20 Financial Milestones to Reach in Your 20s (ish)

Posted by louisa on Wednesday 9 February 2011 in personal finance | 1 comment

A list of “20 Financial Milestones You Want to Reach in Your 20′s” has been circulating around many Generation-Y-ish personal finance blogs recently. I’m not quite in my 20s any more – I’m 31 – but it feels more like a stage of life thing (no kids, first steps on property ladder, student debts etc) rather than an exact age, so it would be interesting to see how I’ve done.

(The original list is from the USA but I’ve UK-ised it a bit to make it more relevant – but stuck to similar sentiments. The bits in italics are explanations from the original list.)

# 1 – Finance a dream vacation…in cash – done
We went to Russia in 2005 when we were 26 – somewhere I’d always wanted to go. We had a week split between two of the top hotels in central Moscow & St Petersburg, with a night in a first class sleeper inbetween. It was lovely, expensive but lovely.

We paid for the hotels & our flights on credit cards for security reasons but they were paid off in full the same month so I guess that was paid for “in cash”.

All our other holidays in our 20s – mostly city breaks around Europe or weeks in shabby-chic cottages on the coast – were actually paid for in cash or the same credit-card-then-immediate-pay-off arrangement. They were all dreamy :)

# 2 – Pay off your student loans – done
I came out of university with about £8,000 in debt – £1250 in an interest-free (for two years) overdraft, the rest as actual student loans. I paid off my overdraft within two years of graduating and finished paying off my student loans in the March before my 30th birthday. (I could have deferred payment after my salary dropped when I became self-employed at 26 but decided to keep paying.)

# 3 – Automate paying your credit card bill in full – done
Yes, but only when I was about 28. Before then, I only paid off the minimum automatically so, in theory, I could manage my cashflow better in lean months but I pretty much paid it off in full every month anyway so finally fully automated it.

# 4 – Get rid of all bad debt – done
A good way to see what bad debt and good debt is is by asking yourself if the underlying asset appreciates or depreciates in value. If the asset appreciates, like a house, than categorize it as good debt. If the asset depreciates, like a car, etc… then it’s bad debt.

The only debts I had were my student overdraft/loans and my mortgage. I’ve still got the mortgage but at the moment, that’s not “bad debt”.