Given the enormous stress debt places on your emotional well-being (not to mention your wallet), paying it off seems like it would be the top priority. But a recent report from Northwestern Mutual says millennials in debt are finding ways to live around their financial woes and refuse to let late bill payments put a damper on pursuing an Instagram-worthy lifestyle.
To be fair, the millennials in the survey (which consisted of more than 2,000 people of all ages answering a series of questions about their attitudes toward personal finance) aren't frittering away their futures on avocado toast and bespoke marshmallow desserts. A majority (54%) say having enough money for marriage or purchasing a home takes precedence over paying off their debt. Given the importance society places on these milestones, it's hard to blame millennials for working toward these goals first (and in the case of owning a home, it can even be the more prudent financial move).
But standing in their way is the $36,000 that the average debt-carrying millennial carries with them, most of it coming from student loans and credit cards.
Millennials aren't ignoring the debt completely, dedicating 34% of their monthly income to paying off that debt (the same percentage of income that Baby Boomers surveyed say they earmark for paying down debts). But the majority of them (60%) say they lack clarity on exactly how much they can afford to spend on day-to-day living versus saving for future obligations, such as owning a home, getting married and lclimbing out from under the debt they've amassed. While any plan to balance living your life and paying off debt needs to take into account your unique situation, anyone looking to tackle debt should consider these tips.
One at a time: If you have multiple sources of debt, pick one and work on paying it off rather than trying to solve all your problems at once. Which debt should you pick? Logically, you want to pay off the debt charging you the highest interest rate first since it's hitting your wallet the hardest. That said, there's a psychological benefit to quickly paying off a smaller debt that may inspire you to stick with your debt repayment plan. The choice is up to you.
Cut the spending: Take a good, hard look at how you spend your money on both a week-to-week and month-to-month basis and see if you can live with going out to eat once every two weeks instead of every weekend. This assumes, of course, you have the privilege of being able to cut back on spending.
Build a budget: Of course, you can't see where you can cut back the spending without first building a budget. It's a tedious (especially when you are in debt) and disheartening task, but one necessary for creating your blueprint for a debt-free life. Future you will thank you for the effort.