Going into debt is a necessary evil for many college students; however, educational loans are just the tip of the iceberg for many. According to TransUnion – a credit monitoring firm – average Canadian owe over $29,000 in debt, not including mortgages. With millennials making 20 percent less than baby boomers (those born between 1946 and 1964) at their age, over 51% of millennials (born between 1981 and 1996) say that the amount of money they must live on is a major cause of stress.
Learn the Basics
In order to budget money, young adults need to know HOW to budget. Comparing income against fixed (and unnecessary) expenses seems like a daunting task, but it is necessary. SkyCap Financial – a lending company specializing in installment loans – offers a free program – SkyCap University – to teach money basics to its clients.
Live Simply
This one is self-explanatory. Paying debt down and adhering to a budget requires cutting down expenses. Learning to live without the extras (eating at restaurants, expanded cable plans and buying those beautiful shoes) might be necessary until debt is paid down. By eliminating excess spending, staying on track with any budget will be more manageable. Negotiating discounted rates for cell phone services and even student loan repayment can help control spending and every little bit counts.
Don’t Sweat the Small Stuff…Forever
One you’ve eliminated excess spending, you might find yourself with extra money each month. The “snowball” method is something that many people swear by to pay off debt. Take the extra money and pay off as much of the smallest debt you have and pay the minimum payment on all your other debt. Once the smallest debt is paid off, repeat the process on the next smallest debt. Time will remove the smaller debts, allowing you to pay down – and pay off – the larger ones.
Make Sure You’re Budgeting Appropriately
Your budgeting will depend heavily on where you’re spending your money on fixed expenses. Your mortgage payment should be no more than 28% of your gross monthly income; your car expenses (loan payment, gas, repairs, etc.) should be no more than 10-20% of your income. Sometimes, emergencies happen and regardless of budgeting, extra help might be necessary. SkyCap Financial also offers small loans ($10,000 or less) with a quick and efficient application process.
Remember Your Hard Work
Once you find a manageable budget and you see your debt decrease (and cease), it’s important to remember how great it feels to be in financial control. Often, making more money can lead to spending more money. Save up for that trip you’ve wanted to take; put extra money toward your retirement fund, or double up on mortgage payments. Smart budgeting now will lead to a bright future of opportunity!
