CHICAGO (WLS) — Young adults, especially those in their 20s, may be more likely to take on deep debt as inflation grips the country. This age group also faces the challenges of repaying college loans and lower-paying first jobs.
But even with the added pressure, you can still pay off your debts and have a little fun.
Teacher Mayra Jaramillo and her husband are in their twenties and are starting a family, but the couple from Mooseheart, Illinois have found themselves in debt and struggling financially.
“My husband and I needed to pay for stuff and credit was the easiest way. And we let it build and build regardless of APR or any of that,” Jaramillo said. . “Interest rates are what really hurt us because we were making payments but the bills weren’t coming down.”
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The couple joined a nonprofit credit counseling service called Money Management International, which helped them create a personal spending plan and consolidate their debts into one payment. They now owe about $5,000 and have been able to boost their credit score using only a low-limit card, which they only use for gas and groceries. She also pays it back every month to avoid interest.
According to Nerd Wallet, 43% of credit card holders don’t even know their interest rate. The average rate jumped to 17.3%, making it harder to pay off credit card bills. University loan repayments for people in their twenties add to this burden.
“The 20s are always a hectic time. You know, we’re getting out of college, we’re getting our first job,” said Thomas Nitzsche, financial educator at Money Management International. “And with interest rates that have increased up to seven times this year. The average interest rate on credit cards is expected to be around 20%, which is an all-time high according to Bankrate. So it’s going to be really difficult for people who find themselves in this situation to be able to repay this debt.”
Jaramillo said if she wants to treat herself to a night out, it’s cash only, and the fun doesn’t go to the family’s credit card alone.
“I would say just stick to a budget and there’s nothing wrong with missing out on some things,” she said.
If you have credit card debt, you should pay off the card with the highest interest rate first and make the minimum payment on the other cards. When the card with the highest interest rate is paid off, start going after the others.
If you are looking for a credit consolidation service to help you manage your debts, always look for it first and try to stick with a non-profit service.
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