If I had to write a letter to myself or any millennial (Persons age 24-38) for that matter, it would go something like this
Your social life is the reason you have debt. Until you figure out how to say “No” to every social event, party, BBQ, bar crawl, brewery tour, wedding, bachelor/bachelorette party, vacation, and daily fast food delivery, you will probably remain in debt. And your future wants you to know this!
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Statistically speaking, if you’re a millennial, there is a very high likelihood you have some form of debt lingering around, considering the 24-38 age group accounts for a total of $2 trillion worth of debt.
While there are many forms of millennial debt:
- Student loans
- Auto debt
- Consumer (Credit card debt)
- Other personal debt
The number one cause of debt for millennials might actually be attributed to not school, but something else…
Our Social Life.
Millennial Debt Problems
According to a recent CNBC Make It article on millennial debt, student loans are actually not the #1 source of debt for millennials – it is actually their constant swiping, AKA their credit card debt.
And where do most millennials spend their money and rack up their consumer debt?
You guessed it, their lifestyle.
One issue that a lot of millennials have is that they have not wanted to sacrifice their lifestyle, even though they have student loans or lower incomes,”Chantel Bonneau on CNBC Make It
Or put another way… your social life is most likely why you’re still in debt!
Now don’t get it twisted, everyone loves (and is entitled to) the occasional Chipotle burrito bowl or the pub crawl for a friend's birthday, but there is something to be said when millennials as a whole have an 80% chance of being in debt (Excluding their mortgage).
Most of their debt can be attributed to lifestyle choices. Hence the title of this blog post,
Your Social Life is Why You’re in Still In Debt.
Contrary to the common belief that most debts for millennials come from student loans (Yes, they have those too), the highest debt category for millennials is from consumer debt (The Gen-Z issue that is continuing to grow happens to be student loans, an issue you read more about here).
Lifestyle choices combined with lower income levels are making it harder for millennials to pay down their other existing debts, buy homes, start families and save for retirement. In fact, the thought of saving for retirement for most millennials with debt is an afterthought.
But is there a solution? Yes!
Social Life or Pay Off Debt?
For many millennials, when it comes to debt, there seem to be only two paths most can choose from:
- Pay off my debt and live below means, thus adjusting lifestyle. Or two,
- Keep social life and lifestyle the same, but carry debt later and late into adulthood.
While this might not seem fair, and there certainly is a way to do both (I will explain later) keep in mind that every generation has financial problems.
Case in point, the boomers, who have gotten into such a bad habit of taking out reverse mortgages that many are retiring with a mortgage instead of a paid-off home. Their homes have increased in value, but so has the amount they owe!
But here is what it is important to recognize the huge issue with debt:
Every generation has it’s debt problems and while the causes might differ or vary slightly, one thing always remains the same:
Lifestyle inflation is a huge contributor as to why most people have debt.
The boomers take out reverse mortgages to send a kid to college, remodel the kitchen, add a deck to their home or go on a family trip.
Millennials – who would rather go into debt instead of missing out on a fun event – have gained a bad reputation of placing their social life in front of their long-term financial well being. Whether you believe it or not, it’s true!
Marketing companies leverage FOMO and YOLO to increase spending. “Experience Weekend Activities,” like breweries, wineries, adventures, and paint nights in addition to the standard social life spending has increased exponentially over the last five years.
But just because FOMO and YOLO promote a spend first mentality, it doesn’t mean if you're a millennial with debt that you can’t have a social life and become debt free…
It just means you might have to get some of your priorities in line and learn a magic two-letter word.
Learn to say “No!”
Perhaps the most powerful word in the English dictionary is no!
Children hear the word some astronomical amount of times before the age of five, yet for some reason, millennials struggle to use the word in between 25 and 35.
But the magic behind the simple word no can transform bank accounts, help young couples pay off debt, and even buy homes.
Learning to say no isn't always simple, but with practice, it can be!
However, that starts with first figuring out a few things, like aligning your priorities to be debt free and putting your social life second!
How to curb your social life spending!
Subject: How to End Millennial Debt 101
Below is a list of some simple steps and ideas to help you stop always sacrificing your long term financial longevity if you're a millennial (Or anyone for that matter) in debt!
1. Figure out your value system.
Learning to say no is easy when you know your values.
Our values form our thoughts, our thoughts form our behavior.
When you have values for yourself, your relationships, your career, your family, how you view society – it is always easy to self assess when you should say no or yes to something.
For example, let's say your values start with your relationship and/or family. You know that as a family or couple, you want to be able to travel three times per year because you value family time.
You're presented with this scenario:
All of your friends are going on a trip to Las Vegas, with expenses approaching at least $1,500-$2,500. What do you do?
If you self-assess compared to your values and you find that the trip impedes your families' ability to take their vacation – you don't go. You simply say no, we are saving for another trip.
2. Know how much debt you have.
Values will help you fight the really difficult situations that are going to pop up. Just keep in mind you should be saying no more than yes in most social scenarios.
However, knowing how much debt you have will certainly make saying no and keeping your finances on the forefront.
Creating awareness around any area of you're looking to improve – be it debt, health, relationships, you name it – will bring your focus to that area.
Awareness is key to making any sort of changes and it is no different when it comes to your debt. Simply write down how much debt you have, then take the necessary steps to start overcoming your debt!
Related: How to Overcome Debt in 5 Steps
3. Recognize who pays your bills.
There is a 25% chance that if you're a millennial a parent is still financially supporting you in some way (Set a goal to stop that in the next 12 months!).
Hopefully, if you're part of the 75% who pay their own bills, you recognize that… YOU pay your bills.
- Not your friends.
- Not your co-workers.
- Not your parents…You!
So always keep that in mind when you're confronted with a difficult social situation where maybe you find yourself having trouble saying no (If you haven't caught on, saying no is the answer to paying off your debt, these steps are just teaching you how to be get better at it!).
Always realize, opinion's (And friends) don't pay the bills! Keep that in mind as you set out to pay off your debt!
4. Stop being immature.
Perhaps I might be stepping on some toes, but maturity is when we stop doing childish things.
Now you might be thinking, “Did he just call me immature?”
Perhaps, that really depends on quite a few things. First, the difference between maturity and immaturity is recognizing/taking personal responsibility.
Your social life shouldn't take priority over your finances! That is immature and irresponsible behavior.
This doesn't mean you can't have a social life, it just simply means you need to place it behind your financial security! Millennials get a bad wrap, as milllennials are sometimes thought of as:
- Entitled and privileged
- Having millennial debt issues from our social lives.
- Millennial entitlement.
- Millennials walking through life without regard for others – HUGE ISSUE.
- Millennials walking down the sidewalk with our cell phone not looking – BIGGEST ISSUE EVER!
All kidding aside, the point of all the maturity vs. immaturity talk is that financial security is a mature step to take in life.
Setting goals like being debt free by 30 (Or 5 years from your current age), investing 15-20% of your income, and making sure you put your future first are mature millennial activities… not binge drinking every weekend!
5. Find a social life compromise.
“Hey, let's all go to Miami for the bachelor/bachelorette party!”
That sounds amazing and I have done the whole Miami bachelor party trip, so I can tell you – it was expensively fun! And while it was tons of fun, at the end of the day, I was beginning to start a habit of going down expensive bachelor party road…Miami, Vega, New Orleans, Charleston and so on.
While bachelor and bachelorette parties might be one example, there are many social situations where perhaps you can tweak the plans to save money.
- Trip to Vegas – Camping in the Mountains
- Bar Crawl – Backyard BBQ
- Vacation – Wait a few years and save up miles
- Wedding – Make it smaller
Having a social life is vital to your mental health. But so is being debt and financially stress-free! So keep your social life, just alter the plans some!
(If your friends get mad, remember #3 – they don't pay your bills)
My Final Take on Millennial Debt:
At the end of the day, Millennials as a whole (Like every generation) need to get better at things.
For us, it's our debt caused by lifestyle, our entitlement, and sometimes our arrogance.
The simple fix actually might be taking our debt seriously. It solves the entitlement issue, cuts back on the extravagant (Filtered) lifestyle, and humbles us – all in one step.
Maybe I speak for myself, but this millennial will not be in debt for much longer. However, five years ago that wasn't the case. Hopefully, these steps can help you start down the road of limiting your social life to become debt free!
Question: What can millennials do better about their social life and debt?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎