It’s generally accepted that people born between the years 1981 and 1996 fall into the millennial generation. This would make millennials approximately aged 23 to 38 in 2019—exactly the age range within which you’d expect many people to start buying homes. Or, at least want to buy a home. But it’s extremely common for millennials today to find themselves facing financial hurdles that make buying property difficult or even impossible at the moment.
What’s standing between millennials and the milestone of owning their very own homes? Debt. Not only is this a generation saddled with high levels of student loans, but millennials are increasingly taking on more credit card debt to make ends meet.
As CNBC reports, more than eight percent of outstanding credit card balances for Americans aged 18 to 29 were delinquent by at least 90 days as of Q1 2019. This represents an eight-year high for delinquency among this young subset of consumers.
As anyone who’s ever accumulated credit card debt knows, it can be challenging to dig out from underneath the pile of late fees and high interest rates. Doing so is immensely rewarding, though, as it frees people up to go after their dreams—like buying a home. Here’s more on how millennials can escape debt in order to get one step closer toward owning a home.
Simplify Your Approach to Budgeting
For many young consumers, perpetually on the go, tracking expenses by hand is simply unrealistic. A better solution for millennials is to come up with a spending plan—one that takes advantage of technology to make tracking expenditures and analyzing spending habits automatic.
Something as simple as a smartphone app can help you stick to your budget and identify areas for improvement; then you can throw these newfound savings at paying down debt.
Explore Debt Relief Options
Budgeting is a great start, but millennials with major debt are probably scratching their heads right about now, wondering how they’ll ever manage to make a dent in their double- or triple-digit thousands.
Your approach to eliminating serious debt will depend on its type. It’s generally wisest to knock out high-interest unsecured debt, like credit card balances, as soon as possible. Here are a few options for doing so worth considering:
– Debt consolidation: You take out a personal or consolidation loan to pay off high-interest debts in one fell swoop, then focus on repaying this loan over the long term. Just make sure you don’t end up paying more interest on the loan than you are on your current debts.
– Debt settlement: You enroll in a settlement program, making monthly deposits into an account until you have enough to begin negotiations with creditors. As many Freedom Debt Relief reviews point out, successful enrollees can end up zeroing out large debts for just a percentage of what they originally owed. It will require a commitment usually between 24 and 48 months, however; and results depend on each individual scenario.
– Balance transfer: Transfer credit card balances from a card with higher interest to one with no- or low interest for relief from accumulating high APR. You will pay a fee to conduct each transfer, and cardholders should be aware the introductory period may end after six to 12 months.
– Debt management plan: Work with a credit counselor to come up with a DMP, possibly earning you lower interest rates and simplified monthly payments. This strategy will likely take years if your debt is substantial.
Before jumping straight to bankruptcy, consider these less-drastic methods for getting rid of debt.
Avoid Tempting Credit Card Offers
While you’re working on escaping debt, it’s extremely important to avoid racking up more. Credit cards often seem like a solution to unanticipated expenses or essential goods but can be very risky. Watch out for offers that seem great but will actually set you back further from your financial goals. After all, 30 percent of millennials let rewards expire—a higher percentage than previous generations. Before signing up for that great travel credit card, consider the potential cost vs. the benefits.
Millennials can escape debt and buy a home; it takes some effective budgeting, strategizing, debt elimination and willpower.