Student Loan Debt Makes Home Purchase Almost Impossible For Millennials

The Burden of Student Debt Affects the Real Estate Market

Student loan debt has become a paralyzing financial burden for many young Americans. Today, millenials are now moving past their college years and entering the phase in their lives where they are looking to be homeowners. However, being the generation with the most student debt in America does not make the home buying process very easy. Millenials are least likely to own a home compared to generations before them. In 2014, only about 36% of household heads between the ages of 24 and 32 years old owned a home. That is down from 45% in 2005. One of the big factors to this low-rate of homeownership is the amount of student loan debt they have.

While homeownership may be lowering, the amount of student debt continues to rise. This can be attributed to the increasing costs of higher education. The average college student graduates with about $30,000 in both private and federal loans. The more education costs the more students take out loans to pay for their education. This has created a never-ending cycle of debt that affects other aspects of life such as buying a home. The amount of student loan debt now surpass that of credit card debt with the total student loan debt being $1.56 trillion and credit card debt being $1.03 trillion. Here are some ways that student loan debt can make it difficult for millenials:

  • Debt-to-income ratio

    – The number one issue that comes up when trying to purchase the home is the debt-to-income ratio. That is the amount of money you owe to lenders versus the income your bring in. The average income of college graduates is about $59,000. However, the average monthly payment of a student loan is about $350. This becomes a large chunk of monthly expenses. Banks are often wary of those with large amount of debt, especially debt like student loans which are seen as “unsecured debt”. Meaning that this debt is likely to be paid throughout a lifetime. Often, banks would prefer candidates whose expenditures are not more than 36% of their income. However, that can be difficult if your income is only $50,000. This ratio also can be affected by the cost of housing in your specific area. Those that live in higher cost areas can find it even more difficult to secure a home loan.

  • Credit Score

    – Another aspect that strongly affects homeownership for millenials is their credit score. About 8% of student loan borrowers were denied a mortgage because of their credit score. Those between the ages of 19 and 34 years old on average have a credit score of about 625. This is much lower compared to previous generations such as Generation X who had an average of 650 and Baby Boomers whose average was 709. However, as mentioned previously millennials also have a larger amount of debt compared to these generations. Millennials’ debt-to-income ratio is directly affecting their credit scores. Often, borrowers acquire a large amount of student loan debt and upon graduation found it difficult to find stable income to payoff the debt and defaulted into their loans. This caused their credit score to lower and made it difficult to be approved for a mortgage.

  • Down Payments

    – Getting approved for a mortgage can be a difficult first step to homeownership. However, the burdening reach of student loan debt does not stop there. Saving up for a down payment for a home can be difficult when you have such huge loan debt to pay every month. Often some would-be homeowners choose to take out a short-term loan to get immediate cash to use as a down payment . This might be particularly appealing for those living in states with lower student loan debt and lower costs of living. Millennials can access an online car title loan to get immediate cash that they can use as a down payment for their home. Since it is a short term loan, unlike a student loan, it can be paid off quicker and easier.

    Higher Cost of Living – Another aspect of student loan debt that is affecting millennials’ homeownership is the higher cost of living. While millennials seem to be earning much more than previous generations, the increase of income has not combatted the rapidly increasing costs of living. Millennials not only pay more for education and housing than previous generations but they must spend more on other expenditures as well. The cost of childcare is about 2% more than previous years, which might not seem like a lot but when broken down that is about $150 on average for child care compared to about $85 a week in 1985. Millennials also spend more on health insurance, transportation, and entertainment than previous generations.

Homeownership and student loan debt can be a tumultuous relationship. Student loan debt often paralyzes millennials from acquiring an integral part of the American Dream, owning a home. Millennials do have a challenging future when it comes to purchasing a home. However, with careful budgeting and dedication to paying off debt, the dream of homeownership can be a reality.

Checkout Unique Finance and get a bonus from me.

Financial Security: Baby Boomers, Generation X, and Millennials Face Mixed Fortunes

 

Baby boomers, Gen X, and millennials have very different financial experiences. When compared to baby boomers or Generation Xers, millennials have it rough when it comes to finances. They enter the labor force when full-time jobs are few and far between, making the strive for financial independence, marriage, or retirement even harder.

In addition, they have an overwhelming student loan debt that prevents them from achieving their financial goals. Even worse, those who are already working are barely making enough money to cover their bills. Never mind savings. Data from Smartasset show that the average salary of the millennial today is about 20 percent lower than the average salary that a baby boomer earned at the same age.

These unique set of financial challenges make it difficult for millennials to build up rainy day savings or establish themselves financially. For instance, a study by the National Institute on Retirement Security found that 66.2% of working millennials have no retirement savings because they hold off savings in favor of paying off student debt or buying homes.

In contrast, prior generations, Gen Xers and baby boomers exhibit far more financial confidence, thanks to their higher salaries, employer-sponsored retirement plans, and years of soaring markets, which enabled them to plan their financial future.

A Sea of Financial Traps

Another reason why the financial prospects of millennials are less than those of their parents is that they often make bad investments. The quest to live in the here and now and to enjoy life to the fullest has millennials spending money they don’t have to buy items they don’t need.

For instance, some millennials consider buying a new car as against a used one a status symbol. Same goes for luxury cars, expensive houses, premium cable package, leased cars, etc. It’s either these or they are overspending or living a frivolous lifestyle that makes it harder for them to put money toward their top priorities.

The lack of basic financial education also comes at a cost, as does lack of financial goals, their spending without a plan, falling for scams, taking on more student loan than is necessary, rushing into investing or not investing at all. All of these issues delay the ability millennials to secure their financial future. Even worse, it makes them more susceptible to economic vulnerability.

Staying on Track

Millennials will do well to consider measures that will help them climb out of debt quickly, especially if they are to make progress towards their financial goals of building a stable future. Good thing is, they have time in their favor, and so can make the most of that time to improve their finances.

To stay on track, one should first of all design strategies that will prevent them from falling into the bad habit of spending too much or living beyond their means. If you’re the kind of millennial who doesn’t have much or is in debt, your goal should be to earn more and spend less.

This means cutting costs, saving a certain amount every paycheck, establishing a side hustle, having a realistic budget, and buying only the things you need. Also, you should consider hiring a finance expert to help you set financial goals and advise you on how best to invest your money.

About investing, you might want to avoid investing in depreciating assets like cars, which tend to lose 75 percent of their original value within the first 3-4 years. Don’t put a brand new car in your garage if you think that will strain your budget. Instead, consider getting a used car and saving the balance or investing it in a profitable venture.

 

Checkout Unique Finance and get a bonus from me.

How Fintech Is Aiming Millennials Using A I Machine Learning

 

Millennials >The Electronic Natives

During the last a few years, millennials have already been upending the customer market as businesses struggle to get the easiest method to attract the world’s first group of electronic natives, a wily lot whom thrive on invention, automation and also all of the tech gadgets that are latest.

As more of these young-adults go into the employees and start invest in their futures, businesses are speedily understand they may have to transform their approach to attraction to this demographics’ distinctive set of needs and also objectives, which take course to totally disrupt the status quo. In a nutshell, it can’t just be business as usual with the generation that is Smartphone.

Millennials Branded

As millennials have already been burdened with a few unattractive labels in modern times, as well as selfish, entitled and award kids, this tech confidence bunch has also been sleeted for being more progressive and also available to new ideas than earlier generations.

Millennials value transparency in addition to convenience. They basically demand to possess a modified products or even services at their fingertips anywhere and also when they need it, according to research that centers on how banks could recreate themselves in the age of millennial.

These types of defining attributes are just what companies require to bear in mind if they wish to maintain their competitive edge in this climate of lightning-fast technological change. It has not ever been truth than for fintech, an industry I have watched develop into becoming more hands on, easy to use and also amusing, thanks towards the computerization that is advanced AI technologies which has flooded the IT-sphere.

Fintech Business and Millennials

Many fintech businesses have seized upon a distinct segment possibility. They realize that old-fashioned investment and banking avenues are becoming quickly phased down. In reality, 58% of Americans believe that financial institutions will no longer exist in their form that is present within next couple of decades. In reality, a lot of big banking institutions have already implemented mobile applications so that you could match shifting customer styles, which are rapidly moving towards the digitization that is complete of sector. Fintech is using this process a step further by essentially replacing (human) financial advisors with robo-advisors that use big data, machine learning and also AI to basically cherry pick the best investment opportunities for this new generation of investors.

As the Chief Executive Officer of my own mobile app and web development store, I have caused a serious few fintech startups over the very last decade that understand the importance of targeting the requirements of this customer base that is valuable. I’ve been keeping a keen eye on this sector, pleased to see that the market is filling with investment platforms geared toward my generation.

AI, machine customer and learning service anytime, anywhere is where the future is headed. Businesses hoping towards capitalize on consumers changing mindsets, with millennials leading the cost, will need to fine-tune their jump or approach off the bandwagon. Those that have not began automating their services to appease the more youthful generation’s demands for transparency, ease and cool, interactive user interfaces have actually about another couple of years to get up or risk extinction.

 

Checkout Unique Finance and get a bonus from me.

What Millennials Can Learn from Boomers about Retirement Planning

Boomers retiring by the tens of millions each year.

How many times have you heard it said, “If I only knew then what I know now…” about everything from financial planning to raising kids? It’s likely that you’ve heard it at least several times a week and now even millennials are becoming tuned in to the problems besetting boomers as they age and retire.

The world is a much different place than it was, even a generation ago, and so it would be wise for the younger generation to look at some of the trials and tribulations of boomers as they begin retiring by the tens of millions each year.

Insufficient Planning Delays Retirement

One of the major problems that many boomers face is that they didn’t plan sufficiently for their future. They assumed their Social Security check along with that 401k or other retirement investment would be sufficient to provide for them in their senior years.

Back a few generations, there simply weren’t the resources to plan well for retirement and today’s retirees are learning that they should have planned better. Today there are financial products that are aimed at growing wealth for your senior years and these are the products millennials should be investigating when seeking to invest in their own futures.

Unexpected Rises in the Cost of Living

What it all boils down to is that no one really expected the cost of living to skyrocket as it has. Some attribute it to the cost of production, keeping prices rising while others attribute it to higher taxes and the increasing cost of fuel and food. For whatever reason, the cost of living has far surpassed the rise in wages and this is something no one could have foreseen but perhaps should have planned for anyway.

Avoid Borrowing against Retirement Savings

Another one of the big mistakes boomers made, almost across the board, is to have borrowed heavily along the way against their retirement savings. This is a big problem that millennials should learn from. If at all possible, don’t delete those savings! Find a way to finance what you need to pay but leave that money where it is so that it can continue growing.

You know what they say about good intentions, so don’t be caught in the ‘intend to replace it’ trap. Chances are you will never replace that money once it has been spent. Just as you think you’ve got your head above water, another crisis surfaces and so it goes. Put that money away and forget it’s there. That, perhaps, is the biggest lesson you can learn from boomers.

The Logic of Downsizing Early

When it comes to downsizing once the nest is empty, altogether too many people fail to liquidate assets early enough. That big six bedroom home you live in and raised your children in may be sentimental but now that it’s paid off, sell it, buy a smaller property and invest the profit made from the sale.

Too many middle age people hang on to the family homestead thinking to save it for the kids, or to have a place for them if they need to come home. It’s time for grown kids to be grown kids. Think about your future by downsizing as soon as the nest is empty. Can you imagine how that amount of money can grow over the course of a couple decades until you are ready to retire?

Diversify Your Investments

And one final thing which millennials should learn from boomers is that they failed to diversify their investment products early enough. Altogether too many people lost their savings with the economic crisis of a decade ago and now those boomers simply don’t have enough time to recover their losses.

By diversifying your retirement investments, you can have that added bit of protection if one market should fail. The last time it was real estate that led to a global crisis. What will it be next time around? No one knows so diversify, unless of course you are a fortune teller and can predict the future.

The intelligent millennial will take a good look around them and fully understand the predicament most boomers are in now as they face retirement. It is always good counsel to be told to learn from your elders, in both their triumphs and failures, but never more so when planning for retirement. Don’t fall into the same trap your parents and grandparents fell in. You can learn a lot from boomers if you care to open your eyes. Plan now and live comfortably later – a great investment strategy altogether.

 

 

For Further information

Checkout Unique Finance and get a bonus from me.

How Millennials Are Managing their Money Differently

Millennials, or digital natives, as they are often called, have dominated news headlines in recent times thanks in large part to their unique makeup and thorough knowledge of technology.

They represent the largest generation in history and have substantial purchasing power. Such is their collective strength that millennials have already become a significant influence in shaping future trends.

Even though they aren’t afraid to put their purchasing power to use when the occasion calls, millennials continue to be the driving force behind change in finance matters. Below, we discuss how they manage their money differently from their elders.

  1. They use investing apps

Millennials are never far away from their smartphones. They use apps to track all the transactions and expenses they make on an everyday basis. Apps like Acorns encourage millennials to save by rounding up their purchases to the nearest whole-dollar and invest the difference in a diversified exchange-traded fund portfolio.

Another program, the Moneybox app, links to a user’s bank account, prompting them to round up digital transactions to the nearest pound, investing the funds into a stocks and shares Isa. M1 Finance, Robinhood, etc. are other apps millennials resort to for investment. Millennials desire convenience and control, investing apps give them that.

  1. They shop smarter

Millennials are strategic about how they save money and how they spend it. Most of them won’t make purchases unless they have read reviews from friends, peers, or strangers online. Smart and knowledgeable, they look over product specifications in detail to be sure an item is worth splurging on. They are careful about spending more than they have the budget for.

Millennials won’t stick around if they can get the same item for less elsewhere. Loyalty means nothing to them unless you recognize and reward them for it. The point is, millennials want to save every cent they can.

  1. They hustle on the side

After growing up during the great recession, millennials recognize the importance of an extra income stream. Creating multiple income streams allows them to diversify the various cash flow sources and decreases their risk of having their primary source of income suddenly dry up.

Freelancing platforms like Fiverr and Upwork offer them opportunities to put their skills to work and pick up some extra money on the side. A CNBC report states that around 51 percent of millennials in the US are running side hustles, with the most popular side hustles being home repair/landscaping and babysitting. A good number of millennials also buy and sell products online via e-commerce platforms like eBay, the report said.

  1. They prefer jobs that offer flexibility and personal time

In this electronic technology age, millennials do not want to spend all day sitting at the office desk for the sake of appearances. To win the hearts and minds of millennials, therefore, organizations will need to provide a flexible work schedule. Also, millennials tend to favor jobs that give them some personal time to work on personal projects.

The world of finance is continuously changing and evolving, with millennials at the heart of it.

Checkout Unique Finance and get a bonus from me.

Are Millennials and Cryptocurrency the Future?

We live in an age of disruption fueled by millennials, the blockchain, and cryptocurrency. The relationship between millennials and technology is easy to understand. They are the first generation to grow up with computers. As a result, they have become accustomed to working in virtual teams and are used to today’s fast-paced life.

From the internet to emails and everything in-between, there’s not a thing that they do not understand about technological innovations. They have often led older generations in the adoption and use of new technology. They are reshaping business models and still lead the way in digital future. In many ways, it appears that they have all it takes to mold the future.

Cryptocurrency is another issue that industry leaders continue to follow with a great deal of interest in the immediate future. Just like the millennials, digital currencies have the potential to change the world by ushering in a new financial order. There are lots of reasons to be optimistic about the future of cryptocurrencies and how they may change our world, especially traditional finance, as we know it.

Why Are Millennials and Cryptocurrency the Future?

Millennials are a different breed. They view the world differently and possess the right tools to bring about change: knowledge and technology. On top of that, they are the biggest generation ever born and constitute the largest generation in the US labor force. Besides, older millennials are entering their peak spending years.

And, because we live in a market that panders to those with means and resources, millennials are expected to cause significant shifts in the marketplace, as businesses look to develop products and practices that cater to their preferences, trends, and buying habits.

What’s more, millennials know technology, applications, social media, and market trends. Growing in an information age also enables them to understand the issues and needs around them and create solutions to such problems. For so long as their size and spending power matter, millennials will continue to rule the market and dictate trends.

The impacts of cryptocurrencies on future transactions is also clear as day, as they appear to be nudging us in a new direction where people might not require traditional financial organizations such as banks and payment companies. Every day, millions of people around the world use the internet to conduct financial transactions. However, privacy and security concerns deter some consumers from making purchases online.

Cryptocurrency is expected to change all of that by enabling shoppers to conduct secure, peer-to-peer cryptocurrency transactions. The secure nature of cryptocurrency transactions will help inspire trust and make people more willing to transact online. When this happens, the mass public will become more willing to adopt cryptocurrency. Such increased adoption of digital currencies could lead to a fall in demand for fiat currency.

This, coupled with the emergence of Generation Y, which seeks convenience and is adept at technology, could see peer-to-peer electronic payment replace traditional payment systems as the standard. Further, the potential increase in digitization makes it even harder to imagine a future without digital currencies.

There Are Still Hurdles to Clear for Cryptocurrency

Despite holding so much promise, cryptos still have a long way to go before they are more widely accepted as a standard means of payment. This is because prices of cryptocurrencies change so much that it becomes hard for the mass public to use them as a trusted medium of exchange.

As with any currency, cryptos need to be stable before they are widely adopted for everyday transactions. Nevertheless, it is hoped that with advances in technology and behavioral changes, digital currencies will become stable enough to be used as means of payment.

 

 

Checkout Unique Finance and get a bonus from me.

How Fintech Is Aiming Millennials Using AI Machine Learning

Millennials >The Electronic Natives

During the last a few years, millennials have already been upending the customer market as businesses struggle to get the easiest method to attract the world’s first group of electronic natives, a wily lot whom thrive on invention, automation and also all of the tech gadgets that are latest.

As more of these young-adults go into the employees and start invest in their futures, businesses are speedily understand they may have to transform their approach to attraction to this demographics’ distinctive set of needs and also objectives, which take course to totally disrupt the status quo. In a nutshell, it can’t just be business as usual with the generation that is Smartphone.

Millennials Branded

As millennials have already been burdened with a few unattractive labels in modern times, as well as selfish, entitled and award kids, this tech confidence bunch has also been sleeted for being more progressive and also available to new ideas than earlier generations.

Millennials value transparency in addition to convenience. They basically demand to possess a modified products or even services at their fingertips anywhere and also when they need it, according to research that centers on how banks could recreate themselves in the age of millennial.

These types of defining attributes are just what companies require to bear in mind if they wish to maintain their competitive edge in this climate of lightning-fast technological change. It has not ever been truth than for fintech, an industry I have watched develop into becoming more hands on, easy to use and also amusing, thanks towards the computerization that is advanced AI technologies which has flooded the IT-sphere.

Fintech Business and Millennials

Many fintech businesses have seized upon a distinct segment possibility. They realize that old-fashioned investment and banking avenues are becoming quickly phased down. In reality, 58% of Americans believe that financial institutions will no longer exist in their form that is present within next couple of decades. In reality, a lot of big banking institutions have already implemented mobile applications so that you could match shifting customer styles, which are rapidly moving towards the digitization that is complete of sector. Fintech is using this process a step further by essentially replacing (human) financial advisors with robo-advisors that use big data, machine learning and also AI to basically cherry pick the best investment opportunities for this new generation of investors.

As the Chief Executive Officer of my own mobile app and web development store, I have caused a serious few fintech startups over the very last decade that understand the importance of targeting the requirements of this customer base that is valuable. I’ve been keeping a keen eye on this sector, pleased to see that the market is filling with investment platforms geared toward my generation.

AI, machine customer and learning service anytime, anywhere is where the future is headed. Businesses hoping towards capitalize on consumers changing mindsets, with millennials leading the cost, will need to fine-tune their jump or approach off the bandwagon. Those that have not began automating their services to appease the more youthful generation’s demands for transparency, ease and cool, interactive user interfaces have actually about another couple of years to get up or risk extinction.

 

Checkout Unique Finance and get a bonus from me.