Young people are going deeper into debt

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Outofmymindyo
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Post by Outofmymindyo »

$6000 in debt, and not counting. I've got a controlled payment plan each month, because when I got these debts, they were for things I could pay for monthly, but not afford if I was to save for the next three years. The payments are low enough to allow me spending money, and that's with just my husband working. As such, I will be working in 2-4 weeks, and even if I'm just pulling minimum wage, it will be an extra income that will get the debts paid off in under 6 months.

I don't consider the purchases a bad idea, because they have benefitted me greatly, in various ways that some may not understand. Although it might not allow me to go out and spend $100 at the drop of a hat, I am not starving because of my household only having one income.
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Silverhawk060
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Post by Silverhawk060 »

I'm 19, and not in debt. I don't plan to be either, people should watch how they spend their money. If you do not have much money to begin with, don't spend it on unnecessary stuff. It amazes me how some of my friends with already so little money... still go out to pubs to drink, eat at expensive restaurants etc.

If you can't afford it, don't get it or look for an affordable alternative. I've turned down quite a few outings with friends because i could not afford it.. i missed the fun.. but at least i'm not in debt.
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Post by G-Dub »

18 and debt free by the end of the month :D Had to borrow some money from my parents, interest free of course, to pay for car insurance and repairs, but I plan to have them cleared by the time I get paid at the end of the month. When I graduate and get a steady job i'll probably get a credit card, and obviously a mortgage, and finance on my Porsche, but I don't plan to get into mountains of debt. My dad works in a bank, he'll always advise me on what to do.

Until I graduate i'll probably dip into my interest free overdraft every now and again when I want something but don't want to save. I see this as a feasible option as I have a steady income of around £500/month from my part time job, 15 hours per week.

Of course, what actually develops only time will tell...
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Post by Graham »

Debt in itself is not a problem, it is not being financially responsible that is the problem.

Personally, I have a credit card which I use for buying various things, but I always clear it at the end of the month and I have savings in the bank. On the other hand I owe the government a relatively large sum in student loans to be taken out of my payslip every month. However in my situation, it's financially better for me to save the majority of any surplus I have at the end of the month instead of make extra contributions towards the loan repayment, strange as this may sound.
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Post by Darth Wong »

I don't mean to pry, but how is that possible? I'm having trouble envisioning a scenario where you're better off not paying down a debt as quickly as possible.
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Post by pianistsk8er »

Darth Wong wrote: I don't mean to pry, but how is that possible? I'm having trouble envisioning a scenario where you're better off not paying down a debt as quickly as possible.


True, with most loans or debts, its always better to finish them off asap. Usually you'll end up spending barrels more than you owe due to crap like interest and other charges...
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Post by Graham »

Simple - student loans in the UK as they stand at the minute are charged at a nominal interest rate based on the rate of inflation, they are not charged at commercial rates.

Thus it is better for me to save most of the extra over the required repayments since I can get a better return on the money in a savings account and have it accessible for any large expenses (of which I have a couple coming up) without having to resort to a loan at a commercial rate.

Depending on my situation at the end of this financial year, I may decide to take some of it and make some additional repayments anyway, but in the meantime it's better where it is.
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Jon Reid
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Post by Jon Reid »

Heh, I'm going to be about £16000 in debt by the time I leave university but as Graham points out the interest rate is only slightly above inflation so I'll be in no rush to pay it off (though as soon as I can afford to start making repayments I will)

Still, £16000 is about what $30000? Bah... Hopefully I'll go into a career where that won't be too much of a dent :roll: Yeah...
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libertate
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Post by libertate »

School loans?! Bah! Try getting a divorce (in the U.S.)!
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Post by Jon Reid »

libertate wrote: School loans?! Bah! Try getting a divorce (in the U.S.)!


:lol:

Talking about debt, I recently found out (in a letter threatening to put my bank accounts into 'default' ) that I owed my bank £350 in charges on an old account I had forgotten about, they threatened to withdraw my student account overdraft facility *(which would have added £1250 to that debt :roll: ) just before the next installment of my student loan arrived- obviously as I have to pay rent and fees I did panic- but I managed to convince them to let me pay the £350 off out of my loan- the buggers- £350 lost instantly because they were charging me £35/month on an account that I had accidently left £2.70 overdrawn 10 months ago!

What absolute twaddle. I hate banks. Heh
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Post by Heimidal »

I just thought I'd mention that, if it weren't for student loans, I'd only be $700 in debt. With student loans, it comes to about $16,000.

:?
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Post by Kanuck »

FF8Jake` wrote: If you can't handle a payment on a credit card balance of $4,000, you need to take a hard look at your spending habits. :)

I don't recall saying I couldn't handle it ?_?

I thought the conversation was about debts being rather common for people my age. I make the monthly payments on my line of credit from my chequing account... the money for which comes out of my line of credit. So basically, my credit line's balance slowly grows, and my credit improves all the while.

Still, I'd much rather be making halfway decent wages. Instead, I've worked jobs where I was making just over half the wage of the "regular" employees; considering the expenses people my age often have to worry about these days, the wages we're expected to cover those expenses with are pretty abysmal.
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Post by libertate »

Kanuck wrote: [...]
Still, I'd much rather be making halfway decent wages. Instead, I've worked jobs where I was making just over half the wage of the "regular" employees; considering the expenses people my age often have to worry about these days, the wages we're expected to cover those expenses with are pretty abysmal.


What kind of wages do you expect comming out of college? No disrespect, but some of the applicants sit front of me in an interview with a college degree, with zero experience and demand about 100 to 150% more then a 20 year old experienced veteran with no degree.

College graduates in the early days of their "emancipation" also have a certain arrogance about them. As if because they are graduates now they should just be handed the job.

When I was in college, I received on average three credit card offers a day. By my fourth year, I had $20,000 unsecured credit limit (not debt, just limit). This is for someone who had $0 income.
Why?
a. Because I was uneducated about credit cards,
b. because credit companies were betting I will be making big chunk of change once finished school.
c. Because my girlfriends at that time were highly motivated by money.

All three.

I am torn between smacking the credit card companies around for not educating the "kids", and smacking the kids around for not having the common sense. The problem is businesses want to make money, but no one can expect kids to know everything about real-world life - including credit/unsecured debt.

I know there is temptation to throw in a "legislation" or something similar to "protect" us from the "greedy" credit card companies. I think asking the industry to put a slightly tighter self monitoring would be of best interest for them. Maybe verifying if that 18 years old does truly bring home $100K salary? Maybe requesting a copy of the applicants last 1040?
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xdarkday
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Post by xdarkday »

Heimidal wrote: I just thought I'd mention that, if it weren't for student loans, I'd only be $700 in debt. With student loans, it comes to about $16,000.

:?
at least its going to somthing that will be with yuo forever.
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Post by Kanuck »

xdarkday wrote: at least its going to somthing that will be with yuo forever.

Still, an awfully expensive piece of paper, wouldn't you say?

Lots of countries are working towards reducing tuition fees, or abolishing them altogether. While I understand the concept of paying for a post-secondary education, in the United States things have gotten out of hand; a university degree costs over $100,000 when it's all said and done.
libertate wrote: What kind of wages do you expect comming out of college?

I'm just talking about the jobs I had in/after high school. Making $10/hr at an auto assembly plant, where everyone else was doing the exact same job and making $18/hr, didn't really motivate me. Didn't matter that I worked my ass off, and did twice the work as some of the veterans who were making upwards of $25/hr; nobody cared. Same with the other two industrial jobs I've had; age was the determining fator, and that was it.
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