Finance

4 Tips Every Young Adult Needs To Know For Staying Out Of Debt

As young adults are just starting out, getting into debt with the ultimate intention of paying it back later on may seem like the best way to move forward. After all, many people are doing it. So there’s probably nothing wrong with it, right? Wrong! The fact is that it is not as simple as it may seem. Recent studies and surveys have shown that it is possible for many young adults to carry their credit card debts to their graves.

More interestingly, this often starts from college. A recent FICO report indicates that between the years 2007 and 2012, students have taken on an average of $5,000 in debt more than in the previous years. What does this mean? It means that young adults are drowning in debt.

Furthermore, unless they can dig themselves out of this hole, or better still avoid falling into it in the first place, they may spend the rest of their lives being in debt. This is not the kind of legacy you want to leave to your kids. So, what can you do to stay out of debt?

Get Some Financial Discipline

This is usually the first step to preventing or even getting out of debt. Yes, you need credit cards to build your credit score, but it doesn’t mean that you should become enslaved to them. Use the credit cards responsibly. Make only minimal purchases with your credit cards. If possible, make sure you don’t have more than one credit card – two at the most.

If you desire something and the price is on the high side, you may want to completely avoid purchasing it with your credit card. The allure of the credit card lies in its ease of access. So, it’s often easy to think “I’ll pay it back by the end of the month”, and then find yourself without the funds to do so.

Unfortunately, that’s how it all starts. First it’s a small, somewhat pricey item, next you feel you can make other purchases on it, and before you know it, you’re already applying for another Visa card. So, get a grip and make sure that you can pay off all debts in a timely manner.

Live Frugally

This might seem a bit weird considering that everyone around you probably seems to be living lavishly. Create a budget and do everything you can to stick to it. You may want to consider that you’re not competing with anyone except yourself. Just because your friend bought the latest ford explorer doesn’t mean you have to.

You can settle for an excellent second hand or used car that works well and provides you with some reasonable comfort. Now that you’re just starting your life, avoid lavish spending until you can really afford it. Avoid eating out unless you absolutely cannot do without it.

Save More and Spend Less

The tendency to want to spend when you’re young is there. RESIST IT! Instead, learn how to start saving more money. If you put away $500 a month, that’s a decent $6,000 a year. It may not seem like much, but add up that over the next 12 years (assuming your income increases every year and you adjust your savings proportionately) and you can find yourself in excess of $100,000 in savings.

Get Some Debt Counseling

If you’re finding it hard to control your expenses, you may need to get some debt counseling from seasoned financial advisors who can help you manage your debt and show you what you need to do to get out of and stay out of debt. It is possible to stay out of debt if you’re genuinely committed to it. It just takes a bit of patience, discipline, and the right financial education to do so.

Oscar King is a resident of Ft. Lauderdale who has recently managed to dig himself out of his own pit of debt, and likes to share advice to help others his age avoid the mistakes he made. For those looking debt in the face, he highly recommends employing Peggy-Cruz Townsend for debt relief. You can find out more about Oscar by visiting his Google+.

Source: http://www.dispatch.com/content/stories/local/2013/01/15/younger-americans-might-die-with-debt.html

http://bankinganalyticsblog.fico.com/2013/06/the-young-and-the-cardless.html

Featured images: image source

Leave a Comment

Your email address will not be published. Required fields are marked *

*