As of February 2023, Americans have racked up $925 billion in credit card debt. That’s ‘billion’ with a ‘b.’ Beyond that, mortgage rates practically doubled in 2022 while student loan debt has hit a staggering federal balance of $1.64 trillion (which accounts for over 92% of all student loan debt). While there is some semblance of a light at the end of the tunnel for some of this debt, many Americans are having to dig themselves out of a debt-sized hole that gets bigger every day as the cost of living increases and the average wage lags much further behind.
As a life insurance agent, the bulk of your clients are inevitably facing debt, but there are solutions you can arm them with to eliminate debt and tackle their financial goals. Here we will break down six tools you can offer your clients (whether strategies or products) that they can use to achieve a debt-free life.
#1: 50/20/30 budget
When it comes to eliminating debt, focusing on your eventual goals is critical to the success of the strategies you use. In the case of the 50/20/30 budget, you can offer a simple idea to help your clients visualize their goals.
50/20/30 refers to the percent of your client’s monthly income that they should be budgeting for. This budgeting tool uses three categories: “needs,” “wants” and “savings/debt.”
50 percent of their monthly income should be allotted for needs (bills, groceries, living expenses), while 20 percent should be spent on wants (entertainment, eating out or a new pair of shoes you might not need). 30 percent of their income should be focused on savings and paying off debt.
Your clients will be drawn to the simplicity of the 50/20/30 budget. It uses an easy formula to draw boundaries on how their monthly income should be spent. More than that, it’s not a particularly rigid budget, so it’s easier to stick to.
#2: Snowball or avalanche debt payoff methods (pick your strategy)
There are plenty of methods for tackling debt. Some methods give your clients time to slowly chip away at their loans, while others require more financial sacrifice to eliminate them in less time. The snowball and avalanche methods (respectively) give your clients two concrete choices on how to eliminate their debt.
The snowball method is designed for your clients that struggle to put more toward their loans. By ordering their loans from the smallest to largest and tackling them one at a time your clients can build momentum to eliminate their debts systematically. The snowball method is ideal for individuals who are motivated by the easy progress of paying off smaller debts and working toward those higher-end loans.
The avalanche method takes a more fast-paced approach to eliminate debt. With the avalanche method, your clients will focus on their loans with the highest interest rate and work down the list. While paying the minimum payments on the rest of their debt, the avalanche method is best for clients who have more disposable income. They won’t see as much initial progress as your clients using the snowball approach, but they will ultimately pay those loans off in less time than other methods.
#3: Tracking spreadsheet
Simple and effective, spreadsheets are a great way to keep track of expenses, financial goals and debt. Your clients can benefit from keeping a detailed account of where their money is coming from and what it’s being used toward.
By maintaining these details, your clients can manipulate the spreadsheets to understand when certain loans can be paid off and what small changes to their spending will speed that process up. Excel and Google Sheets are both great inexpensive options, and your clients can find plenty of free resources online to sharpen those spreadsheet skills.
#4: Find a budgeting app
At the end of the day, few tools get it done like phone apps. They’re typically easy to use and always within reach, and for that reason, they’re a great resource for your debt-saddled clients. There are apps for budgeting, monitoring spending and even rolling your pennies into savings which add up to amounts your clients can use to make large, one-time payments.
More specifically, apps like Quoin and Undebit.it are virtual debt pay-off tools that your clients can use for thoroughly automated debt tracking. Both options will help track your clients’ income and payments while offering a list of strategies they can deploy to tackle them.
Both apps do require payment, but there are a host of free budgeting apps that they can use instead.
#5: Work with a fiduciary
Working with a fiduciary is a great option for your clients who feel more comfortable letting others take the debt elimination wheel. A fiduciary can be a family member, trusted co-worker or experienced professional — your client can choose whomever they want to handle their finances.
Whomever they choose, your client’s fiduciary has the role of finding the best investment vehicles and money management to best serve the client. While these services have traditionally been expensive, our parent company, Quility, has created Quility Financial Advisor (QFA), providing financial planning for middle America.
Regardless of your client’s financial situation, an advisor with QFA can help pinpoint where they can improve their financial portfolio and look for products to help them meet their goals.
#6: Debt Free Life®
An example of one of those products, Debt Free Life (DFL), is our proprietary answer to your clients who are buried in debt.
DFL harnesses the power of a life insurance policy to help your clients achieve financial freedom without spending more than they already are and in fewer years than it would traditionally take. As a Symmetry agent, you can help your clients with a payment plan that will systematically tackle their debts using the tax-deferred payments of the policy.
Selling DFL does require certification, but is a great product to have in your wheelhouse when working with clients hoping for a debt-free future.
Eliminate debt with Symmetry
Debt is something that most Americans deal with every day. It’s important to have answers for those who are looking for a solution. Whether you’re helping them restructure a budget or finding a policy that can accelerate their payoffs, they’ll be happy with any tool that can ease their financial burdens.
