Ways Millennials Can Be More Credit Card Smart
With roughly 44 million Americans facing student loan debt, you might think that carrying this post-grad debt would be the biggest financial challenge facing millennials today. In actuality, more millennials are facing credit card debt than student loan debt. Of course, paying back student loans is important but so is learning how to budget wisely and capping your credit card spending. New Era Debt Solutions reveals ways millennials can reduce their credit card debt and get a few steps closer to achieving financial freedom.
According to stats from a 2018 survey conducted by NBC News/GenForward at the University of Chicago, 46 percent of millennials have credit card debt, while 36 percent have student loan debts. About 34 percent of millennials are paying off car loans, according to the survey.
If you haven’t already set up a budget for yourself, today’s the day. Use the 50/20/30 method to prioritize how much you should be spending. Allocate 50 percent of your income towards essentials like food, rent, utilities, and gas. Twenty percent of your income should be set aside for savings and retirement and if necessary, paying off debts. The remaining 30 percent of your income can go towards nonessentials, such as entertainment, shopping, and vacations. But make sure you know what your debt amounts are, otherwise your budgeting plan won’t benefit you.
Pay off the minimum amounts on all your credit cards, using whatever you have left on the accounts with the highest interest rates. The longer you wait to make a payment, the higher your interest rate will get. It may take awhile to get out of the red but with some time, you will no longer be spending all your hard-earned money on interest.
Limit credit card use.
Make your monthly payments more manageable by capping your credit card use to 30 percent of your available credit limit. No one likes to be shocked by the numbers on their monthly statements, so don’t add more debt to your debt.
Keep housing at 30 percent of income.
This tip might vary depending where you live but if your rent is costing you the majority of your paychecks, consider finding roommates to share expenses with or moving back home. Housing expenses should be limited to 30 percent or less of your income. Finding roommates or moving in with your parents doesn’t have to be a forever solution but these living situations can help tide you over until you’re in good financial standing.
Find a side hustle.
If you’re driving to work, why not pick up a few passengers on your way and get paid for it? There are many side jobs out there with flexible hours to fit your schedule. Earn extra cash by driving for Uber or Lyft in your free time, selling your lightly-used clothing on Poshmark, or pet-sitting through sites like Rover.
New Era Debt Solutions has settled over $250,000,000 of debt since 1999 and wants you to be our next success story. To see if debt settlement is right for you, contact one of our friendly counselors or fill out the form on this page for your free debt analysis.