Moving out from home and living on your own is a time-honored tradition that young adults love to partake in. It’s something that has perhaps become less common in the millennial generation, but it’s still a goal that many young people have. There is a sense of freedom that comes with moving out from under your parents’ roof. There should also be a sense of foreboding, as you’ll have to pay for many expenses that you might not have had to deal with previously.
Dealing With Unexpected Expenses
Everyone who lives on their own for any length of time at all will likely see a surprise expense pop up at one time or another. These are the expenses that can cause major problems for those who are living on a tight budget. Unfortunately, most people who move out to live independently do not have a nest egg built up to deal with these expenses that can range from flat tires to a broken leg. Therefore, it’s likely that a quick personal loan or a credit card charge will be required, unless family is able and willing to lend a financial hand.
Figuring out how to pay these expenses off can be a challenge on a limited and tight budget. The first step is to see how much you actually owe. This requires setting up a budget with recurring expenses like rent, utilities, and insurance as well as any debts that are owed. This would include the surprise expenses that led to the debt.
Some money in the budget should go toward paying off the debt that’s been incurred. Always pay on time, even if it’s the minimum payment. Otherwise, the creditor could report your debt, which would seriously damage your credit score and make you pay more for debt in the future.
Setting Up a Repayment Plan
After figuring out how much is owed, it’s a good idea to formulate a plan on how quickly this debt can get paid off. It doesn’t matter if the debt is a loan from parents or a charge on a credit card. Getting an unexpected expense paid off quickly might require making more money, cutting back on discretionary expenses, or a combination of the two. Regardless, it’s a worthy goal. If it takes getting a second job for a few months, getting out of debt is worth it. Debt is one of the leading causes of stress and depression in the US, so keeping away from it as much as possible is a step toward better financial and mental health.
Save Up to Avoid Future Debt
After paying off the surprise expense, it’s a good idea to set up an emergency fund. This requires putting a bit of money aside from each check. As the weeks and months go by, you’ll be able to see this number build as long as you can keep your budget in check. Make sure to actually have a line in the budget for savings. In other words, pay yourself first so that you can avoid having to go into debt. Paying cash will usually save money in the long run, as you’re able to avoid interest charges that cause items to cost more than the sticker price.
Unexpected expenses will definitely pop up at times. It’s a part of life. However, paying the debt off as soon as possible and then saving up an emergency fund can alleviate much of the stress that can come from life’s little surprises. Just be sure to prepare as much as possible.