Learn To Live Well While Spending Less
If you’re twentysomething and already in debt, you are by no means alone. In fact, according to bankruptcy expert Elizabeth Warren of Harvard University, more than 110,000 adults aged 25 and under filed bankruptcy last year. Credit card debt among this age group has skyrocketed in the past decade—and shows no signs of slowing down.
Why are so many young adults in such a negative financial state? Plenty of factors are contributing to the rise of debt for those just starting out, including escalating college costs, an unstable job market, and inflation. Attitudes towards debt have changed, too, leading many young consumers to believe that credit is practically unlimited, and that buying things on credit is not only normal, it’s encouraged. Credit card companies spend millions of dollars marketing to this segment of society, knowing they’ll bite. Many students graduate from college with more than just a degree—they also have thousands of dollars in debt.
So how can a smart twentysomething lead a normal social life, buy the things he or she needs, and still have money left to pay the bills and even (gasp) save? It can be done—if you set your mind to make it happen. Here are some words of advice.
Shop smarter
Do you really need that new, state-of-the-art cell phone, or could you use your old one for another six months or a year until the price goes down on the new one? At the grocery, do you buy name brands just because you parents did? They probably had more money to spend—you don’t, so buy generics whenever possible. That goes for designer clothing, too. If you must wear pricey labels, buy them at close-out stores or at consignment shops—more and more of these “gently-used” apparel stores are opening throughout the nation, and they are a great way to balance your fashion budget. And always comparison shop, even for items you’re in the habit of buying from the same place every time. Try online price finders, like www.mysimon.com or www.nextag.com. You’ll be surprised to see how you can find lower prices on anything, from toasters to toothpaste.
Watch your “luxury” spending
Okay, everyone defines the word “luxury” differently, but we’re talking about the non-essentials: going out for dinner or drinks, ordering pay-per-view movies, getting your hair professionally colored, going tanning, having a manicure, etc. You don’t have to cut these expenses out completely, but set a combined limited budget for them every month and stick to it. If your budget runs out, compromise. Buy a box of at-home haircolor or a six-pack to drink with friends instead of going to the bar.
Don’t open store charge accounts just to get a discount
It’s probably happened to you: you’re at the register, and as the clerk is totaling your purchases, he or she asks if you want to “save 10% today by opening a store credit card!” Sure, it may take only a minute, but there are plenty of reasons why you should say no. The small percentage you could save off that single purchase, usually just 10-15%, would soon be negated if you didn’t pay the balance in full within only one or two billing periods, thanks to the interest rates, which are typically higher for store credit cards and average about 20% or more. Plus, having new, available credit can be too much of a temptation—you’re trying to get out of debt, not increase it.
Be young and have fun—just don’t go broke doing it!
