightrope of your finances and you slip, your savings is the first net that’s going to catch you.”
There are also ways to make debt cost you a little bit less, said Woodruff, like a balance transfer offer to manage credit card debt or consolidating with a personal loan. “That’s when you borrow a personal loan from a credit union, or an online lender or a bank and you’re able to consolidate debt. You’ll be left with one loan at a fixed interest rate so you know what to expect.”
Is now a good time to be considering investments?
“Investments are like pizza. It’s always a good time for pizza,” said Aliche. “The sooner you start investing, the better.” But you also have to be ready to invest the time and energy it takes to understand what you’re investing in, otherwise you’re guaranteed to lose money, according to Aliche.
She added that everyone should be checking with their employer to see whether they match your 401K contributions. “Get your free money, girl!”
What is the best way to re-enter the workforce?
Woodruff recommended starting with LinkedIn. “Start seeing who you have in your connections, or start adding connections to see who you may know and start trying to network virtually.” She said everyone understands that it’s a difficult time so don’t be afraid to cold message people you haven’t spoken to in years. “Tell them your story. Be upfront.”
“Start juicing that network, but also acknowledge that it may take a while because it’s still a pretty uncertain time,” Woodruff said.