By Amanda Wegner
If you feel like you have too paycheck, you’re not alone. According to Bankrate, 50% of female credit card holders carry a balance from month to month, compared to 43% of males. Additionally, women hold roughly 63% of all outstanding student loan debt in the United States.
Debt consolidation, or rolling multiple debts into one payment, ideally at a lower rate, can be a powerful reset. But the right strategy depends on your situation — the following are a few to consider.
HOME EQUITY LINE OF CREDIT (HELOC)
“If you own your own home, a home equity line of credit is my first recommendation,” says Natalie Mendez, director of consumer lending at One Community Bank. With a HELOC, you can borrow against the equity you’ve built in your home to pay off debt. While rates have shifted over the last few months, they are generally more favorable than credit card rates.
PERSONAL LOAN
A personal loan is an option for consolidating multiple high-interest debts into one predictable payment. “For someone with good credit, it can work really well,” says Mendez.
CREDIT COUNSELING SUPPORT
One option Erin Bykowski, community impact and financial education manager at UW Credit Union (UWCU), suggests is working with a nonprofit credit counseling organization, which can help you develop a debt management plan and consolidate debt.
“These plans pair structure with ongoing support. Having a plan is critical to success — and to reducing stress,” says Bykowski.
UWCU partners with the nonprofit GreenPath, a debt management program, to provide this service.
STUDENT LOAN DEBT
For federal student loan debt, Emma Crawford, MA, CFP, CSLP and founder of October Loan Strategies, suggests looking at income-driven repayment (IDR) plans. These plans don’t consolidate debt, but cap federal student loan payments based on income and family size, often leading to lower monthly payments and forgiveness after 20 to 30 years of payments.
Learn more at studentaid.gov/manage-loans/repayment/plans/income-driven.
401(K) LOAN
If you have a 401(k), your employer may allow you to take a low-interest loan against your vested balance, says Mendez, with repayment made as a deduction from your paycheck.
Importantly, a 401(k) loan is different than taking an early withdrawal, which comes with taxes and penalties.
“This can be a useful, last-resort option for women that are in very tough situations,” says Mendez, adding, “I would advise anyone to reach out to their specific plan administrator before considering this option and the fees that might be associated with it.”
A JOURNEY, NOT A DESTINATION
A critical mistake for many dealing with debt is treating consolidation as the finish line.
“Lasting change requires a plan for reducing future debt, not just restructuring current debt,” says Bykowski.
It’s important to recognize that debt stress is real: “It shows up as avoidance and self-blame,” says Bykowski.
And don’t let shame delay action — it’s the single biggest barrier to getting help. If debt is overwhelming you, reach out to a trusted financial professional to learn about your options.
