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Millennials, unlike any generation before them, are becoming less likely to be able to achieve important milestones in their lives. Being able to buy a house, invest their earnings, and even retire at an early age is becoming more difficult for the millennial generation (people born between 1981 and 1996) due to debt.
We’re taking a look at some of the most significant sources of debt for millennials and sharing how to get out of debt for good with our Debt Free Life solution.
Auto loan debt
Buying a car is often the introduction to loan debt for many people. A 2019 Experian report found that most millennials carried an auto loan debt of around $18,000. What many millennials saw as commodity they could not afford to go without is turning into a burdensome debt.
Credit card debt
Credit card payments are something most people will deal with throughout their lives. Credit cards carry a high interest rate and their easy access makes this type of debt hard to escape. Experian reported that on average a millennial is carrying a credit card debt of approximately $4,700.
What’s more, credit card debt has seen a massive increase in the last few years. Millennials are often more likely to use credit cards more often than cash or debit cards, and in turn, credit card debt can pile up in just a few weeks or months. While these balances might seem smaller when compared to other types of loans, they add up quickly alongside high interest rates that make them harder to get rid of.
Student loan debt
One the most significant types of debt that millennials are facing is student loan debt.
While auto loans and credit card debt gradually increased over the years, student loans saw an overhaul in payments that resulted in debilitating debt for many people. According to Business Insider, the cost of attending college has more than doubled since the 1980’s. As a result, millennials are facing the effects of that price increase as they work towards paying for their education.
Saving for a brighter future?
As debt piles up, many millennials are foregoing important milestones like buying a house and starting a family. In fact, compared to generations before them, millennials are much less likely to buy a home. Between 2005 and 2014, the US saw an 8% decrease in young people buying homes. The Federal Reserve attributed this decline in home ownership to a spike in debt among young people.
The mentality among millennials has completely shifted from that of their parents and grandparents. Many millennials are aware that to save for the future, they would need to save almost everything they have. To that point, a survey conducted by T. Rowe Price discovered that 32% of millennials will not be able to retire until the age of 75. While many generations before them were able to leave the workforce in their sixties, millennials are facing the reality that retirement will not be a possibility until a decade later.
Savings tools for the digital age
As a response to this growing cycle of debt, several tools have been created to help millennials manage budgets and strategize loan payments. Apps like Acorn, and Mint are tailored to help millennials invest and save money for the future.
With the Acorns app, you can “micro-invest,” which means investing and saving small increments to meet a larger goal. This type of investing makes sense for millennials who might find it difficult parting with larger portions of their income.
Another app, Mint, allows users to combine all their bills and payments into one dashboard. This all-in-one strategy helps millennials to be strategic in spending, saving, and investing. Mint galso provides the user’s current credit score, which is another valuable tool in tackling debt.
Get on track to financial freedom with Debt Free Life
While money management apps are a great way to budget and get a handle on debt, there are other options available that can help you eliminate debt for good.
Debt Free Life is a life insurance savings vehicle that helps you eliminate debt strategically while reducing the amount of interest on loan payments. With Debt Free Life, you can tackle your debt while planning for the future. Debt Free Life also operates as a life insurance policy, so if something were to happen to you before your policy term is up, your beneficiary would receive the policy’s death benefit.
Eliminate debt on a schedule that works for you
For most millennials, getting the power of life insurance plus the ability to pay off all debt in nine years or less can be a game-changer. Debt Free Life gives you control over your finances while systematically knocking out each of your debts. This realistic approach will give you financial freedom in nine years or less while also helping you save money for retirement. The cherry on top? The policy is affordable, and you won’t be spending any additional money each month.
Want to learn more about Debt Free Life? Connect with a Quility advisor today – we’ll create a customized debt payoff plan and get you on track to being debt free.
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