Credit: Alan Celaver
According to NerdWallet, the average American household owes over $7,000 in credit card debt alone -- if we look exclusively at indebted families, however, that number doubles to about $15,600 in credit card debt.
These statistics, as unappealing as they sound, could indicate an issue with the cost of inflation versus average worker wages. If workers cannot afford the necessities with their paychecks, falling back on an easy line of credit is a common band-aid solution. But relying on credit to get through tough times will only make those tough times harder to get out of. To avoid falling into debt to begin with, 20-something's should make an effort to borrow as little as possible. These tips can help them do so.
Choose the right college
College is still the best way to increase earning potential, but a lot of that depends on a person's ability to pay for college courses. If students choose a college that is too expensive, making sufficient student loan payments upon completion can make the transition into the workforce much more difficult. To avoid this, it's important to choose a college based on a budget.
Start building good credit
To get the lowest interest and the most appealing terms on new loans, having a strong credit score is key. For those just starting out, this can seem like a difficult task, but is actually quite simple. Just take out a single line of credit (preferably one with a good rewards program) and begin making small purchases on it. If borrowers can pay off these balances monthly, they are on their way to a top-notch credit score.
Negotiate a good salary
Credit: Zach TaylorMany young Americans don't the value of negotiation -- especially when it comes to their salary -- and may be earning less than they should simply because they don't ask for it. In order to earn the most in a career, recent graduates should try their hand at negotiating what they feel is a good wage. Though some employers may not bite the bate, more often than not, negotiating a good wage will project confidence and actually help in the plight to find steady, well-paying employment.
Don't use credit for cash
If the money isn't there (and it won't be there by the next paycheck), then it shouldn't be purchased. This is especially true for small purchases like food or outings because they will lose their worth well before they are paid off.
Though California might sound like a fun place to live, the cost of doing so is significantly higher than much of the nation. In an effort to avoid debt, it is probably best to avoid living in an area in which the cost of living exceeds a reasonable budget.
Though excessive debt can be remedied, it's best to avoid it as much as possible.
Whether you're a young adult just heading out into the big world or a concerned parent researching the best opportunities for your child, becoming financially literate is perhaps the biggest step towards becoming a self-sustaining adult. This means understanding the situations that lead to debt and taking care to avoid them now. Because your future shouldn't be spent paying off your past.