Las Vegas Valley residents have some of the worst credit scores, debt ratios, and money management habits in the United States. A recent study by WalletHub found that as of March 2016, the median credit score of South Las Vegas residents was 646 and 636 for North Las Vegas residents.
Combined with mortgages, car loans, and student debt, the area rated in the 30th percentile of all the cities in the United States. Many of these habits and debts are said to come from the city’s reliance on the cyclical tourism industry, the housing bubble, the area’s massive mortgage debt-to-income ratio, and the increase of student loans. However, there are ways that the residents of Las Vegas can improve their money habits and ultimately improve the city’s standing. As children are said to be our future, it is important to start with recent grads. So, if you’re a young adult or recent graduate that’s looking to make it big in the big city, here are a couple of things you should be doing to ensure that you’re financially sound and successful.
Pay Off Your Student Debt
Student loan debt is now the second highest consumer debt category, just under mortgage debt, beating out credit card and car loans. In Nevada, the average student walks out of college with $21,666 of debt, and at the University of Nevada – Las Vegas, 35 percent of incoming freshmen take out a loan. Therefore, it is important that you pay off your student debt as quickly as possible. Whenever you have the financial means to do so, you should be paying more than the minimum monthly payments. If you come into extra money or start a side gig, use that cash to increase your payments. When you can, you should also reconsolidate or refinance your student loans. This is one of the best moves out there for paying off your loans faster. This will decrease interest rates so that more of your payments go directly towards bringing your debt down.
Work on Your Credit Score
Paying your student loan payments every month will definitely help to improve your credit score. However, there are other things you can do to increase that three-digit number. For one, you should always pay your credit card bills on time. Also, the smaller the amount of money you’re using on your credit card, the better your score. Essentially, you should only spend about 30 percent of your credit limit at any time. You should also leave old debt on your credit report. Some people rush to get their credit off their report as soon as they pay it off. However, good debt is actually great for your credit and the longer your history of good debt is, the better your score will be.
Start Savings as Early as Possible
The earlier that you start saving, the more you’ll learn about fiscal management skills. You should create a budget for your life goals. This should be a monthly and a yearly budget that will help you get to where you want to be in life. You should also have an emergency savings fund that you put money in every month. This can be as low as you want it, but it should provide you enough cash should something happen to you, your home, or your family. It’s also never too late to start planning for retirement. Even though it might seem like a long time from now, you should automate part of your paychecks directly into a savings account for your future.
It’s never too early to start thinking about money management. With the financial problems of the city and Las Vegas’ standing, you should be doing as much as you can to create smart spending habits.