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HomeBlog Credit Card Debt8 Things To Do In Your 20s To Avoid Piling On Debt
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8 Things To Do In Your 20s To Avoid Piling On Debt

October 11, 2015 by National Debt Relief

Adult WomanThe 20s can be one of the best decades of your life. You’ve finished school and you’re on your own. If you have a decent job you have more money than ever before. Want to buy a new laptop? Then go for it – the decision is yours and yours alone. Ditto that car you’ve been eying.

But as that wise, old saying goes, “with great freedom comes great responsibility”. And you now also have a new responsibility – to avoid getting into debt that could plague you for years to come. You’ve undoubtedly already learned the importance of paying your rent, your utility bills, buying groceries and taking care of some of those other expenses of life. But if you’re typical you’re being bombarded by offers for credit cards, department store specific cards and personal loans.

Unfortunately, most of these come with interest rates that can only be described as usurious. One of the biggest problems with these offers is that they’re often sold as a safety net – something that would be there to help in the event of an emergency. But if you’re not careful you could end up maxing out those cards and stuck with high-interest debts that will haunt you all the way through your 30s.

Fortunately, there are things you can do to prevent this from happening and here are eight tips that can help you avoid getting stuck in debt.

1. First and foremost, avoid credit cards like the plague

There are some good reasons to have a credit card. For example, it’s true that it’s not a bad idea to have a credit card available in case of an emergency. Also, if you use a credit card sensibly this will help you improve your credit rating. Unfortunately, it can be very tempting to use that card or cards to buy things you can’t really afford. The unstated goal of every credit card company is to get you into debt while you’re young and then bleed you like a leech with minimum payments and compound interest. So when you get those tempting credit card offers just do what that old anti-drug commercial advised and “just say no.”

2. Underestimate your income and overestimate your spending

You may have come to grips with the idea of budgeting for your food, bills, rent and other expenses. While that’s all well and good it’s important to understand when you create a budget that both your spending and your income can fluctuate greatly. This means when you’re creating your budget it’s a good idea to overestimate your spending and underestimate your income. Do this and you’ll dramatically reduce the possibility of having to borrow money to help you through a month when you’re sick and can’t work or winter hits and your heating bill goes up drastically.

3. Be prepared for sudden expenses

Whether you want to believe this or not something will go wrong. Your car will need a major repair, your dog will get sick or something else will break. When you’re creating your budget it’s wise to set aside at least 15% of your earnings just as a buffer against those unexpected expenses you can expect to get hit with. According to a study done by Bankrate, 7% of Millennials intend to use their credit cards in times of emergencies. This is actually a bad idea – it is better to use cash rather than a card especially in an emotional time.

4. Don’t think you’ll be able to afford luxuries all of the time

Some things in life are permanent and others are transient. Buying high-priced luxury items might feel good for a while but generally don’t improve your quality of life over the long term. What’s better is to spend your money on doing rather than buying. Instead of buying a new car why not spend a few months traveling through Europe. You’ll either need or want to replace that car in just a few years but your memories of Paris and Rome will last the rest of your life.

5. Have an allowance and stick to it

The best way to control your spending is have one account where you deposit your wages and a separate account for your spending. Then arrange automatic transfers from your earnings account into your spending or allowance account, monthly, weekly or even daily. That should help you keep your stick to your “allowance”.

6. Save for the stuff you really wantholiday spending

Our society seems to be built around the idea of instant gratification. According to an article published on PsychologyToday.com, the digital age that we are in makes waiting irrelevant. That means our minds have a hard time getting around the idea of waiting to get what we want. For that matter, all the credit schemes are designed to encourage us to not wait. You can buy almost anything on credit, which generally means making small monthly payments for years on end at huge interest rates. That might seem manageable at the time but if you keep adding one small payment on top of another your debt will begin to grow exponentially. You will soon find that you have such a small amount of disposable income you can’t afford to buy gas for the car you’re still trying to pay off. If there’s something you really want, whether it’s a new car or new living room furniture, create a savings account specifically for it and deposit a set amount of money into it every month. You might be surprised at how quickly you’ll have enough money to pay cash for the stuff you really want.

7. Pay off your debts with your savings

As noted above, the more debt you have the less disposable income you have. If you have $1000 in debt accruing interest at an APR of 18% or higher and $1000 in a savings account that pays 3% APR – this is a no-brainer. Use the $1000 in your savings account to get rid of that $1000 in debt. You’ll be able to breathe easier knowing you’ve eliminated that debt and will now have more disposable income some of which you could use to replenish your savings.

8. Understand that interest-free credit is not free money

There are numerous credit cards available now that offer interest-free periods from 6 to 18 months. But if you sign up for one of these cards don’t make the mistake of thinking that this is free cash. These interest-free offers are meant to encourage reckless spending so that when that introductory period ends you’ll have a huge amount of new debt at an interest rate that could be as high as 19%.

In summary

The fact is that most of us will have to deal with debt throughout our lives. Whether it’s buying a new car or a new house most of us will just never have enough cash available to pay for them. Now, when you’re still in your 20s, do your best to avoid debt. Try instead to learn to enjoy the simpler things in life and not complicate these years with financial worries. Use some impulse control, do some calculating and you’ll have a fun, debt-free and fulfilling decade.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 3/28/2021 Charlotte: Our call is recorded. How did you first hear about our National Debt Relief? CESAR: Internet. I believe in either Credit Karma or one of the other sites. Charlotte: What made you decide to work with National Debt Relief as opposed to other providers? CESAR: I heard some good things about them. Actually, one of the credit card companies that was collecting on one of my accounts said they themselves had used National Debt Relief and they were very, very happy. Charlotte: Tell me about the service they gave you. CESAR: The service has been great. It's been pretty transparent. You make your payments. We get you through it. We’ll deal with all the harassing calls and things of that nature and [unclear 0:01:21]. Charlotte: What did you think about the program? CESAR: The program’s been great. [unclear 0:01:30] being able to consolidate like that was one of the biggest things, putting some money back in my pocket at the same time I'm paying off my debts. Charlotte: What was the enrollment experience like for you? CESAR: Simple. Very, very, very easy. They walk you right through it. You basically give them a list of your debts. And I think they just checked my social security number and ran a credit check and added the accounts that we can add. And the ones that we can’t, they still give you some advice on how to settle those. But I thought it was pretty simple. Charlotte: In what ways has the program worked for you? CESAR: Well, like I touched on before, being able to pay my debts while still having some money to breathe, feeling like I'm not in a sinking hole the whole way through it. Charlotte: About where are you in the process? CESAR: I think I'm still very early on. If I'm not mistaken, I'm about a year in. And I believe they've gotten three. At the end of this month, I believe it'll be three accounts that we've closed. And one of them was one of the biggest ones that I had open. So, I'd say I'm well on my way to being debt-free. Charlotte: Can you walk me through the interactions with your negotiator so far? CESAR: The interaction has been far and between. I haven't really had much to do, much to say. They email me when another offer comes through on the account and [unclear 0:03:32] collections. They give me the chance to either accept or decline and go on from there. Charlotte: Do you happen to remember the name of your negotiator by chance? CESAR: I do not, no. Charlotte: How comfortable have you felt so far working with National Debt Relief through this process? CESAR: Very comfortable, very comfortable. And like I said, there haven't been really any hidden fees or things that would kinda strike you as, well, I didn't know this was gonna happen at the beginning. I did have one of the collectors actually file a lawsuit, but I'm not gonna blame National Debt Relief for that. It is what it is. Charlotte: How did National Debt Relief work with you as far as coming up with a payment plan? CESAR: Well, I believe they looked over my financials, my monthly income, my debt, as well as my living expenses. And they determined this is a good amount that we can move forward with and this is the time it'll take to pay off. Charlotte: If you had to rate this experience on a scale of 1 to 5, 5 is you would recommend to friends and 1 is you're pretty dissatisfied, how would you rate them so far? CESAR: I will rate them at a 5. I wish I would have known about this program a long time before. And actually, I had heard of a different program, but I just kept having that nagging, that doubt, that doubt that it would work. If I could go back, I'd be debt-free at this point in time in my life. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? Would that be okay? CESAR: Does it stay anonymous? Charlotte: We only ever use first names. CESAR: Okay. Yeah. If that's the case, I wouldn't mind it at all. Yeah. Like I said, one of the biggest takeaways that I've had back in 2017, 2016, 2017-- I was already flooded with debt. It just kept growing, and I couldn't find a way out of it. I was literally taking money from my credit cards just to pay other credit cards. And it was just a revolving door. Had I gone with my gut and just said, “Screw it. I’m gonna apply for this program,” 2021, I’d have been debt-free by now and I'd be in a completely different [situation 0:07:00] than what I am today. Charlotte: I am going to send you a link of your review just to have it as a record at ctorres.8600@gmail.com, just to have it for your own record. We’re recorded.

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Cesar Torres
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