Financial independence is what every person hopes for and dreams of in life. However, it seems like the world conspires against your pocket to make your financial life a nightmare. Almost all households have some kind of debt, but the biggest problem is what millennials are facing.
Many people praise and criticize this generation in equal measure for their wit and fast movement. In fact, many companies are on the front line to hire them to drive sales in what is the biggest market.
However, the sad part is their debt status. Nobody wants to owe, yet these debts continue to drive millennials to the wall. It’s such financial frustrations that cause anxiety, stress, and depression, often leading to unnecessary arguments and tension.
In this post, we focus on how debt stress is taking a toll on millennials both financially and emotionally. Later on, we’ll discuss ways millennials can combat it. In the meantime, take a look at some of these alarming numbers from the Institute for College Access and Success:
- The average student debt at graduation went up to $28,950 in 2014 from $18,550 in 2004. This is a 56% rise – over double the inflation rate in that period (25%).
- With this rise in college education costs, student loan delinquency rates in the third quarter of 2015 were higher than the late payments for car, credit cards, and mortgages combined.
- That’s not all. The situation gets grimmer because between 2004 and 2008. The unemployment rate was under 6% for college graduates. It got even worse for the years following the end of the recession with the rate going past 7%, but 2010 was the worst. The unemployment rate peaked at 9.1%.
- The unemployment rate hit 14.7% for high school graduates in 2014 – over twice the rate for college graduates.
Tips on Millennials Can Use to Fight Debt Stress
This is just a sneak peek into the frustrations and stresses millennials have to cope within their 20s and 30s. Even with jobs, college graduates still live from one paycheck to the next, thanks to burdensome student loans.
According to the Federal Reserve Bank of New York, student loans hit $1.2 trillion. What’s more, an average of 11.6% of student loan debt was over 90 days delinquent. With so many issues to deal with and at such a young age, it’s no surprise that many millennials are falling ill due to financial and debt distress.
In fact, the physical and psychological well-being is correlated to financial distress. The Yellowbrick blog states that people with high-stress levels associated with debts are at risk of suffering illnesses such as severe depression, migraines, ulcers, and other digestive tract complications.
It gets even worse because the people with stress caused by high debt levels are twice at risk of having a heart attack. The statistics are worrisome, but there are ways millennials can combat crippling debt stress.
- For those who are still in college, it’s advisable to seek the services of a financial advisor in the financial aid office. This will help you understand everything about student loans including future consequences.
- It’s also advisable to visit studentaid.ed.gov. This website contains details about the various loan repayment and loan servicing options available.
- You can also consider choosing a career that offers loan forgiveness programs or will help you repay the loan. Some of these careers include public service jobs, family/child worker, and teaching.
Apart from these tips, consider implementing the following strategies
Accept the Situation
Acceptance is always the first step to debt management. Without this, ensuing steps will be a waste of time. Debt accumulation takes time and most of the time, people don’t even notice it until they are deep in debt.
It all starts with a small just right loans and grows into something you feel is out of your reach and control. However, it’s important to accept that you have a debt problem.
Open Up About Your Debt Status
After accepting that you have a debt problem, it’s time to talk to someone about your debt status. This is where friendships come into play. Talking to close friends and family members allows you to offset your worries and frustrations—something that has been proven to be beneficial.
However, take caution in who you talk to. Healthy relationships are critical during these times to help build a solid, resilient, and supportive structure. If you don’t feel at ease, consider talking to a financial counselor who’ll hear your problems and later on chart a way forward.
Deal with the Debt
Accepting that you have a debt problem and talking about is just the first step. The actual work is in taking action. Consider getting advice from a financial advisor on the way forward about your debt situation.
For student loans, seek various avenues of paying off the loan, such as a loan forgiveness program, forbearance, or one where the employer can help you repay the loan. Also, consider talking to various creditors whom you owe. Negotiate on a way to clear the outstanding debts.
Besides getting you on the road to financial independence, dealing with debt will restore your confidence. It’s these small steps that boost your confidence because they give you a sense of achievement—something that’s critical to your journey toward financial independence.
Address the Psychological and Physical Effects of the Debt Stress
As stated above, increasing debts can have a toll on your overall well-being due to the stress associated with them. Some people end up with anxiety or even worse, depression.
It’s, therefore, in your best interest to take care of your overall health. Having said that, there are simple ways you can use to help you maintain good health. As you seek ways to clear your debts, don’t forget that the situation is temporary and with action, it’ll be over in no time.
In the meantime, do this:
- Engage in physical exercises like running or riding a bike. It doesn’t have to involve expensive gym subscriptions.
- Eat a balanced diet. Nutrition is important for the normal functioning of both the body and mind.
- Get enough sleep. A good night’s sleep will put your mind at ease and also help to relax your body.
- Maintain perspective. This has to do with reminding yourself about the bigger picture. The reason you took out any loan was that you wanted a good life. The debt may be weighing on your finances, but acceptance is key.
- Volunteer for various community projects. This has positive effects on your psychological well-being and has been found to reduce stress, anxiety, and depression.
No one wants debt. That’s the truth, but the reality is life will push you to the edge and, sometimes, the only way out will be to borrow. Keep in mind that borrowing is not always bad, however, you must understand your financial situation before applying for a loan.
For millennials, it’s wise to consider alternatives such as working online or starting a business to pay off your student loan. This will relieve the pressure of finding a white-collar job.