Dealing with Debt as a Millenial
As a young person, just out of school and getting into my first job, dealing with debt is part of my everyday life. I had student loans, and a car loan totalling around $38,000 when I graduated from University. These days, starting out life with this much debt is just the cost of doing business. It’s a necessary prerequisite to any kind of middle class education and (hopefully) existence.
Staying in debt, however, is not a necessary part of middle class existence. In fact, for a millennial staying in debt, or taking the longest possible amount of time to pay off debt, is downright stupid. For me, I want to pay off my debt as soon as possible. I’ve gone a little extreme in the process of trying to pay off my debt quickly. I’ve become a permanent house sitter to save on rent costs, my fiance and I share a single car in an area with no public transportation, and are trying to be as frugal as possible about our upcoming nuptials. I’ve gone to these extremes because I worry that my debt is keeping me away from stable financial footing.
Job Security Is Rare
As a young person just entering the job market, I’m at the bottom of the barrel, employment wise. I was very lucky to secure full time employment immediately after graduation in my field of choice, but that doesn’t mean my job is secure. The economy isn’t what it used to be, times are tough, and if the axe ever came down, another job might not be right around the corner.
Once upon a time, you got a job, and stayed with that employer for your entire life. You might switch companies a few times, but for the most part, job hopping wasn’t really on the table.
Now, I would be shocked if I didn’t experience some form of unemployment in the future. I’m not a doctor, or a lawyer, and neither is my fiance, our job security is far from concrete. I’m trying to avoid unemployment as much as possible, but if that ever happens, I don’t want to have to worry about making payments on almost $40k in debt. Instead, I want to have no debt, and a financial cushion to fall back on. So, I have to pay it off.
Affordable Homes are Rare
Beyond having a financial cushion, I want a home. Buying property these days, especially for some people with a load of debt, is an entirely different ball game than it used to be. Interest rates are low, but home prices are high. I want to buy a decent house, but I don’t want to have to struggle to make ends meet if interest rates go up. To do this, I have to do two things:
- Reduce my other financial obligations: I need to eliminate my $500 in minimum debt payments I make every month.
- Save a monstrous down payment in order to keep my monthly payment reasonable.
Not everyone gets rid of all debt before home ownership, but I’m going to. Having all of this debt and having a mortgage would be way too much debt to carry should anything go wrong in life. I don’t want to have to chose between making a payment on my home, and making a payment on my education. So I’m going to pay it all off, and rent in the mean time.
Sufficient Retirement Funding is Rare
Saving for retirement isn’t something that’s on most people’s radar, especially people my age. After all, I’m 23. I’ve got my whole life to save for retirement. Unfortunately, I’m not expecting any kind of additional retirement funding, beyond what I provide for myself. I’m not saving for retirement yet, but once I’m out of debt (probably by the time I’m 24) I’ll start socking away cash into retirement funds.
Retiring with full pensions as some people have, is a thing of the past and an amazing pipe dream for most, including myself. Because of this, I’m planning on using time to my advantage by investing early. In order to do that, but have enough cash left over to you know, live, I’m going to pay all of my debt off.
Debt is the Enemy of Millennial Prosperity
Becoming an adult as a millennial has been a rude awakening for me. I don’t know what I expected, but I didn’t expect adult life to be as much of an uphill battle as it has been. Instead of beginning my life, having a wedding, saving for a house, or (now this is a long way off) thinking about having kids, I have to accomplish a laundry list of prerequisites in order to ensure my own security and prosperity. First I need to dig myself out of a $38,000 hole, build a big barricade around myself to protect from potential catastrophes, accumulate a small fortune in order to become a home owner, and then divert significant portions of my future earnings towards funding my old age.
Once that’s all accomplished, maybe I can get down to living a typical life. Until then, I’m suspended in 20-something purgatory, not quite sure of my place, but knowing where I’d like to end up. I do know one thing though, I’m not going to be able to accomplish any of that with the weight of debt hanging around my neck.
Is finding stable financial footing to be more difficult than you thought? I want to know!