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Young, Dumb and Full of … Debt: 3 Ways for Young Consumers to Save Money

Ahh, to be young, beautiful and broke. Sounds like an episode of 'Girls', right? Unfortunately, 'being broke' isn't all it's cracked up to be, which might explain why young adults are racking up some serious debt and taking their sweet time paying it back...

According to a survey out this month from Rent.com, more than 75% of consumers aged 18 through 24 said they actually spent more than they earned each month. Another 20% - 1 in 5 – said that they spent $100 more than their income each month. This does NOT sound like thrift store shopping, kiddos.

OK, this is a pretty disturbing trend, and it won't be long before the red catches up with some or most of these younger consumers.

So what's a young person with little money but a lot of expenses and social pressures to do? The answer's pretty simple: Cut back on spending. Way back, if you can.

Listen, it's no fun to be that friend with no money, and some of your friends maybe even direct the 'C' word at you from time to time (we mean “Cheap”, of course), but if you're going to get serious about saving – or even just breaking even – then it's time to take a step back and see where you can save.

If you need a hand getting started, here are three expenses to consider...

1.) Dine out, much?

Look, we're not all 'chefs.' Heck, most of us wouldn't even consider ourselves 'cooks'. But that doesn't mean you have to spend every night – or even a couple nights – dining out.

We've all done the faux-math, wherein we decide that we can actually SAVE money by going out. This is a pipe dream, since we casually forget to include tip, drinks, etc. All of a sudden that $6 burrito is $12 and not quite the deal you had originally budgeted. (Unless it was a REALLY good burrito. Then all bets are off.)

Sure, dining out every now and then is a needed break from the daily grind. But if you make it a habit to go out to eat more than a couple of nights a week, you're stretching that already meager budget pretty thing.

Do yourself a favor – hit the grocery store. If you make a list and stick to it, odds are you'll be spending about the same amount for an entire week of meals as you would for two dinners and a lunch date out.

Not to hate on the foodies out there, but come on now – it's just food! It's there and … well, then it's gone. Save your real funds for the things that matter most, or at least last longer than a few minutes. And if your friends want to go out for a lavish dinner and you really aren't trying to break the bank to make it, offer to host a potluck. Those are always more fun, anyway, and the drinks are a lot cheaper. (A LOT cheaper.)

Look, go out and enjoy a nice meal once or twice a month, but don't make dining out a habit.

2.) Stash the credit cards

The easiest way to stay out of credit card debt is to cut back on credit card purchases. What a concept, right?

If you've seen your balance rise sharply over the last few months, then it's time to give the spending a rest. Seriously – for emergencies only.

There's this thing they call the Snowball Effect, and it occurs when someone starts paying the minimum on their credit card bills - most of which is going to interest fees. So each month, despite making payments, their balance is staying the same or getting even higher, and the interest fees become even more burdensome. This leads to a “snowball effect” wherein the balance just gets bigger and bigger, and the only way to stop this credit debt disaster is to put a freeze on spending – pun intended, of course.

Credit cards help us get from one paycheck to the next when we really need them to, and their cash back and rewards programs actually make them the most lucrative form of currency out there. But when we start using credit cards for purchases we're not likely to pay back anytime soon, that's when the Snowball Effect comes into play, and it's what makes credit cards dangerous in the wrong hands.

See if you can make this month a cash only month and put away your cards. Finally...

3.) Break out the bike

Bikes are awesome for a lot of reasons. Um, what other vehicle with wheels do they allow you to drive when you're FIVE?

But bikes are also cool because they're inexpensive, they don't require gas and – bonus – they make you healthier! Sure, you can't bike everywhere. But you CAN bike somewhere. Even just biking to your friends' house a couple of miles down the road is a start, and once you get in the habit you'll be zipping around town like you once did, pre-license.

This past summer, when gas rose to over $4 a gallon, I started biking to work on my little fixie. While it was really tough to get going, by the end of the summer I would wake up excited knowing that one of the first things I would be enjoying was a bike ride. Yeah, the hills were treacherous, and I probably should have invested in a helmet, but overall I was saving a minimum of $15 a week in gas – that's $75 a month!

Bikes are fun to ride and inexpensive to keep up, and on top of that they provide you with some exercise. This is a no-brainer.

Alright, so there are dozens of ways to save money each month to get you out of the red and into the black when it comes to your monthly budget. The above steps could literally save you over $100 a month if you're dedicated to slashing spending, and imagine what a $100 a month might mean one or two years down the road when it comes to your bank account?

OK – enough math. It's time to put these practices into play. Now if you'll excuse me, I'll be the dude biking to VONS, sans credit card.

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Jason Bushey's picture

Jason Bushey is the former Editor and Vice President of Creditnet. Jason is a Burlington, Vermont native who moved to sunny San Diego after earning a Bachelor's Degree in English and Political Science at the University of Vermont ('09). When he's not sharing his take on credit cards, administrating the Creditnet Forum or blogging about all things related to credit, you can probably find him cheering on the Green Bay Packers (He's an owner!) or running up and down the streets of SoCal.

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