Forty-two percent of millennials believe their debt is “overwhelming” according to a new survey.
Credit card bills, mortgage payments, student loan debt and medical debt — that is what 47 percent of millennials use almost half their paychecks on according to a survey by Wells Fargo. Maybe even more alarming is the response most millennials gave when asked what was their “biggest financial concern.”
Their answer? Debt.
Gary Herman, President of Consolidated Credit understands their pain, but there are methods they can use to alleviate this financial burden.
“Being in the credit counseling industry, we’ve seen firsthand how millennials have been inundated by debt, whether it’s credit card debt, student loans or other bills. But we came up with some valuable tips to help you shrink your debt more efficiently and in a less painful manner than doomsday scenarios such as debt settlement plans or even future bankruptcy.”
Consolidated Credit offers these six top tips:
No 1: Build an effective budget
If you don’t know how much money you’re making and where that money is going – for example $50 a week for eating out at work – how can you possibly manage your finances. And responsible budgeting means accounting for every penny spent, not just the large expenses such as a car payment or rent. Budgeting also allows you to set aside money for retirement or an emergency fund.
“Preparing a budget is the first thing every millennial should do,” says Herman. “It helps you track your money and shows you where you can cut expenses, which allows you to pay off your bills more efficiently.”
No. 2: Find student loan consolidation programs
Immediately contact your student loan provider and ask if you qualify for any of these programs:
- Pay As You Earn Program – Available for federal student loans
- Income Based Repayment (IBR) – Available for federal student loans
- Public Service Loan Forgiveness – Available for federal student loan borrowers employed in specific jobs
No 3: Assess your credit card debt
If you don’t know how much time it will take to eliminate your credit card debt, find out. Use this practical debt calculator to quickly calculate the length of time you will be paying those nagging bills.
“If you’re in serious credit card debt, it’s in your best interest to stop making purchases on your cards,” says Herman. “Chances are you’ll only be able to make the minimum payment each month, which means you’re only paying on the interest instead of the principal.”
No. 4: Check your credit score
Your credit score reveals a lot about your financial situation. If it’s low, that means you may have missed payments or experienced other negative issues or there may be errors on your credit report. If it’s high then you’ve been paying on time, haven’t maxed out your cards and appear to be in good financial condition. You can request a free credit score from each of the three credit reporting agencies once a year at annualcreditreport.com.
No. 5: Don’t be scared to negotiate
There’s no rule against calling your credit card issuer or other lenders and asking them to negotiate a better deal. Maybe they’ll lower your interest rate or your monthly payment or provide you with an alternative payment plan. Just be patient, honest and sincere. If they notice you’ve been struggling to make payments they may work with you. But if you’ve been busy charging new shoes or hitting the club scene on your card, chances are they’ll refuse.
No. 6: Talk to a professional
If your debt is completely overwhelming you, it may be time to sit down with a certified credit counselor and discuss your options.
“Before you enlist professional help, make certain that the credit counselor you speak with is certified, the company has a BBB accreditation, there are no upfront fees and they offer a free budget analysis,” says Herman. “And the counselor shouldn’t try to sell you on a debt management program right away. There are other options to consider such as balance transfers.”
Debt is no laughing matter. And getting out of debt requires serious planning or you could further damage your finances. Get relief today. Call a certified credit counselor at Consolidated Credit for a free consultation.