According to a report on CNBC, millennials (the age group ranging from 24 to 39) in the United States owe an average of $78,396 in debt. With inflation rates soaring, members of this generation should be able to catch up with their finances.
Despite today’s economic situation, it’s still possible for millennials to achieve financial stability. All it takes is knowing the right strategies for getting out of debt fast. In this guide, we look into how millennials can tame their finances:
Make cuts to your lifestyle
When it comes to paying off debt, sacrifices need to be made. Focusing more on your daily essentials and trimming luxury expenses are crucial for settling debts faster. It’s just a matter of identifying non essential expenses such as streaming subscriptions and food deliveries and seeing if you can cut them down. Financial discipline will go a long way in avoiding more serious problems.
Consider debt management options
If you want a faster way to settle debts, opt for a debt management plan. This allows you to make timely debt payments at lower fees. It’s also a better alternative to settling credit card debt right away since debt settlement negotiations can hurt your credit score the longer they persist.
Debt management plans are ideal if you have too much debt. If you think you are not earning enough to settle your debts, your best option is a consumer proposal. While this could cause your credit score to drop significantly, it has a good chance of recovering. In addition, the remainder of the amount you still owe will also be forgiven so long as you make timely payments.
Check for student loan repayment remedies
For many millennials, student loans comprise the bulk of their debts. In the United States, federal student loan debts could reach as high as $37,014. Standard repayment plans could weigh heavy on millennials that have yet to settle down. The good news is that there are other repayment options you can check out to decrease your student loan debt little by little.
Apart from making fixed payments, you can also consider a graduated-payment option that starts low and increases over ten years. If your income is lower than your debt, you can opt for an income-based repayment plan. Whichever the case, consider the advantages and disadvantages of every repayment option and pick the one that best serves your financial situation.
Shop for a more affordable home
With mortgage rates increasing right now, you could be thinking twice about purchasing your dream home in today’s economic situation. At this point, your best bet is to come back home and use your rent savings to pay off your outstanding debt. On the other hand, if your income is high enough, consider buying a smaller home. While it might not have the amenities you need, a smaller home can put less pressure on your debt situation.
Despite today’s challenges, millennials can still prosper so long as they use the right financial strategies. The ideas above are some of the remedies to help them gain financial closure and reach personal goals.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
