The Millennials Unofficial Guide to Becoming Debt Free
Are you a millennial with mounting debt? You aren’t the only one. According to a new survey, over 48% of millennials are graduating college with at least $20,000 in student loan debt, and 34% of grads have an excess of $30,000 in debt. That’s a lot when you factor in the cost of simply living and getting your feet off the ground post-grad.
While some graduates are OK with paying off this debt in their 40s through making the minimum payments, others desire to kick the debt to the curb as quickly as possible. Beyond creating a budget and sticking to it, here are 8 practices to help you dig your way out of debt.
1. Quit the Starbucks
Coffee is cool. We all love going to our favorite coffee shop, grabbing a latte, and chatting it up with our pals, but believe or not, getting your daily java fix at your neighborhood shop can end up costing you over $1,000 a year. Instead, brew your joe at home and drop that cash on your debt.
2. Make your own food
Treat yourself, they say. It’ll be fun, they say. Of course it is fun — but the cost of enjoying meals out on the town will really eat away at your wallet. According to the USDA, millennials spend over 44% of their food dollars on eating out. Instead of spending your well-earned cash patronizing every hip new restaurant, host dinner parties at home. Pot lucks are a hoot, and you can still enjoy all the good company of your friends without the sticker price of eating out.
3. Take no shame in living at home for a couple of years after college
Seriously, take no shame. If your parents are willing to have you, then be had! The average cost for a one-bedroom apartment in an American city is about $1,100. A little simple math will show that you could easily save over $13k on rent alone, not to mention utility costs. Twelve months of living at home with the ‘rents could have you out of debt years ahead of the norm.
4. Sell your car and buy a bicycle
Your dream vehicle shouldn’t come at the cost of your overall happiness. Opting out of owning a vehicle for a few years could help you pocket over $8,000 per year. Alternatively, hop on the train or bus, or buy yourself a pretty bicycle to pedal your way about town. Your wallet, legs, and the environment will thank you.
5. Don’t get sucked into impulse buys
All the little knick-knacks at the Target checkout line are there because they’re proven to sell. Take off the rose-colored glasses and realize you absolutely do not need that miniature-sized Febreze bottle for your car.
Keep in mind that impulse purchases go far beyond the checkout counter. Avoid the urge to buy a new outfit for every wedding you’re attending this year. Just move on, and you’re unlikely to have any remorse for your decision.
6. Tackle debt based on interest rates
Interest rates can really bite you, so identifying your debts with the highest interest rates is key. It’s easy to be distracted by the highest or lowest principals, but what really makes the most difference is quickly knocking out those high-interest loans. Credit cards often have extremely high interest rates, so get rid of those quickly. If you have private student loans, you may be eligible for refinancing them into one large loan with a lower interest rate.
7. Sell your things
There is much to be said about minimalism – it’s good for your overall health, allows you to keep a clear head, and enables you to sell off things you no longer need. Take a few weekends to clear out and sell. Create an eBay store, join your city’s local Facebook swap pages, and use Craigslist to offload your unnecessary belongings and make some side cash.
8. Avoiding FOMO
It’s the worst! We’ve all been there, and it’s an inevitable feeling if you’re trying to whittle away at your debt. Avoiding the dreaded “fear of missing out” will take some personal responsibility. Constantly checking social media and Snapchat for updates on how much fun you are perceiving your friends to have will only hurt your cause. Instead, look at your opting-out of certain activities as some much needed “you” time. Furthermore, if you can’t seem to shake the FOMO, then take the reins and organize some cost-free friendly gatherings of your own.