Millennials tend to have a lot of notable characteristics — being tech-savvy, striving for an education, and having a large sense of global presence are just a few. They are also the largest generational population in the western world, which is why the relationship between them and their finances is so important.
According to recent studies, three out of every four millennials are in debt, and a quarter of those owe more than $30,000. This millennial debt has seemed to continuously grow, which is causing many people in the 18- to 34-year-old demographic to put a hold on starting families, seeking more advanced degrees, and even purchasing homes. Despite this high rate of financial instability, there are plenty of credit repair services millennials can seek out to make sure they stay above flooding debts. Here are Liberty Debt Relief’s main tips:
Prioritize Your Debts
There is no denying that adulthood is expensive. Between paying for the astronomically high price for higher education and being able to afford a decent apartment, food, a car, and bills, it is a wonder that anyone has extra money lying around these days. The high rates of all these expenses are why credit cards and loans are so popular among younger people and why millennials and debt are a familiar pairing.
Luckily, getting out of a sticky financial situation can be done. The first thing to do is to prioritize your debts. The credit card or loan with the highest interest rate should be worked on first, because that debt will accrue the most interest over time. While you dedicate a significant amount of money to this specific debt, make sure to pay the minimum payments on your other accounts to keep your credit score in check.
Budgeting is key to a successful financial future for anyone seeking asylum from debt. To do so effectively, make sure to record all of your stable income for the months to come, as well as any other extra pieces of income you can expect. Next, record all of your regular bills and payments, such as rent, insurance, car payments, and gas and food, so you know exactly how much you have to pay companies every month to maintain your standard of living. Whatever money is left over from that should be divided between relieving your debt, savings, and miscellaneous items.
Live Below Your Means
Getting out of debt takes years, and such a task should not be taken lightly. To make sure you are not one of the thousands of millennials getting buried in overdue bills and debt, try living below your means for a few years. If you make $40,000 a year, for example, look for utility companies, apartments, and insurances that will allow you to live like you actually make $36,000 a year. Make sure to factor in your credit card and loan payments into that amount, and you can choose to either pay off your debts earlier or even use that money to set up a retirement fund or investment account.
Check Your Benefits
A lot of employers want to help rid the problem of millennial debt. If you work full-time, check with your employer to see if they offer any tuition assistance or student loan repayment options. If you work in the public service sector — which many millennials do — you may even be eligible for the Public Service Loan Forgiveness program, which forgives your remaining student loan forgiveness after you make 120 monthly payments. Those working in government, non-profit organizations, AmeriCorps, or the Peace Corps are likely qualified to take part in this program. Since the millennial generation is also known for being one of the most socially conscious generations, it may be worth it to turn that trait into a career!
Kickstart Your Savings
Along with living beneath your means, one of the best ways to avoid the notorious millennial debt is to start saving money early. Many times, excessive debt stems from unforeseen circumstances, such as a family or health emergency, and having a backup fund available can help eliminate those issues. Some banks even add substantial interest to your savings, so you can make money by simply having a savings account.
Understand Your FICO Score
FICO scores are a crucial chapter in adulthood and should be kept up with regularly by everyone looking to avoid unfair credit rates. Your FICO score is determined by how often you make payments, the types of lending accounts you have, the length of those accounts, and your debt to income ratio and is usually the major deciding factor in what kinds of loans and credit cards you can obtain. Many of the worst cases of millennials and debt occur because someone signed up for a credit card or loan when their credit score was low and they received a crippling interest rate that made it nearly impossible to pay the original amount back. By staying ahead of your score and actively taking steps to improve it, you can eliminate the risk of getting high interest rates and fees that create a disastrous amount of debt.
Being a millennial and being in debt does not have to go hand-in-hand. The years of youth are meant to be enjoyed to the very fullest, and by adhering to a few simple debt relief tips, you can be a millennial who comes out on top of debt and live a life free of financial worry.
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