In 2009, only 20% of young adults ages 18-24 were unemployed or underemployed. Today, that number is hovering just above 50%. Combine this with 5 years of school to earn a 4 year degree at an average of $40,000 of debt per student, and you have a problem.
Young adults are graduating later, starting their careers later, getting married later, having kids later, and saving later. This has put our youth's maturity at an all time low and their debt at an all time high.
One of the greatest decisions my wife and I ever made was to always remain debt free. We have worked very hard to achieve such a title at our age. We've also agreed to not even carry mortgage debt. Yes. That means if we buy a house, we pay cash for it.
While this level of financial freedom may sound crazy, it's really not. Even if you make $40,000 per year, you can have a similar life 5 years from now by following a few strict rules. I have provided them below:
1. Spend Less Than You Make. Period. Put even more simply. Act your wage. If you have to buy it on credit, you probably don't need it. Dave Ramsay famously said:
“We buy things we don't need with money we don't have to impress people we don't like.”
2. Don't Go To College Unless You Have To: Times are rapidly changing. A degree no longer equals a job, but debt. I'm not saying college is bad, but the system its built on is. As of 2014, 44% of college graduates are at jobs that don't even require a degree! I have written a more extensive post on this topic here.
3. Never Buy a New Car: Buying a new car is like driving down the road throwing hundred dollar bills out the window. With new cars losing 70% of their value in only 4 years, it just doesn't make sense. Consequently, be the person who buys the idiot's new car four years later for 70% cheaper. That's why I drive a 2007 Toyota Camry Hybrid, and it feels good 🙂
4. Save 10% of Your Income No Matter What: My wife and I have saved 10% or more of our income for over 5 years now. Some years it was only $300 per month while others it was $3,000. By saving we've had the freedom to travel, to give to others in need, and to live a life of pleasure. It's never to late to save, start today.
I found this infographic (below) that had some strong practical advice for getting out of debt and into a pressure free life. I recommend you take a read.
Are you in debt? Are you practicing any of these strategies now? How are they working? Let me know in the comments below.