How Millennials Can Get Out Of Debt: 8 Ways To Win The Battle
Lots of millennials are struggling to get out of debt – at least one long-term debt.
Researches reveal that about two-thirds of millennials have at least one debt – one long term debt, mostly student loan debt, averaging about $40,000.
As per a study conducted on the combined data from US Census Bureau and Federal Reserve in 2016, average credit card debt among people less than 35 years (the millennial) was about $5,508. Though the figure is much less as compared to other age groups, paying off $5,508 is not an easy task. So, being a millennial, you have to plan it properly to repay debt.
Check out 8 ways millennials can win the battle and repay debt.
1. Accept that you’re struggling to repay debt
You may think that why you need to accept that you are in debt; but, it’s necessary. Unless you admit to yourself, it won’t be your priority to look for ways to win the debt battle.
So, list down all the debts you need to pay off, however small it is.
2. Analyze your financial situation
Now, you need to analyze your financial situation in detail.
List all your debts along with the name of the creditors, minimum monthly payment due every month, interest rate and the total balance.
List the debts in an descending order; that is, the most expensive debt at the top.
Now, analyze your income and expenses and decide on a figure, which you can shell out every month towards becoming debt free.
3. Make yourself financially organized
Making yourself financially organized can help you pay your bills – Yes, it works.
Take out some time and organize your bills in a way to make it easy to pay them off.
If you have paper statements, you can opt for electronic delivery, at least for paying the minimum amount on each account. Doing so, you won’t be delinquent on any of your accounts; in turn, you’ll avoid fees and penalties.
4. Save as much as you can
You need to save more when you want to win the debt battle.
Often financial experts say that we should try to save everyday, however minimal the amount is. You can try to save about $2 everyday over and above what you’ve planned to save every week or month, as per your budget.
Saving extra $2 everyday, for a month, will give you about $60, which you can use to pay extra on one of your expensive debts.
5. Make a realistic debt repayment plan
Saving only is not enough unless you have a realistic debt repayment plan. You can look for various options to get out of debt and choose one that suits your financial scenario the best.
You can opt for professional help, or look for DIY options if you’re confident that you can repay on your own.
6. Ask for a salary hike
If you are confident that you’re doing good at your job, ask for a salary hike.
However, most millennials feel uncomfortable to ask for a salary raise. But, sometimes, you have to ask for it. So, negotiate for a hike and use the extra money to overcome your debt problems.
As per statistical reports published by PayScale in 2015, only about 37% of millennials have ever asked for a salary hike. However, most interesting fact is that, out of the millennials who asked for a raise, about 43% have got what they wanted.
So, don’t feel shy or uncomfortable to ask for a raise if you think you’re eligible. This is one of the easiest ways it can become easier for the millennials to repay debt.
7. Realize the value of time
Value your time. You can earn extra by working at your leisure time.
Choose a work which you love doing. You can baby sit, be a freelance content writer, and so on.
There are various options available online to work part time and earn extra. You can even opt for answering surveys and earn a decent amount per hour basis.
Remember, every little amount matters when you’re trying to get out of debt problems.
8. Use cash as much as possible
Stop charging your credit cards; use cash instead.
As a rule, when trying to repay debt, don’t spend money which you don’t have. So, sort out between things which are necessary and which are optional. For the time being, you can stop buying the items that are optional; that is, you don’t need presently.
Studies have shown that usually people, who use cash, are less likely to overspend in comparison to those who rely on plastic money.
If you don’t like the idea of carrying a fat wallet in literal sense, use debit cards; and if you’re not comfortable with using debit cards everywhere for security reasons, use credit cards like debit cards.
Set a limit and charge your card till that limit. Once you cross that limit, you should repay the existing balance and then only, allow yourself to charge the card again.
To get out of debt, the three most important characteristics you need to have are dedication, persistence and some amount of work. If you’re ready for it, you will surely be successful in your debt payoff mission.
So, go and get it!
Andy Masaki is a freelance journalist living in Oakland. He works for Oak View Law Group , a leading consumer and bankruptcy law firm based in CA and operational across US.
At Millennial Leadership we strongly encourage you to invest in yourself, especially in the area of Finances. One of our favorite books on the subject of debt is Dave Ramsey’s “The Total Money Makeover” which serves as the cornerstone of many financially responsible people who live debt free lives.
If you are in debt, this is a great book that will help you plan a way to get out.
If you aren’t in debt yet, read this book so that you continue to stay out!