According to this chart, from Moody’s,
credit card debt among new borrowers under 24, and borrowers 25-34
has increased 20-25% faster than the national average
The new levels are a record high for each age group
.
.
.
Their credit card delinquency rate is, well . . . not terrible, but it is rising so quickly who knows what tomorrow will bring.
I always taught my son to save. If he didn’t have the money, don’t buy it until you do.
I told him never to borrow money for college and he didn’t. He worked his way through and I’m very proud of him.
This is not why they are taking on credit card debt.
Another case where a warning sign is spotted but not understood.
It is not at all unusual for a young person to spend 50% (or more) of take home pay on housing. (45% is the raw average for people under 30, but that raw average includes 2 -incomes households, college graduates making 6-figures in the tech sector etc.)
It is not at all unusual for a young person to spend 15-25% on transportation.
(Ya can’t get credit for a old used car when you’re underemployed, cars-with-loans require comprehensive insurance and all auto insurance is VERY expensive for young people.)
Those have long been the facts of life.
I was stuck like that when my parents went through their preaching phase. I had control over only 15-25% of my income even if I literally gave up food I would not have saved much by their standards.
Added
In those days I made about $8.00/hour. ($320 pre tax a week)
After FICA taxes ($30) Rent ($144) Student loans ($50) car payment and car insurance I had about $100/wk for food, gas and clothes. That’s $5,200/year.
My parents reminded me many times that I should save 3 months income for emergencies ($3800) and $2,000/year in an IRA.
Eventually I made more money and vowed not to be like them.
One of the most difficult lessons one must learn in life, is to define and financially separate wants and needs. Needs come first…always. When that isn’t applied and wants are fulfilled first…often…there isn’t enough left for the needs and then bad things start happening.
My father defined a need in his vocabulary as…“will you die if you don’t get it”?
Oh yeah.
I made plenty of wrong decisions to get in that spot in the first place, (college-path, career-path etc,) but “not saving money right now” was absolutely not a mistake I was making. It was officially the time in my life when “I grew up and stopped taking advice from my parents.”
Anyway, current debt trends among the young tell me the economy is not getting better and the impacts could be long term.
