COLORADO SPRINGS – Consumer debt is surging and a lot of it is coming from young people’s spending.
Many are taking out student loans and now more than ever-personal loans.
A recent study from LendingPoint shows the share of personal loan borrowers between 18 and 35 has doubled in the past three years. They now make up almost a quarter of all debtors, up from just 12 percent in 2015. The top reason younger adults are getting personal loans is due to debt and credit card consolidation. If these people have student loans as well it can be a tough financial road.
Jennifer Ridler said, “You’ve got to manage it or it’s going to manage you.”
While Ridler doesn’t have credit card debt or personal loans she’s still paying off thousands of dollars in student loans.
“It’s enough to drive a person mad…stress…student loans weigh heavy on my family and my income.”
Between that and mortgage payments on her home she’s in deep.
“Hundreds of thousands…debt is something I live with every day and it was the only way to get that job done.”
Thankfully, Ridler has a solid plan to pay back her student loans, something that can’t be said for everyone in the 18 to 35 age group.
Linda Leitz, certified financial planner at Peace of Mind Financial Planning, said, “It’s one thing to have education loans. Those a lot of times serve a really good purpose…it’s the other things that tend to add on and tend to make the debt get out of control.”
Leitz said young people are using credit cards and personal loans to pay for every day expenses, vacations, even weddings.
“To the extent that they’re borrowing money to live their lives, that can start to get really expensive because they’re paying interest on that and they may not be aware of what they’re spending…there is this certain sense that I want to live life now. I’m okay if I have a little bit more debt or I don’t make quite as much money. I’ll just work longer…a lot of times just having these things get out of control means that the person is going to end up with a bad credit rating, they may end up in bankruptcy.”
To avoid all that Leitz has some recommendations.
“There are financial planning firms like ours. We have a program for young professionals that is very cost effective and deals with how do I balance savings and paying back debt.”
People should also consider reaching out to accredited financial counselors. Whatever the route, take action sooner rather than later.
Leitz said, “It’ll just continue to mount if you don’t.”
She said another factor in this debt issue is that there is no solid education on this topic at the high school and college levels. She said young people need to know what they’re borrowing and the ramifications that come with loans and credit cards.