Recently Northwestern Mutual’s 2018 Planning & Progress conducted a survey of over 2,000 American adults, including an oversampling of more than 600 millennials. It is estimated that over 44 million US adults have student loans with the average debt hovering around $33,000 and according to the study, millennials between the ages of 25 and 34 have an average of $42,000 in debt, of which only 16% is study loan. Rest is coming from credit card debt.
“As you grow older, your expenses increase. The additional pressures that come onto the pocketbook only grow and your disposable income shrinks in a lot of cases, even if your salary is growing. The pressure to start relying on credit cards makes a lot of sense. People’s purse strings are clearly caught in a tug of war between enjoying the present and saving for the future,” Emily Holbrook, director of planning for Northwestern Mutual says.
Soaring home prices, high student loans and other financial expenses have put burden on millennials that no other generation had to face. The average American has about $38,000 in debt, up $1,000 from a year ago. Despite many people want to take off their debts, they find it really hard due to not having a high paying job or high living cost in few areas. Northwestern also find out that people spend too much on discretionary activities like dining out, travelling to their dream destinations or pursuing their hobbies — as they struggle to pay their debt.
Holbrook recommends spending at least 10 minutes sorting through what kind of debt you have and what the interest rates are, and prioritizing what to pay down first. That will give you a path forward. She suggest to prioritize high interest debt like credit card first before dealing with your low interest debt like mortgages or student loans. It is also important that you try to save some money for future while paying for your debt. It’s more about prioritizing and planning to take your debt off in the right way.