It’s hard to feel financially free when carrying a heavy backpack of student loan debt. Wells Fargo’s Millennial Retirement Survey found that 42% of this generation claimed that debt was their biggest financial concern. But what’s interesting is to see the difference in attitude around financial setbacks and goals between the determined Boomers and the optimistic Millennials. Both generations are weighed down by debts (student loans or otherwise), but only 22% of Boomers feel overwhelmed by it compared to 42% of Millennials.
The difference in attitude may not have so much to do with the amount of debt, but rather past experiences and the current life stage they’re in at the moment. Boomers have been actively playing in the job world for a lot longer; most likely they’ve figured out a budget that works for them, have a retirement plan in place and have acquired assets that give them a sense of financial security. They view loans as a nagging question of when they will finally be free from their debts.
However, young Millennials are standing in one of the most financially unstable times of their lives. Not long ago they crossed the graduation stage starry-eyed, bursting with excitement for their futures, only to walk face first into the reality of an economic downturn and a mounting pile of student loan debt. Unlike the built in support they could rely on on campus, the real world doesn’t offer a set foundation to build their dreams on. Constructing their future must start with breaking ground on where they stand now, which means digging up their student loans and making a student loan repayment plan that works for them. Their debt stress doesn’t come from the question of when they will pay them off, but rather how they will pay off their student loans.
Here are a few steps Millennials can take today to break ground on their mental money mania.
- Get the details. Call your lender and speak to a representative about how much you owe and what the interest rate is per year. Although you may be scared to hear the jaw-dropping number, living in the dark never gets you anywhere. And heck, who knows the number could actually be lower than you think. But either way you can’t make progress unless you turn on the light and see what you’re standing in.
- Do the math. Sit down with a calculator and figure out how much you can comfortably repay on your loan each month after expenses have been taken care of. I suggest that while you have the representative on the phone, ask them to suggest a loan repayment plan that’s suited to your situation.
- Stop pointing your finger. Stop playing victim and blaming the economy, the school’s over-priced tuition or Mom and Dad for not footing your tuition bills. It’s time to start writing the story where you’re the hero and start paying off your student loan debt.