Millennials could be risking their financial future as they craft ways to tackle their student loans, car payments and credit card debt. New research indicates that many are overusing credit cards, racking up fees with late payments or overdrawing checking accounts and, in some cases, even taking loans against 401k plans. In many cases, Millennials could be earning about 20% less than their parents did when they were in the 25- to 34-year-old age range. Many Millennials are taking on extra costs and risks as they juggle the bills. A quarter of those with checking accounts, for example, had overdrawn their account in the prior 12 months, according to the survey for the National Endowment for Financial Education.
Having confidence about dealing with your cash doesn’t equate to knowing the right moves to make when juggling debt or getting socked with an economic shock, such as a costly car repair or job loss. Millennials are better off if they avoid basing a decision on a short-term fix that isn’t financially healthy for the long term.
This is important to me because it’s always good to learn from other people’s mistakes. You learn about the right way to invest and save your money and the alternatives to get out of student loan debts. It’s really costly carrying a balance from one month to the next and it eventually adds up to more than you have or can pay off. If you have a balance, don’t use a card to pay for more items until that balance is paid off. Pay cash, instead.
By only paying the minimum payment, you’re stretching out credit card charges for years and racking up considerable costs for interest. These are things you learn as you grow older or may never learn.