6 Steps to Surviving Millennial Debt
Are you drowning in a sea of debt? It is one of the most stressful feelings in the world when you can’t pay your bills. Millennials don’t have the same livelihood outcome as their parents did. School tuition rates have soared, health care premiums have gone up, as well as the cost of living, and food. It is not surprising after all of these things that people are up to their ears in debt.
“When that generation went to college in the 1960s and 1970s, many of them paid little in tuition at nearly-free public institutions or received generous federal and state grants that paid for most of their bachelor’s degree. But during the past two decades, as members of that same generation came to power — in Washington, in state legislatures, or as college presidents and trustees — they presided over the decay of the basic building blocks of the Higher Education Act as they drastically increased tuition and pulled back on financial aid.” Jeffrey J. Salingo, The Washington Post.
Our scenario was like many others in today’s unstable global economy and with a child on the way, we decided to get serious about our debt by utilizing the resources available to us.
Flash forward to 2017, we have made considerable sacrifices to improve our financial future. We eliminated $10,000 in overall debt which included $5,000 in credit card debt, bought a house, a car, and found a better paying job for my husband.
This would have taken us years to accomplish if we had not made the decision to change our spending habits. I’m not making promises here because everyone’s situation is different. You may have more than one income, or too high of an income to have access to certain benefits. However, if you are wanting and willing to take action, I recommend some version of these steps below to help you accomplish your financial goals:
1. Move in with Family or Friends
This was the very first step we took in October 2015. We found a subletter for our home in Bloomington, Indiana and moved in with my in-laws in Fort Wayne, Indiana where rent and groceries were free.
Fort Wayne in the past two years has been one of the hottest cities to live as a young family because of its’ affordable housing and job market.
It was sad leaving Bloomington and our friends, but after a year of saving, we eliminated $10,000 in debt, bought a house, a car, and built our credit score back up.
2. Pay Off Credit Card Debt
If you don’t pay your credit card off each month, you will be throwing away money paying interest. We had a total of $5,000 in credit card debt and paid it off in nine months later while still paying for health insurance and student loan debt. The cards with the highest interest rates relative to the balance came first and the rest was history.
We also opened credit cards with low balances so that we could not go into thousands of debts again and to also establish credit for my husband. He had never had a car payment or credit cards. He did have negative history with utility bills and an unfortunate situation where a roommate did not pay what he owed in back rent from over 10 years ago. It was still on his credit report because it was unpaid and still collecting fees!
Your credit union may have an option for you if you don’t have a credit score or need to rebuild your score, but know that they may require a few hundred dollars up front to hold in case you miss payments.
3. Back Away From The Drive Thru
Man were we fast food junkies! Now, we are lucky if we order a pizza out once a month. Eating out can cost you hundreds a month on top of the hundreds you spend in groceries.
For our family of three, we have managed to keep our food budget at $250 or less a month since moving into our new house. I use grocery lists extensively while cooking almost every single meal at home.
Crockpot dinners, taco night, pasta night, and smaller pieces of meat thrown into a vegetable bowl with brown rice, scrambled eggs, and pancakes are on the menu every week.
I shop weekly at ALDI, Kroger, Fresh Thyme Farmer’s Market (eggs for $.77 cents on sale!), Dollar Tree for Newman’s Organic Cat Food, Dollar General for $.50 Organic baby food pouches, and was income qualified for WIC (Women, Infants, and Children) to receive basics such as tortillas, beans, rice, milk, eggs, and cereal.
4. Live Within Your Means
As an adoring mother of one rambunctious little toddler, the decision for me to stay home was a no-brainer for our family but came with the hefty penalty of losing an extra income.
While our move brought a better job for my husband, affordable housing, and a big back yard for my son to play in, we still had to be very conscious of the house we would purchase.
We could not afford a $100k house and instead applied for an FHA loan that only required a 3% down payment instead of the traditional 10% standard requirement of traditional loans. We also bought a $75k for $73 after negotiating the price. Our payments went from $700 per month in a two bedroom rental to $500 a month for a 3 bedroom house all the while building sweet equity.
5. Ask For Money And Not Presents
When the holidays and birthdays came around, we asked for money and not presents. We knew what our family was going to spend on us for Christmas and we didn’t need more stuff. We needed cash for our savings to go towards paying off our debt. This extra amount significantly helped to reduce our debt.
6. Ask For An Early Inheritance
This may sound heartless because and selfish because nobody wants to think about their parents, grandparents, or anyone for the matter dying. However, my husband’s father retired early and received an unexpected large bonus. All of his children were struggling financially to make it, so he decided to give each child a sum of money to use to pay off debt or use as a down payment for a house. The money had more use now than later as all of his kids were in the process of buying houses, changing careers, and raising families. He had been there once before and recognized how hard it was.
This was an amazing and generous thing to do and it helped us with our down payment and to pay down more debt. We have been so thankful and appreciative of that loving gift.
While everyone’s situation is different, this list does not exhaust all the possibilities of becoming debt free. Depending on your goals and financial situation, results may vary. Know that there is always a way if you are willing to commit to action and a plan. We are still learning every day, still making mistakes, but still fighting our way into becoming entirely debt free. If you seek further information, please look into local resources at your library. Indiana’s libraries are known for providing free tax counseling during tax time.