Only 35 percent of today’s young Americans own a home. Millennials say that the biggest reason holding them back is the lack of financial capability. Bombarded with student debt as soon as they get off college, new graduates think that moving back home and living with mom and dad is a solution.
Millionaire and property tycoon Tim Gurner let out a harsh message for millennials in an interview on 60 Minutes.
“When I was trying to buy my first home, I wasn’t buying a smashed avocado for $19 and four coffees at $4 each.”
Some thought it was a bit too much. If one were to save up for a house down payment, he/she would need to give up 49,000 smashed avocado goodness if the toast cost $19 each.
Young millennials can take a tip or two from us. Saving, whether to pay for college debt, or buying a house, or just for the sake of saving, will do you greater good.
Change your Spending Habits
What the 35-year-old millionaire businessman was really trying to say is we should all learn to sacrifice some of our luxuries for the more essential things in life. This can be a home or to pay off student debt.
The first thing to do is to examine your cash flow. How much money is coming in? How much goes out? Having a clear picture of your income and expenses will help you identify where you can cut off and save.
If you can’t let go of the smashed avocados, think of how you can get it in a cheaper way. Make it yourself.
Dining out too often, shopping every time you spot a sale or subscribing to premium cable service can be the reasons why you aren’t saving as much.
Move Back and Live With Your Parents
Young adults will find this very embarrassing, but you’ll be surprised that 26 percent of the millennials are planning to move back home to save up more and pay off their student debt sooner.
This can be very practical. This doesn’t mean you will be living with mom and dad until you pay the debt completely. While you live with them, you pay the debts faster. Once you have paid a significant amount and have build savings along the way, you may finally be able to live separately.
Becoming Debt-Free Sooner Can Help You Save More
Snowball Your Debts
One effective technique, experts say, is the snowball method.
You start by paying the minimum due on all your debts. Any extra money, you will pay towards the smallest loan until you completely pay that one off.
Although this may not be the cheapest way to go, you personal victories will continue to fuel your desire to pay off all your debts completely. This helps you stay motivated and consistent until you are debt-free.
Debt Avalanche it!
This technique targets the loan with the biggest interest first. This may be cheaper than the snowball method because you are not allowing the interest rate to grow.
How this is done is to make minimum monthly payments on all your loans. What you have extra will put to the loan with the highest interest until that completely gone. Then you move to the second highest interest, so on and so forth.
Strategy and practicality play a big role in paying off debt and saving up money. How you handle your finances today will greatly affect your future.