Millennial Money Management: Part II
A Q&A with Stefan Sharpe of the Millennial Budget
At OppLoans, we’re talking to Stefan from The Millenial Budget about the financial reality of millenials today. We’re getting his take on how recent grads can deal with overwhelming debt and the steps they can take today to set themselves up for financial success tomorrow!
What advice do you have for millennials who are just graduating with mountains of debt?
Forget about what your friends are doing. This is harder said than done. If you have a mountain of student debt, your only focus should be paying it off as fast as you can. That means live with your parents if needed, go easy on the entertainment expenses, and make extra payments. One common mistake I constantly see is that students do not take advantage of the six-month grace period. They think this is a “free” pass for six months so they ignore their loans. However, during these six months, interest is still accruing which means your total debt is climbing higher. Pay off those loans as quickly as you can, you will thank me later.
How can college students prepare their finances to deal with that impending debt?
During freshman and sophomore year, student debt and money is the least of concerns for many college students. For me, those years were all about getting the college experience. However, by junior year, and most certainly senior year, students realize the challenge they will be faced with. My advice is to first set up an emergency fund. You can find a complete walk through on what this is and how to fund it here. The reason for this is that you need to have a safety net in case something happens. The last thing you would want is to take on more debt when you are already drowning in student loans. After this is set up, I would put any extra money you have into your loans.
What are your top 3 tips for tackling student debt?
My top 3 tips would be:
- Pay early, pay more. I have said it many times already, start paying off your loans early! The quicker you pay down your loans, the less interest you pay. This can amount to thousands in savings. What would you do with an extra thousand dollars in your bank account?
- Don’t forget about your tax deduction. The interest portion of student loans is tax deductible. Make sure you are getting that money back!
- Every dollar counts. Every time you skip your morning coffee or that night out with your friends adds up. Even if you save an extra $25 a month and apply it to your student loans, it will all make a difference in the end.
Any other words of advice for young people hoping to take charge of their financial situation?
Do not accept the norm. Too often we are told that we work until we are 65 and then retire, or we need that fancy new car and big house. While this may have been the standard for older generations, the millennial generation is far different. We have access to far more wealth than before. If we make use of this increased access to wealth properly, many of us can retire well before 65. Do not settle for average. I certainly will not be. If you are interested in taking control of your money, make sure to stop by my blog. Like my tagline says, “Grind today. Relax tomorrow.”
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