As it stands, many younger millennials are completing their final years of college. The eldest millennials, however, are into their 30s. Many of them, at this point, are in the midst of decisions about buying a home, raising a family, and other major life choices.
If you are a millennial who falls anywhere along this spectrum, chances are that you’re paying off a significant debt. Over 60% of millennials have at least one source of long-term debt (often student loan debt) that now averages about $40,000. Understanding your finances and getting out of debt are critical to building a financially successful future. Let’s take a look at five ways to gain control of your money and work your way to financial relief.
Acknowledge your debt
The first step to getting out of debt is to really understand what you owe and what you are paying. You’ll want to list all of your debts (including student loans, car loans, credit cards, personal loans, medical bills and mortgage loans) and see where each one stands.
Understand how much you can pay on debt each month
Take time to create a budget for yourself. Identify exactly how much you earn each month and how much you spend.
Set aside a few hours and organize your bills. If you are receiving paper statements, go through the steps to convert each account to electronic delivery. Arrange to automatically pay at least the minimum on each account before the due date, and then return later to pay more (ideally, pay in full).
Pay off student loans
It’s quite clear that more millennials have attended college than any other generation. Half of older millennials (about age 25-35) have a college degree, and graduate-school enrollment increased by 35 percent between 1995 and 2010. However, over a third of millennials who have a household income of $75,000 or more worry about being able to repay their student loans. If you don’t think you can make a loan payment, contact your lender and speak with them about your payment plan options. Having said that, always be aware that the faster you pay off your student loans, the faster you can secure other life goals.
Save, save, save
Even if you do have debt to repay, it’s important to save for retirement. In addition, Scottsdale top bankruptcy attorneys note that saving six to nine months’ worth of living expenses can prevent you from going into debt in the future.