Millennials Share How They are Trying to Survive the Recession
For millennials, their initial working years have been full of relative economic balance, rising stock market, low interest rates, and stable employment. Early warning signals are that the US will experience a slowdown in economic activity within the next 14 months.
A slowdown in economic growth is possible, but two-quarters with negative GDP growth, defines a recession, expected in the second half of 2020. Economic booms and busts are as cyclical as change of seasons. The oldest millennials may experience five or more recessions during their remaining lifetimes and some steps on surviving an economic recession are outlined below:
Slash credit card debt:
The average millennial owes $36,000 in personal debt. Credit cards and mortgages are major debt sources with discretionary spending, the culprit to ballooning debts. A strategy for debt-reduction is the ever popular ‘debt snowball’ method wherein the payments increase as the credit card balance reduces.
Paying off student loans:
Student debt is a financial worry for millennials. Additional payments and refinancing are an excellent strategy for outstanding balances as economic clouds gather. If caught in an economic storm, apply for income-based repayment or a less-favored option, forbearance, to keep you from defaulting and being hunted down by collection agencies.
Contribute to retirement plans:
Consistent contributions to retirement plans, despite economic conditions, can enhance your personal equity and achieve financial independence. Time allows steady investing in stock markets, while dollar averaging gives a well-rounded approach for savings investments at regular intervals.
Millennials are complacent about job security. But if a recession occurs, companies cut expenses to survive and millennials must buildup/ update resumes. The demand for skilled and qualified employees never dies down. Keeping your resume sharp and colleagues close, may reduce time to find a new position should you be offloaded.
Create a spending plan:
Diets suck, as do budgets. Any budget is a ‘financial’ diet. Instead prepare a spending plan, which tracks income and expenses. A spending plan lists all incomes with detailed expenditure. Review expenses to be eliminated to bolster savings or reduce debt. Review your spending by taking the 7-day Cash Challenge. Estimate discretionary spending for that week. Those accepting the challenge, generally reduce their cash before the weekend begins. Most millennials have evaded any physical spending. Take the challenge and choose paper over plastic to understand your spending habits.
Taking advantage of downturns:
For many, recessions lead to financial distress. But millennials with reduced debts and boosted savings, recession signals opportunities for major savings with the caveat that you remain fully employed during and after the recession. A recession is ideal for purchasing a home. With job security, recessions lower interest rates, reducing borrowing costs for home mortgages. With low borrowing costs, homeowners find themselves over-leveraged and are forced to sell homes below market prices, providing opportunities for the financially secure. Fortune favors the financially prepared.
Economic booms and busts are as natural as the change in seasons. The oldest millennials may even have to experience five plus recessions in their lifetimes. Laying down basic principles for surviving a recession, prepares you to thrive during most challenging economic conditions.
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