By Sarah Stewart Legal Group
Everyone dreams of being wealthy. Who wouldn’t love to have enough money to do whatever they want whenever they want? Unfortunately, for the first time in American history, many Millennials, those born in the early 1980s to the mid 1990s, are making less and working harder than their parents did and are buried in far more debt.
Pay for young people in America today is far less than their parents received at their age. Average income for young people is the lowest it has been since the 1980s.
The Baby Boomer generation graduated with very little, if any, college debt because tuition was much lower in the 1960s and 1970s. Millennials have graduated with an average of $34,000 in student loan debt. Also, Millennials carry over their credit card debt each month, adding ridiculous amounts of interest and fees each month to their bills.
Because of these conditions, the Millennial generation is delaying buying a home, getting married, and buying cars. So, for most Millennials, paying off their debt is their dream, and a difficult one to attain at that.
If you are a Millennial ridden with debt, you need a good financial plan to get rid of your debt and start your real life. Here are 6 tips to help you plan:
(1) Decide How Much You Owe
We can’t make a plan if we don’t know what we’re planning for. Pull out those statements and add up your total amount of debt.
(2) Negotiate Interest Rates
Try to negotiate with your debt-holders on interest. Just a few points in interest can make a huge difference in your overall payout. Shop around for consolidation and refinancing options. Just don’t fall for the “___ months, no interest” trap, unless you can reasonably pay off the debt you’re transferring in that amount of time. Otherwise, you’ll wind up paying interest on your balance, and usually, interest on all the months you supposedly didn’t have interest accruing.
(3) Budget, Budget, Budget
Budget isn’t a dirty word. Most wealthy individuals live by budgets- and praise them. Figure out what you can live with and what you can’t live without. Cut out the extras and bring your monthly budget down to the bare-bones. Pay whatever extra money you can to your lowest debt until it’s paid off, then focus on your next lowest. Re-evaluate your budget each month, and be sure to stick to it! When you budget, you can also make sure you are not adding to those credit card balances each month!
(4) Build an Emergency Fund
Having an emergency fund is essential to getting your finances in check. If an emergency happens and you don’t have the money set aside to pay for it, you derail all your hard work. Start putting a little aside each month to help with emergencies. In fact, make your emergency fund your first priority, until you have saved at least $1,000. Then, start working on paying down that debt.
(5) Call a Professional
Accountants and other professionals can help you plan for debt reduction. Don’t be afraid to ask for help. Or, pick up books by financial gurus- and follow their advice.
(6) Make an Estate Plan
The number one excuse I hear for not planning is “I don’t have an estate.” This is a myth.
The reality is, everyone has an estate, no matter the size. If you don’t make a plan, the Court will decide who gets your valued things. Estate planning also determines who you want to help you when you can’t help yourself. Estate plans are, quite simply, for everyone.
Once you have a plan in place, the rest of the pieces will fall into place. You may have months where you do better than others, and that’s ok. Just continue to work on yourself and your finances and you will progress.