According to a recent article from CNBC, ‘Young adults are particularly vulnerable to delinquencies’, claiming that 1 in 5 have debt in collections. It goes on to say that credit card debt is up 15% over just the last quarter and with the possibility of more layoffs this year, that may go a lot higher as people try to stabilize their financial footing.
For people who already have low credit scores, this problem can compound as they have fewer options for assistance and end up turning to payday loan sources that charge huge fees and high interest rates.
If you find yourself in this situation, I listed a few credit card companies below that may help. Meanwhile, work on getting your credit score up by paying on time and keeping your balances less than 50% (preferably 30%) of the credit limit. Also, look at your credit and dispute anything that doesn’t look correct by reaching out directly to the credit bureaus (Experian, Equifax, and TransUnion). For other credit improvement hacks, check out this article or video.
According to a recent report by Credit Karma, nearly 1 in 3 adults rely on parents for financial support either monetarily or by giving them a place to live temporarily. In fact, according to a report by the Pew Research Center, 18% of US households now have two or more adult generations living under the same roof with the older generation paying the larger share of expenses.
According to that same report from Credit Karma, 69% of the parents who help their adult children said it causes them financial stress. To make matters worse, a recent report from LendingClub found that 32% are saving less now than they were a year ago and half have no savings at all. Clearly, this is not sustainable.
Sadly, individuals aren’t the only ones hurting. Many companies have found that they too are victims of higher interest rates and high inflation. For most of these companies, their only option to stay in business is to cut their biggest expense: Labor. This compounds the problem even further.
Time to Budget for Success
So, what are people to do? They will need to start by drastically cutting back on unnecessary expenses. A good way to do this is to go back through your credit card and checking account statements for the past 3 to 6 months and put each purchase in two columns: Need and Want. If you are comfortable with using Excel, it makes this process quicker and easier.
So, obviously, a utility payment, gas, food and your rent or mortgage would be listed under “Need”. Starbucks, Olive Garden, and cable TV go under “Want”. Even within the “Need” column, you can dig deeper into where & how often you drive to see if you can cut back on your gas expense. As for food, you can further examine if you purchased items you needed or wanted.
I think you’ll be shocked how much is listed in the “Want” column (if you’re being honest with yourself). This is NOT fun. We work hard and feel we “deserve” some simple pleasures. I won’t argue with that. But, if you want to get to the point where you can sleep without worrying about debt, this is something you’ll need to seriously consider. The good news is that this is temporary, and it may even help you develop new habits that guide you further to financial independence.
Cutting back on expenses is only half of the balance sheet. The other half is income. What can you do to bring in more income? You can take on a second job. There are a lot of companies that need to cut expenses by hiring part-time employees to avoid paying benefits. You can start a side “hustle” such as Uber, Uber Eats, DoorDash, Postmates, Instacart, etc…
You won’t find all your answers here, but I hope I gave you enough to get you thinking of ways to make some improvements. If you’d like more tips and suggestions, please feel free to check out our other articles or our YouTube channel.
