- Four basic components of any type of loan are time, interest rate, loan amount and payment.
- Young adults tend to have four types of loans: student, auto, credit card and mortgage.
- A good credit score will give you much better terms on any type of loan—and save you thousands of dollars over your lifetime.
- Don’t tie up your cash when you’re young, but you have to be smart about your loan terms.
- Making slightly larger, or more frequent, payments than you’re required to can add up to HUGE savings down the road.
- A used car is often better than new when you’re young—especially when the savings is applied to higher-rate student loans and credit cards.
- Even if you weren’t a math major, you need basic computational skills and an understanding of compound interest, inflation, amortization and taxes to be a financially responsible adult.
- As discussed in a previous post, the Rule of 72 is a powerful shorthand way of calculating how many years it will take an investment (or debt) to double.
- Don’t forget to factor in the drag of taxes and inflation on every important money decision you make.
- With each succeeding generation, the educational and career expectations increase. This delays the start of marriage, family and home ownership.
- Nearly half of 20- to 29-year-olds have debt today, compared to just 17 percent of 20-somethings who had debt in the 1980s.
- Long-term coddling by parents, colleges and society isn’t helping young adults move faster to financial independence.
- Achieving financial independence isn’t only about money and careers; it’s a shift in one’s mind-set.