10 Tips for Gen-Y to Avoid Debt

Today is a guest post from Amy Nickson. You can find out more about Amy in her bio at the end of this post, but for now check out what she has to say about staying out of debt if you’re in Gen-Y!

10 Financial tips for Gen-Y: Evaluating the ways to stay out of debt

Nowadays, very few of us know the difference between needs and wants. Most of us lead extravagant lives without caring about affordability.  In addition to this, very few people know how to manage money. Thus, they are facing financial problems deliberately.

If you’re constantly facing financial worries, then give a glance to your personal finances. Personal financial management is extremely important to ensure good financial health.

Some research reveals that those in Gen-Y are not aware of these personal finance tips.  Thus, they are accumulating debt and inviting an uncertain financial future.

Here are some smart and effective financial tips to become financially responsible and debt free.

1. Learn to live within your means

The sooner you can master the art of delaying gratification, the better you can handle your personal finances.

Although you can effortlessly purchase a particular thing with credit anytime you want, but you must practice self control, which will help you wait until you’ve saved enough money to buy with cash.

If you have the habit of doing reckless shopping on credit, you might see yourself still paying off the balance after 10 years.

2. Formulate a frugal budget

Most of us hate to follow a budget. Doing so, we don’t know where our money is going and when to stop spending. However, budgeting is not difficult. You can plan one with the help of budgeting apps that are available online.

The important thing is to create the budget with all the elements of frugality.

Eliminate all the unnecessary expenses from your list and concentrate only on the things that you can’t do without.

3. Cut down the random usage of credit cards

If the temptation of overspending on credit cards is too much, cut them in half.  You want to avoid the temptation of whipping them whenever you don’t have enough cash to pay for something. Either cut them or lock them in your house if cutting seems too drastic.

Carry cash instead of credit so that you can shun the habit of resorting to plastics when you can’t afford something today with cash.

4. Start saving money in an emergency fund

Save money and build an emergency fund in order to lead a tension free life.

Experts suggest to save at least 20% of what you make in a month and build an emergency fund so that you have a cushion to fight back with the emergencies.

An emergency fund will provide you financial help when you need it the most.

No matter how much you owe on your student loans and other financial obligations, make sure you pay yourself first.

5. Track your hard earned money

It is necessary to keep a track of your money so that you can decrease the expenditures to boost the savings.

Not keeping the track can have a serious impact on your financial life and may obstruct you from achieving financial success.

6. Say “yes” to free entertainment

You can spend hundreds of dollars on Internet, TV, movie subscriptions, sports events and so on.

But did you ever think that you can save some money if you decide which entertainment is really worthy of your time?

You can rent CDs to enjoy movies instead of going out to theaters where snacks cost so much!

Try to avoid parties and night outs with friends. You can enjoy a nice day out by arranging a picnic in the park or can enjoy a local event with friends as well.

7. Optimize the food costs

You can easily save $25 every week to avoid expenses on lunch while you’re in office. Brown bag lunch can save $1,300 per year.

So, just think how much you can save in your whole career.  Eat at less expensive restaurants to save money.

Other than that, you can also save money on food by using leftovers to make some new dishes.

8. Start saving for retirement

The sooner you start saving for retirement, the better you can manage your finances after you leave your jobs.

It is said that the retired life is considered as the golden period of a person’s life, so make sure that you save enough money for the retirement years. By doing so, you can avoid financial stress and enjoy the retirement days peacefully.

9. Get rid of your debts

There are many options available to become debt free. You need to decide if you can get rid of debts by yourself or you need professional help.

  • DIY debt relief option – debt snowball

In debt snowball method, you organize the debts from smallest to largest outstanding balance. You pay as much as possible on your smallest debt while making minimum payments on other debts. By doing so, you’ll be able to pay off the lowest amount of debt first. Repeat the same process until each debt is paid in full.

This process takes time but helps you to increase your confidence.

  • Pay off your student loan debts or try consolidating them

If you see that you’ve accumulated huge amount of student loan debts, try consolidating them by taking out a federal debt consolidation loan. You can consolidate your multiple loans and pay off debts in single monthly payments.  Also, you can refinance your student debt in 2 weeks.

  • Try debt management to repay credit card debts

If you have incurred huge amount of credit card debts and you can’t make the minimum monthly payments of the accounts, try to manage your debts through debt management.

If you enroll in a DMP or a debt management plan, your debt consultant will attempt to lower the interest rates and monthly payments on your loans.

This way you can repay your debts through easy and affordable monthly payments.

10. Avoid further debts

Avoiding unnecessary debt is the key to a good financial life. How can you avoid future debts? Just pay the bills on time. Because once you miss your payments, creditors will surely increase the interest rate and it can double what you pay every month.

Here are some ways you can avoid accumulating further debts.

  • Reduce the usage of credit cards to become debt free.  Moreover, use cash instead of cards. By doing so you can stay within your limits and buy things that will be affordable to pay off.
  • Apply for a low interest credit card instead of high interest credit cards to stay comfortable in your financial life.  Look for deals.
  • Always pay more than the minimum balance. Thus you can lower the outstanding balance and can pay off the debts fast.

Lastly, remember that you don’t need any fancy degree or background to become an expert in personal finance management.

You just have to make sure that you stay away from credit card debt and restrain the usage of your cards as much as possible.

Also, stop blowing tons of hard earned money unnecessarily.

Save money as much as possible to become financially independent and achieve financial success in life.

Author’s Bio: Amy Nickson is a web enthusiast. She completed her graduation from Oglethorpe University, Atlanta, Georgia. She works as a financial writer and she shares her expertise through her crisp and well researched articles based on money management, money saving ideas, debt, and so on. You can follow her on Oak View Law Group where she shares her expertise on personal finance field.

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