3 Solutions to the Financial Challenges Millennials Face

By Rebecca Williams (Finance Writer)
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Millennials, or those born between 1982 and 1994, are the scourge of the modern office and the focus of many blistering news articles about a lack of productivity and discipline. I’m not buying into the hype. This intrepid generation has already survived the worst economic crisis since the Great Depression. And, I might add, they’re very tech-savvy.
 
Distracted? Maybe. Lazy? Definitely not. Millennials are experts at getting things done with minimum effort, because that’s the expectation silicon valley has engrained into them. As the first generation to go to college with a smartphone that has more technical horsepower than NASA’s entire 1969 operation to get us to the moon, it’s hard not to lean on the efficiency (and distractions) that technology brings to the table.

As millennials continue the transition from college and into the workforce, financial responsibility becomes a determining factor in their long-term prosperity and fulfillment. The millennial generation is unique, and so are the financial challenges they face. The good news is there are common-sense solutions to virtually every financial challenge. So, let’s dig in and find ways to beat everyone’s expectations!

1. The Burden of Crushing Student Loan Debt

More than sixty-percent of college students take advantage of the Federally subsidized student loan program. A mind is a terrible thing to waste, and student loans certainly empower high school students from every background to continue their education. But, millennials are graduating with extremely high levels of student loan debt. A financial future is definitely a terrible thing to waste.
 
Making student loan payments, while struggling to clear the first hurdles to a fulfilling, financially rewarding career is a challenge; especially when the student loan payments can be as much or more than the cost of rent each month.
Solutions to Navigating Student Loan DebtIn most cases, student loan debt cannot be wiped away by bankruptcy. Loan consolidation can be tricky, and you definitely want to avoid converting an unsecured debt into a secured debt. So, student loan debt can be solved three ways:

• Choose a job that provides federal student loan forgiveness as a benefit. Many government jobs in underserved communities offer this benefit.
• Slash personal expenses and aggressively pay back the student loan in full.
• Take advantage of hardship deferrals and repayment plans tied to income. Note that while in deferment, the student loan balance will grow due to compound interest.

2. The Tax Implications of the Freelance and Sharing Economy

In the aftermath of the Great Recession, a boom in alternative income streams became popular. As employers looked to slash their overhead and minimize full-time staff, they increasingly turned to freelancers and other project-based outsourcing solutions. Recent graduates and those laid off embraced opportunities to earn a living from home, while searching for full-time work.
 
Now that the economy is beginning to reach pre-recession levels, many millennials are hesitant to give up their side-hustle. Even as they secure full-time employment, some are opting to keep, or go all-in on the freelance lifestyle. This additional source of income created tax obligations that, if improperly reported and paid, could lead to fines and tax debt.

Solutions to Keep the IRS at Bay​

​Trust me, there are few organizations that outperform the IRS in terms of resources and the ability to focus on a single goal: identifying and collecting back taxes. Millennials that earn additional income streams, beyond a traditional employee income, need to:

• Carefully track and record income from every income stream.
• If you expect to pay more than $1,000 in taxes for the current tax year and earn an income from freelancing, you may be required to pay quarterly estimated taxes.
• If you receive a notice stating that you have an IRS tax debt, immediately consult a tax debt expert to understand your financial obligations and develop a strategy to reduce and/or resolve the tax debt before the IRS begins aggressive collection procedures.

Consult an IRS Tax Debt Professional to Minimize Fines, Total Liability and Avoid Collection ProceduresIf you end up in the IRS’ crosshairs, it’s important to act quickly. Consulting a qualified tax debt specialist is the best way to avoid unnecessary fees, or unfair assessments. I personally lived through this frustration when I filed my first tax return with self-employment income. The following year, the IRS wanted to know why I wasn’t paying quarterly estimated taxes.
 
Because I ignored their letters, incorrectly assuming that I could cover my bases on my standard tax return, I was assessed late payment penalties and was threatened with an audit. I had no intention of misleading the government, or mishandling my financial obligations, but ignorance is not a defence.
 
The majority of IRS tax debt specialists will tell you that the most important factor in resolving an issue with the IRS on favorable terms is the speed with which you address the issues at hand. Act quickly to avoid penalties. I promise, ignoring the problem will not make it go away.

3. Credit Card Debt

It seems like as soon as the freshman start to move into their dorm, the credit card companies start handing out “free” swag on campus, along with credit card application forms. Thanks to the CARD Act of 2009, this trend has slowed, but it certainly hasn’t come to a money-saving halt. Students with little to no source of income certainly find the chance to charge their weekend beer runs to a piece of plastic exciting.
 
Unfortunately, their monthly payments usually only cover the minimum balance, or neglect to be remitted on time. So, after four years of living the college life, their credit card debt balance looks very scary!

Solving the High-Interest Credit Card Debt Dilemma 

The easiest way to solve a credit card balance crisis is by cutting up the plastic cards in your wallet and committing to never using them again. Millennials have a lot of life left to live. By making smart money choices early on, the full potential of a life well lived is theirs for the taking. If you feel like you’ve already dug yourself a financial hole, it’s time to contact a qualified debt professional (right now!). There are a multitude of options available to transform a financial disaster into a manageable problem, and lasting life lesson. 

Sources:

• http://time.com/3930296/millennial-financial-problem-solution/
• https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service
• https://blog.freelancersunion.org/2014/03/11/quarterly-tax-guide-freelancers-and-self-employed/
• http://www.curadebt.com/
• http://www.usnews.com/education/articles/2010/02/19/new-rules-place-barriers-between-students-credit-card-issuers