Millennials have earned quite a reputation over the years, particularly being criticized for their lifestyle choice by older generations. Apart from that, common millennial stereotypes include being entitled job seekers, distracted high-degree holders, and too opinionated bloggers, who cannot even afford their own homes.
Whether these stereotypes are true or not, the fact remains that the majority of millennials are in debt. This crisis is mainly due to the sudden shift of the economic landscape and higher education condition, caused by the 2008 Great Recession, leading to a significant increase in college education cost among millennials.
It is worth noting that student loans and credit card debts eat up a sizable portion of the millennial debt. However, all is not lost. If you are a millennial experiencing the same dilemma of your generation, here are some of the best tips to help you pay off most, if not all, of your debts.
Go for Zero-Based Budgeting
According to Investopedia, zero-based budgeting is a budgeting method wherein there must be a justification for all your expenses in a given period. Said simply, your expenses should match your income in a month.
Included as expenses are not only home loans, monthly grocery, and utility bills but also savings. By listing down your expenses and income up to the minute detail, the process of zero-based budgeting gives you a clear outline of your usual expenses.
Having a clear view of your usual monthly expenditures helps you create a regular budget plan. It helps you assess what your unnecessary expenses are and remove them from your budget list. With this tip, you finally gain control over your money.
Do the Debt Snowball Method
Adulting means toughening up to face those fears. By fears, we mean debts. The longer you push those loans into forbearance, the longer you shall suffer. As early as now, list down those debts from the most onerous to the least. After that, start paying them off. Get angry with those debts.
Not addressing those existing loans as early as possible will have a detrimental effect on your life more than you can imagine. Among others, it will negatively impact your credit score, and landing best home loan rates will be difficult, that is, if you could even find a willing home loan company.
Learn How to Cook Your Meals
As compared to non-millennials who only spend about $153 per month, millennials spend about $174 per month dining out, on the average. Furthermore, a 2015 article on Food Network said that 87% of millennials are willing to splurge on a meal even when money is tight.
This meal habits of millennials are eating up their savings and adding up to their debts. However, with a busy lifestyle eating out is the most convenient option for most working millennials. Nevertheless, if you are a millennial dying to get out of your debts, cutting back on those takeouts and dine-in expenditures will help you payout for those existing loans.
Set Financial Goals
Setting financial goals helps you become more self-aware of your spending habits. It will help you discern between your wants and needs. You can start with short-term, achievable goals, like paying off all your debts or buying your first car. Eventually, you will be ready to start planning long-term financial goals.
Experts suggest writing down financial goals and placing them in a conspicuous and strategic place. Having visuals keeps you reminded and focused on your priorities.
Other than aiding you to become a more financially responsible adult, goal setting boosts your self-confidence. Who knows, following this tip would make you the next Warren Buffet.
Make Lifestyle Adjustments
A significant number of millennials have zero, if not less than $1,000, on their bank account. Despite that, they are poised as the nation’s biggest spender, as compared to Boomers and other generations.
Millennials’ greatest worry is not meeting key financial goals like setting enough aside for retirement and paying off student loan debts. However, the irony is, instead of saving up to realize these goals, millennials spend more on comforts and convenience.
All these said, for those millennials wanting to break free from their debt bondage, it is high time to let go of those lavish spending habits. Cut back on those unnecessary expenses, put money on your bank account instead, and start paying off those loans.
It would not hurt to put a hold on that vacation. Consider commuting instead of buying that car for now. And always remember, you will still survive without that Starbucks coffee.
