Managing Debt in Your 30s and 40s: What High Earners Need to Know About Loan Refinancing

Americans in their 30s and 40s face an affordability challenge. These borrowers—even those with good salaries—carry significant debt including credit cards, student loans, auto loans, and more. 

Many assume that if you make more money, you’ll have a better chance of avoiding debt, or at the very least, repaying it promptly. But a bigger salary doesn’t guarantee financial security. High earners have significant expenses and financial goals that often require borrowing. While more income generally makes it easier to access credit, it also makes it easier to accumulate debt since credit limits tend to be higher.  

If you're a high earner facing costly debt, refinancing your loan could help ease financial stress and put you back in control.

The debt dilemma for high earners

Even with a substantial income, many higher earning Millennials find themselves stretched thin due to economic factors beyond their control, such as the Great Recession in 2008, the COVID-19 pandemic, and a volatile job market. Unexpected events and life changes can strain even the most carefully planned budget.

Millennials face unique financial challenges

When compared to all generations, millennials in their 30s and 40s are the most impacted by life events and unique economic factors, a recent Goldman Sachs report found. The generation’s ability to save for retirement and other financial responsibilities is at war with competing financial priorities, including student loans, childcare, education costs, rising costs of home buying, and caring for aging family members.

Many millennials are still feeling the financial repercussions of the Great Recession in 2008, a crisis that made it hard for the age group to find good jobs and build a strong financial foundation. Just as they were gaining ground, they faced another setback when the COVID-19 pandemic hit. Millennials were more likely to lose their job than older generations during this time, thanks to an unemployment rate that somehow managed to exceed the one they experienced in 2008. This further impacted their careers, debt level, and overall financial well-being. 

It's not just the economy causing millennial stress. Personal life events and unplanned expenses can play a big role, such as paying for kids’ education, medical costs, and even home maintenance and renovations. Handling one expense might be manageable for higher earners, but when you're forced to pay for several big things at once, it can quickly become overwhelming. 

Common types of debt in your 30s and 40s

Expenses increase for borrowers at this age as they begin to raise families and buy homes. As a result, credit card balances and total non-mortgage debt for millennials are nearly twice the size of Gen Zs. Millennials also have the highest mortgage balance among all age groups. 

A recent survey found that the average millennial now carries $30,000 in unsecured debt, including credit card debt. The generation also carries an outstanding student loan balance of more than $40,400, which is 6.6% higher than the national average.

High-interest debt limits a borrower’s ability to save and invest. Millennials are more likely than any generation to say that debt is interfering with their ability to save for retirement, according to the Transamerica Center for Retirement Studies. Similarly, more than 8 in 10 millennials say that debt has forced them to put off major investments, such as buying a home or starting a business.

Why refinancing debt can be a smart financial move

Refinancing, the process of taking out a new loan to pay off your existing debts (usually at a lower interest rate or with more affordable monthly payments), can be a powerful tool for managing debt and regaining financial freedom. This can offer several benefits, especially for high earners.

What is loan refinancing?

Loan refinancing is a broad term to describe replacing one or more existing loans with a new loan. Most people choose to refinance when the new loan has more desirable terms, such as a lower interest rate or a different (better) repayment schedule.

Refinancing and consolidation are often used interchangeably when discussing ways to better manage your debt. Consolidation specifically refers to combining multiple loans into one. Loan refinancing can include consolidation, but it can also involve changing the terms of a single loan. 

Key benefits for high earners

Refinancing with a personal loan, also called a debt consolidation loan, offers several advantages for higher-earning borrowers. 

• Lower interest rates: Personal loans tend to have lower rates than credit cards, which can significantly reduce the total amount you pay over the life of the loan.
• Predictable payments with fixed-rate options: Many refinancing loans offer fixed interest rates, including BHG personal loans. This means your monthly payment will stay the same, making it easier to budget.
• Simplified repayment terms: Refinancing combines multiple debt payments into a single, streamlined payment. Instead of keeping track of several due dates and amounts, you’ll have to manage one loan payment.  

Strategic timing: Why now is the right time

Both interest rate trends and inflation are climbing, causing many to wonder if refinancing is the right move. It may make sense to refinance now if you have high-interest debt and getting a new loan would allow you to consolidate it and save on interest.

Prime borrowers—those with strong credit scores and high income—are in a unique position to lock in lower rates through refinancing.

Refinancing vs. managing debt the hard way

If you’re tempted to try to pay off your debt as is, know that carrying high-interest debt comes at a stifling cost. Every dollar you pay in interest is a dollar you could have invested elsewhere—and you’ve worked too hard to think of your finances as an “either/or” opportunity. 

The true cost of carrying high-interest debt

Tying yourself to high-interest debt can delay wealth-building opportunities. Over time, the lost potential investment returns can be substantial, forcing you to invest more later to hit your target. High credit card APRs also eat into your disposable income, leaving you with less money for everyday expenses like dining out and childcare, as well as the opportunity to budget for life experiences and saving opportunities. 

Why making minimum payments is a trap

At first, it might seem smarter to pay only the minimum on your credit cards. But debt snowballs, and it doesn’t take long for card balances to go from manageable to uncontrollable, even without making additional purchases. It can take many years to pay off balances once they begin to roll over from month to month, and you’ll pay a lot more in interest overall.

If you refinanced with a lower rate, you could save significantly on interest and get out of debt much faster.

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How high earners can use BHG’s personal loan for strategic refinancing

BHG Financial offers personal loans tailored to high-earning professionals, which can be an excellent option for refinancing debt. Prime borrowers have a unique opportunity to consolidate debt and free up additional cash flow because BHG considers your income and earning potential in addition to your credit score. This helps high-income earners create a more secure financial future without sacrificing the lifestyle they’ve worked hard to build.

Competitive rates and flexible terms

BHG’s personal loans can have competitive APRs, especially for those with strong financial profiles. Any decrease in rate can lower your monthly payments and the total amount of interest you’ll pay on a refinancing loan. 

Choosing a longer loan term can also lower your payment and add more breathing room to your budget. The money saved each month can be redirected to important financial goals, like wealth-building or future planning.

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Fast funding, no collateral required

Because BHG’s personal loans are unsecured, you can often get funding in as few as five days¹ without putting up any collateral, like your home or car. The application process is quick and easy, allowing you to refinance before rates go up or your debts grow larger. 

When does loan refinancing make sense?

Refinancing isn’t right for everyone, but it could be a good idea in the following situations:

• If you have high-interest credit card debt: Credit cards tend to have higher APRs than personal loans. Refinancing the debt into a personal loan can secure you a lower rate and save you a lot of money, especially if you have good credit. 
• If you have large balances with variable rates: Debt with variable rates leads to unpredictable payments, making it difficult to budget accordingly. Refinancing to a fixed rate can provide more stability. 
• If you are juggling several debt payments: Consolidating multiple payments into one can simplify your payments and make it easier to manage them. 

Before you refinance, determine whether your new loan will lower your monthly payments or total interest. Refinancing generally only makes sense if your new term will help you save money or streamline your finances. 

You’ll also need to ask yourself whether you’re ready to commit to a fixed repayment plan; your new loan will require you to make on-time monthly payments consistently over the course of several years. 

Planning beyond debt: Building long-term financial strength

High earners should view loan refinancing as a strategic tool for building long-term wealth. Those who can manage debt effectively don’t have to choose between enjoying life and prioritizing financial responsibility.

The power of reallocation

Lower APRs and consolidating debt help you reduce monthly payments and free up money for other financial goals that help you maximize net worth. You can redirect the funds that would have otherwise gone toward high-interest payments to other wealth-building priorities, such as saving more for retirement, investing in the stock market, or building an emergency fund.

Debt freedom as a foundation

Consolidating also encourages you to automate financial habits, helping you establish a routine for responsible money management once you become debt-free. With a stable financial foundation, you can accelerate your progress toward other milestones like buying a larger home or investing in your business. 

How to get started with BHG’s refinancing loan option

Applying for a refinancing loan with BHG is designed to be straightforward—and you can do it entirely online in minutes. To begin, complete our online form to get a personalized rate quote. With BHG, you can view the available loan options, including APRs and repayment terms, with a soft credit inquiry. This won’t affect your credit score.²

Next, you’ll choose a loan based on the options available to you and complete the full application. This typically includes submitting more detailed financial information for review, such as proof of income and identification. 

If your application is approved, you’ll likely receive the funds in as few as five business days.¹ BHG offers personalized support and loan structuring. Dedicated loan specialists are available to answer questions throughout the process.

Final takeaway: Take control of debt while your earning power is at its peak

High earners shouldn’t settle for high-interest debt. Instead, leverage your earning power with loan refinancing, so you can take control of your debt.  

At BHG Financial, we believe financing should fit seamlessly into your life and goals. That’s why we offer personal loans tailored to your needs, with amounts up to $200,000³ and flexible terms of up to 10 years.^3,4 Consolidate your high-interest debt with a BHG loan designed to help you unlock flexibility and freedom now—and more wealth later.   
   
Plus, you’ll enjoy dedicated, U.S.-based concierge service that works around your schedule—because your time is valuable. Ready to see what’s possible? Use our quick and easy payment estimator to get your personalized loan estimate in just seconds.