More and more these days, graduates are finishing their college careers deep in debt. Before they even join the job market, get married, buy a home, or start a family they are saddled with significant debt. Statistics also show young adults are accumulating wealth at a much slower pace than their parents are grandparents, due in part to their student loans.
And in addition to the burden of student loan debts, many are accumulating a great deal of consumer debt just to maintain an average lifestyle. They are forced to put everyday items like gas and groceries on high-interest credit cards, worsening their already bleak debt problems.
The good news is as a young debtor, you have some time to fix your problems. It could be several years before you are ready to make major purchases or do anything that would warrant a look into your credit, but the important thing is you take action as soon as possible to get your situation under control now instead of ignoring the problem.
What are some of the most important tips for young debtors to begin moving toward a brighter financial future?
Know Where You Stand
First and foremost, you must be aware of your current situation. Before you can make improvements, you need to know what you owe and what you earn. If you haven’t already, calculate your total debt and know what you have incoming from various sources.
Once you have a clear picture of your financial situation you can create a budget. Any way possible, within that budget, pay yourself in savings before you pay anything else. For some this is impossible, but really take a hard look at what you spend. Even $5 or $10 per week cut from your spending and put toward savings can make a big difference. In time, this gradual savings will give you a cushion that can help you avoid sliding back into debt in an emergency.
Don’t Jump the Gun
If your financial situation is less than ideal, postpone any big purchases for the foreseeable future. You should have your debt eliminated or well under control and a comfortable savings in place, as well as putting money toward retirement, before you invest in big ticket items like a home. Rushing into serious financial commitments too soon can get you into a world of trouble that will take decades to erase.
Make Smart Choices
Make sure any money you do spend is well thought out. Now is not the time to be overindulging. Once in a lifetime opportunities might come along, but you do not need those opportunities to derail your long-term financial plans. Also be smart about small daily and monthly expenses. A little bit spent here and there adds up quickly and could instead be put toward eliminating debt.
Know When to Say When
Does your financial situation seem bleaker than it should? Did your original calculations result in the realization you owe more than you earn? Now is the time to realize a financial emergency is on the horizon.
If you are a young adult and unsure how to handle a financial crisis, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 for more information.