The New Generation - Drowning in Debt?

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According to the Christian Science Monitor, today’s generation of young people could be the most indebted Americans in this country’s history. Americans are brought up today to believe that a college degree is a necessary element to get ahead in life. Due to the sharp rise in tuition costs most students will need loans to complete their education. The majority of new graduates will start their careers with a large amount of debt due to these student loans.

With grants being more scarce than ever before, a student will have to borrow money to pay their tuition. In most cases, the typical student will graduate owing more than $20,000 in loans and many graduates will begin their careers with temporary jobs leaving them without health insurance. If they are unfortunate enough to have health issues during this period, medical expense will be added to their mound of growing debt.

Almost all students will be tempted with introductory credit card offers. The credit card companies make it very easy. They show up on campus and all you have to do is fill out the application and the free gift is yours. These credit issuers don’t seem to care if you are employed or not. After all, you are going to school, so you must be getting money from somewhere. These usually have a low introductory rate for a short period of time. Once that rate expires, your rate will probably increase to over 50%. If you make a late payment, you may see your interest rate rise to as much as 30%.

The unstable job market is also a contributing factor in the debt of young Americans. An unemployment check does not usually go very far when it comes to covering monthly expenses. This leaves many people paying for necessities with credit cards. Debt becomes out of control very quickly when you have to use credit cards to pay for groceries and other monthly expenses.

Many young people are not used to having to live on budget. Coming off the boom years of the 1990s, students are not used to clipping coupons or cooking and eating at home. This is a generation of people that spend impulsively. These habits can be changed with some planning and forethought.

Before you can make a plan to become debt free, you need to know in detail what you owe. Start by getting a copy of credit report from all 3 credit bureaus. Transunion, Experian and Equifax, the 3 credit bureaus, all offer a free credit report annually. These reports will help you organize your debts so you can formulate a repayment plan. If you need help, there are many non-profit credit counseling agencies that will help you with budgets and repayment plans for your debt. If your debt is seriously past due or “charged off,” a debt settlement company is your best option. They will negotiate getting your balances reduced.

There are several different debt options available to help you get your debt paid off. The biggest mistake that most people make is waiting too long to face their debt and ask for help.