Depending on how you look at it, many Millennials lead great lives. They graduated from top universities. They travel around the world and take selfies of everywhere they visit. They love to eat out every day, buy local and sustainable foods, shop online, jump on the latest tech trends, do yoga, go to expensive gyms, go on vacation, socialize with friends, work from home and even shift from full-time to part-time contract work. Some Millennials are starting businesses, buying homes, throwing weddings and supporting young, growing families in our higher-than-ever cost of living.
But the Millennial lifestyle comes at a cost. A debt, let’s say.
According to a UBS report, Millennials owe $1.1 trillion of the country’s $3.6 trillion in consumer debt. Two in every three Millennials have a constant source of long-term debt—often owing huge student loans on several credit cards. Gallup research indicates that 64% of Millennials owe a staggering $40,000 (when student loans are added to the mix).
How can Millennials get out of debt?
Here are a few helpful debt solutions to help our young global workforce, budding leaders and entrepreneurs and hopeful homeowners get what they want out of life.
3 Simple Debt Solutions for Millennials
It’s never too late to learn how to manage your money and debt more effectively. Take a deep breath and get ready for a crash course in debt solutions.
1. Get an overview of your finances
Get a good idea of where you stand financially. Look at your monthly income, cash in your accounts, expenses and debt. If you have any assets, investments, and outstanding taxes, add that into the mix as well. This is just for you, so lay it all on the table. Consider downloading your bank statements and categorizing them into bills, rent, debt, fun, shopping, health, food and so on. The first step in getting out of debt is understanding and acknowledging your circumstance.
Luckily for you, Canada Credit has several useful (and free) tools to help you see the whole financial picture.
2. Set SMART financial goals
SMART goals are those that are Specific, Measurable, Achievable, Relevant and Time-bound. We often do this in business, but why not apply them to your finances? For example, something like “My goal is to get out of debt” is not time-bound or even perhaps achievable from the get-go. A goal like “I want to pay off $1000 a month on my credit card over the next six months to get it to zero,” is SMART.
Now that you know how much income comes in every month and which bills and expenses must be paid, what does that leave you with? What are your financial goals? How can you get there? Does something have to go from your daily, weekly or monthly expenses? Do you really need that daily coffee, for example? Do you need to pick up a side job or say no to that upcoming road trip?
Consider all of your options—and know that nothing is impossible or unattainable. Write them down and stick to your timelines. Reward yourself as you work toward and meet your financial goals.
3. Consider the ways to tackle debt
According to Forbes, there are two popular ways to pay off debt: debt stacking or the “snowball method.” Debt stacking can help you reduce your interest payments on credit cards. In it, you concentrate on paying the minimum monthly payments and then use leftover money toward the highest rate credit card. Move down the chain of interest rates, if you have multiple cards you owe for.
With debt snowballing, you pay the minimums but extra cash goes toward the cards with the lowest balances, regardless of the rate. This is more psychological—like ticking something off your list. The relief of paying off your debt will encourage you to keep going and tackle bigger and bigger debts.
At Progressa, we offer another way to pay off debt. We work with people like you, who are serious about paying off their debt and need extra help after an unforeseen financial circumstance. We work with you to discover your financial situation, build goals and create a plan that is specific to you. Together, we pay off your debt in full and rebuild your credit so you can breathe easily again.
Final debt solution tips for millennials
A 2017 BMO Wealth Management report stated that Millennials have poor financial literacy. This is more than just knowing how to budget. This young generation must work hard to educate themselves on expenses, assets, income, taxes, investments and different types of bank accounts and interest rates.
It’s never too late to learn how to manage money effectively—and set goals for getting out of debt and beginning to save for the future. Once you get yourself out of your financial hole, find clever ways to live within your means and budget for unforeseen adventures and mishaps.
The author Sam Milbrath
Sam Milbrath is a freelance copywriter and brand marketer. When she isn’t writing for brands or doing her own creative writing, she’s exploring, taking photographs, gardening and doing pottery. Check out her work at www.sammilbrath.com