So Money with Farnoosh Torabi — Episode 1911: Ask Farnoosh: How to Crush Your Debt (Encore) Release Date: November 28, 2025

Episode Overview

In this encore “Ask Farnoosh” episode, Farnoosh Torabi addresses pressing and diverse debt questions from listeners, focusing on timely concerns like rising delinquencies, large credit card balances, student loans, and car loans. She provides actionable strategies to relieve debt, build financial stability, and weighs in on balancing debt payoff with savings, all in the context of current economic realities. Listeners receive grounded, empathetic guidance with Farnoosh’s signature transparency and tough-love encouragement.

Key Topics and Discussion Points

1. State of American Debt & The Need for Relief (02:00)

• Americans now collectively hold over $17.6 trillion in debt.
• Credit card balances alone have topped $1.1 trillion, breaking previous records.
• Delinquencies are climbing, especially among younger borrowers, spotlighting the urgency of managing debt smartly.

2. Evaluating Debt Relief Programs (03:22)

Listener Question (Marco): Should I consider working with a debt relief program?

• DIY Debt Solutions vs. Professional Help:

  • Debt relief programs can serve as a lifeline for those who are overwhelmed.
  • Not all programs are created equal—prefer nonprofit and accredited agencies.
  • NFCC.org recommended as a trustworthy source.

• Red Flags to Avoid:

  • Be cautious of companies promising to settle debt for “pennies on the dollar”—may come with high fees and credit damage.

• Advocacy Options:

  • Consider negotiating with lenders directly, asking about hardship or modification plans—a path not widely publicized but potentially beneficial.

“I like organizations that are nonprofit and accredited. For example, the National Foundation For Credit Counseling, NFCC.org, is fantastic.”
— Farnoosh Torabi (04:24)

3. Balancing Self-Employment with Debt Payoff & Investing in Crypto (08:28)

Listener Question (Mary): Should I stay self-employed or get a job to pay off my credit card debt? And what about investing savings in Bitcoin?

• Stability vs. Passion:

  • Given income inconsistency and rising debt, Farnoosh suggests a temporary pivot to more stable employment, while maintaining at least some activity in the self-employed venture.
  • Treat a traditional job as a strategic, short-term “bridge” to financial stability.

• On Crypto Investments:

  • Recommends against investing emergency savings in Bitcoin or other volatile assets while managing debt.
  • Emergency savings should be preserved, not gambled in speculative investments.

“Be grateful that you have it. Why would you, excuse my French, piss it off in Bitcoin?... With everything you’ve just told me, I don’t think this is the move for now.”
— Farnoosh Torabi (10:49)

4. Debt Paydown vs. Emergency Savings — Finding the Right Balance (13:00)

Listener Question (Megan): Should I prioritize debt payoff or bulking up my emergency fund during economic uncertainty? How often should I rebalance my approach?

• The 3-Month Rule:

  • If you have less than three months of essential living expenses saved, pause aggressive debt payments and build up your cash safety net first.

• 70/30 Framework:

  • Once you hit that cushion, direct 70% of new money toward high-interest debt and 30% toward continued saving.

• Review Regularly:

  • Reassess every 3–6 months or after big changes in expenses or interest rates.

“Cash is your safety net... Once you hit that baseline, you want to divide that money... 70% towards the high-interest debt, 30% still towards savings.”
— Farnoosh Torabi (13:52)

5. Tackling Large Credit Card Debt: Methods & Mindset (16:08)

Listener Question (Brittany): What is the best way to tackle a large amount of credit card debt?

• Step 1: Face the Numbers

  • Don’t ignore your statements—list all cards, balances, interest rates, and minimum payments.

• Step 2: Choose a Strategy

  • Avalanche Method: Target the highest interest rate debt first for maximum savings.
  • Snowball Method: Pay off the smallest balance first for fast wins and motivation.

• Step 3: Consider Consolidation

  • Good credit (680–700+) may qualify you for a 0% balance transfer card (12–18 months).
  • Alternatively, look into a personal loan with a fixed, lower rate and clear payoff timeline.

• Step 4: Behavior Change

  • Stop using credit cards while paying them off; switch to debit/cash.
  • Remove cards from digital wallets, auto-payments, and online accounts to limit temptation.

“If you can’t face the debt, you can’t face the debt payoff. So face the full picture.”
— Farnoosh Torabi (16:53)

6. Should You Use a Home Equity Loan to Pay Off Student Loans? (24:45)

Listener Question (Dr. Marari): Should I get a HELOC to pay off $160,000 in student loans at 4–6% interest?

• Rate Comparison:

  • Current HELOCs average 8–9%—higher than many student loan rates.
  • Mismatched risk: student loans are unsecured; HELOC puts your home at risk.

• Federal Loan Protections:

  • Don’t lose existing federal loan protections (income-driven repayment, potential forgiveness) for a riskier private loan.

• Refinancing Option:

  • Only consider HELOC/refi if rate is significantly lower and protections are not lost.

“Mathematically, it doesn’t make sense. And ... student loans are unsecured. Your home is not the collateral. A home equity line of credit... does use your home as security.”
— Farnoosh Torabi (25:18)

7. How to Get the Best Car Loan Rate (27:34)

Listener Question (Caro): Tips for securing a good car loan and rate.

• Down Payment:

  • Put down 20%+ if possible for better rates and to stay ahead of depreciation.

• Loan Term:

  • Borrow for no more than 4 years to minimize total interest.

• Budget:

  • Keep overall car expenses under 15% of take-home pay (loan + gas + insurance + maintenance).

• Shop Around:

  • Get pre-approved at banks and credit unions before visiting dealerships.
  • Use offers to negotiate better deals at the dealer.

• Used Car Tip:

  • Prefer certified pre-owned for warranty coverage.

“Shop and then shop around for a loan. A lot of times we go to the dealership and ... we just go with it. I know because I have been in that seat.”
— Farnoosh Torabi (29:55)

8. Should You Pause Retirement and College Savings for Debt Payoff? (32:40)

Listener Question (MB Raz): Should I stop contributing to my 401k and 529 to pay off $192,000 in debt?

• Prioritize:

  • If debt is high-interest (>10%), temporarily pause 401k and 529 contributions to focus on accelerating debt repayment.

• Short-Term Sacrifice:

  • Target cutting the debt by half in a year (with precise calculations and added income/cost-cutting).
  • Resume retirement and college savings once debt is more manageable.

• Never Withdraw from 401k:

  • Don’t take money out; tax penalties and loss of compounding make this a bad move.

“If that $192,000 balance you’re talking about is high-interest debt... then, yeah, I would recommend pausing your 401k and your 529 contributions temporarily. It pains me to say this.”
— Farnoosh Torabi (32:56)

Notable Quotes & Memorable Moments

• On stability during tough times:

  “This pivot doesn’t mean that you’ve failed. It means that you’re figuring it out. You’re being strategic.”
  (12:29)

• On behavioral tricks to avoid card use:

  “Back in the 90s, people would put their credit cards in the freezer. Now ... everything’s digitized... but this is a behavioral trick. This will definitely save you some money.”
  (19:51)

• On being realistic with tough choices:

  “I’m realistic. I know that there are trade-offs here... pick your poison. Do you want to never get out of credit card debt but then you have a 401k that’s fully funded and 529 contributions?”
  (33:34)

Timestamps for Major Segments

• [02:00] – Episode Introduction and State of Debt in America
• [03:22] – Evaluating Debt Relief Programs (Marco)
• [08:28] – Freelance vs. Full-Time Work & Crypto Savings (Mary)
• [13:00] – Debt Paydown vs. Emergency Fund (Megan)
• [16:08] – Tackling Large Credit Card Debt (Brittany)
• [24:45] – HELOC to Pay Off Student Loans (Dr. Marari)
• [27:34] – Getting the Best Car Loan Rate (Caro)
• [32:40] – Pausing Retirement/529 for Debt Payoff (MB Raz)

Links and Resources Mentioned

• NFCC (National Foundation for Credit Counseling): nfcc.org
• So Money Links — Resource guide: somoneylinks.com

Farnoosh delivers actionable, unbiased advice grounded in realism and compassion. Whether your debt feels overwhelming or you’re simply unsure of your next move, this episode provides both practical steps and an empowering mindset to tackle debt head-on — and know you’re not alone.