Millennials: What you need to know about debt
When used wisely, debt can help build one’s credit score. If debt becomes unmanageable, bankruptcy may be a viable option.
Each generation manages assets differently. This is true when it comes to debt as well. According to Experian, a top credit provider, debt is divided amongst generations as follows:
- Millennials, those between the ages of 19 and 34, average $52,120 in debt
- Generation X, those between the ages of 35 and 49 average $125,000
- Baby Boomers, those over the age of 50 average $87,438
Various life stages come with different forms of debt. The jump between Millennials and Generation X, for example, is likely due to the presence of a mortgage for the Generation X group while debt for Millennials is often focused on auto and student loans.
When entered into wisely, debt is not always a bad thing. Those who take out credit, like a mortgage loan, car loan or student loan, and make regular payments can build their credit score and set themselves up for future financial success.
How Millennials can use debt wisely
Financial experts with Experian discussed the varying forms of debt from generation to generation and provided some advice geared specifically for Millennials. Some top tips included:
- Credit cards. It is important that Millennials respect without fearing the use of credit. Interest rates on credit cards can be high, changing a manageable amount of debt into one of monstrous proportions in a matter of months. As a result, it is important to make regular payments and keep the overall balance under control. Review the bill monthly to both ensure the debt does not get out of control and to watch for fraud. If there are any unrecognized charges, contact the credit provider immediately.
- Cars. Millennials should also purchase cars wisely. Take care not to buy more car than needed and wait to get a luxury model until a higher level of financial security is achieved.
- Student loans. These same experts also clarify that tuition debt can be a wise investment. Getting a college education, according to this article, pays off over the course of one’s career. However, take the time and do some research. Carefully consider the costs associated with each institution and the interest rates of various student loan offers in making your decision.
Unfortunately, even when these steps are taken debt can become unmanageable. In these situations, it is wise to seek the counsel of an experienced bankruptcy lawyer. This legal professional can review your options and work to better ensure a more favorable outcome.