6 tips to avoid long-term debt

Millennials born in the 1980s and 1990s entered the workforce during, or shortly following, the largest economic downturn since the Great Depression. Many are straddled with crippling debt, including student loans. Learn the steps millennials can take to avoid further debt and build savings.

Debt strategies for young people.

Six tips for building a savings plan and keeping your head above water:

Know how much debt you have.
Make a list of all your loans and their interest rates. Make minimal payments on all of them, but concentrate on paying off the ones with the highest interest rates or those with variable rates first. If you’re unemployed, you may be eligible to defer your loans for a period. It’s always better to ask the loan company about your options than to make assumptions or to default.

Avoid further debt by paying bills on time.
Pay on time. This is a very important factor in maintaining a good credit score. It is especially crucial if you’re planning to purchase a home, finance a car, or apply for a small-business loan in the future.

Create an emergency fund.
After organizing your loan repayments, try to put aside a small amount every month for emergencies, just in case.

Couple sitting in their kitchen looking at paperwork.

Enroll in your company’s 401(k) plan.
If your company offers a 401(k) savings plan, enroll. Most employers match a percentage of your contribution. It’s a win-win situation.

Start saving early.
Save early and save often. This gives you time to weather economic ups and downs and take advantage of compounded interest.

Protect your loved ones.
If you pass away, your loved ones may be responsible for paying off your debt. You can protect them by purchasing life insurance, which is considerably less expensive for younger buyers. And depending on the type of policy you purchase, you may be able to access your policy’s cash value to help with future expenses, such as buying a house or starting a business.¹