Do you follow the newspapers regularly? Then you might have noticed the news, which says that 20-somethings are going to carry the credit card debts to graves. Young adults born between 1980 and 1984 have an average debt of $5869, which is more than their parents had, when they were in their 20-somethings.
Gosh! I think that has taken your breathe out. Calm down, relax!
We said that young adults are likely to make the debt to their graves since they do not intend to make any kind of changes to reduce their debt. Well majority would not agree with me, as there are examples where 20-somethings are well efficient in handling their financial life.
A smart and savvy group of 20-somethings, who knows that financial loopholes can kill themselves in the long run wants to attain the financial freedom. So let us approach this problem from that viewpoint.
IDEA 1: What Can 20-Somethings Do To Decrease The Debt?
First suggestion, which financial experts give, is to use the balanced transfer credit card. Well it is going to work perfectly if you have an excellent credit. You can transfer the debt to a card that offers 0% intro rate and thus lets you save on the interest expense.
Being young it is not possible to have an excellent credit. So let us take out ways that can bring young adults out of debit in spite of the low credit balance. For that, you need to understand the personal finance, to make better decisions.
Like, before purchasing a concert ticket on the credit card, you will be thinking repeatedly. Once you become confident to make sound financial decisions more optimistic, you will turn to pay off your debt.
IDEA 2: Few Sacrifices to Climb Long Way
Getting into debt in the 20-something is often due to the unnecessary expenses. People do not have enough money to buy the luxuries and for that, they switch to credit cards, without bothering about the compound interest that adds on.
Personal sacrifices can make you get into the tracks. If you do not qualify for a balance transfer card or you do not have the time to get a second job then personal sacrifices are the best option. Give up that gym membership, weekly watching movies instead run in the park and rent DVDs to watch the movie at home.
As soon as the debt starts growing down, the credit score will start improving. At some point, your score will be able to qualify for the balance transfer credit card and you can pay off the rest debt without paying interest.
IDEA 3: Do You Still Feel Like Drowning?
Is your debt too high? Then refer to a credit counselor for expert advices. Talk to the counselor and make out what should be your next steps to fight with the odd debts.
IDEA 4: The Debt Cycle: Broken Down
For 20-something landing into debts is mainly due to their excess spending, prolonged unemployment or a health hazard. However, for many the debt occurs, as they do not have solid foundations in their money like - credit, works. Therefore, at the very beginning you need to educate yourself.
Learn the money skills from parents. Survey says that around 41% of the young adults have educated themselves from their parents and 59% are still unaware of all the tips and tricks. I really think that this debt is related to the debt which 20-something carries. So having a solid foundation in personal finance is necessary.
It is a good advice to the parents – if you are having kids, talk with them about the family budget. Explain the money decisions that you are going to take in your life, so that they have a better grip over their own finances.
Like paying the grocery bill through credit card, is not all, you have to pay the bill later when the statement comes. Explain your young adults, what are those bills that you intend to pay at the end of the month. This is going to boost their finances.
The point on which I am stressing is to break the debt cycle within your own family. Knowledge alone cannot win benefit for young adults, the real life evidence can make the 20-somethings educate and take smarter money-related decisions.
Talk to your kids and educate them on the personal finance management system.