Debt blights younger generations

Graham_Devon

Make of it what you will.

I'm sure there will be a range of thoughts on this, for example, they spend it all on tat and alcohol through to using it to make ends meet. However, an analysis of clients under 40 showed that one in three had no money after covering basic living expenses each month. This rose to up to 70% of those in younger age bands. So that kind of puts weight behind those who suggest it's not just frivilous spending thats the issue, it's living costs as a whole. Unfortunately it's all ruined by the usual case study of the poor young people who took out a loan to fund a wedding! I'm sure the guardian always look for the most aggrivating case study they can possibly find....this ones got it all! Loans for weddings, PPI reclaims, sueing for injuries and then living on benefits!

Either way, it seems the younger generation has a rather large debt issue.

Early debt problems mean young Britons are unlikely to be able to buy their own homes and other assets as their parents and grandparents did, according to a leading debt counselling charity.

A report by the Consumer Counselling Credit Service (CCCS) predicts a bleak future for many people under the age of 40 as they struggle against higher debts, declining real incomes and increasing difficulties in saving for retirement.

Although debt levels tend to peak when borrowers are in their mid-30s to mid-40s, research for the charity found that more than 1m households in the 18-39 age group are already struggling to cope financially and indicates that another 893,000 are at risk of money difficulties.

Almost three-quarters of people aged 18 to 39 now have unsecured debts, compared with 60% of those in the 40 to 54 age group. Younger households are more likely to use credit to make ends meet, with 19% of the 18 to 24 age group saying they are very likely or fairly likely to need to borrow in the next three months.

People in the 25 to 39 age group are also more than twice as likely – 15% compared with 7% – to be in arrears or insolvent as those aged 55 or more.

The report, Debt and the Generations, points out that the rise in average house prices from 2.3 times to nearly 5.5 times gross earnings has either left younger homebuyers with extra mortgage debt while transferring wealth to those further up the housing ladder, or has excluded first-time buyers from the market altogether.

http://www.guardian.co.uk/money/2011/nov/02/debt-younger-generation-buying-home

ILW

If you don't buy stuff you cannot afford, you will have no debt. Simple really.

The only exception being a house.

ess0two

Ditch the iphone contracts.

Going4TheDream

Dare I say that is because they 'want it now' and pay for it later?

My first car was an old yellow mini I paid £750 for it when I was 22, I never owned a brand new car until last year aged 46 and I paid cash for it (was only a cheap city car btw) In between my 1st and last car I paid cash, saving a bit each month until I could afford a bit of a better/newer car.

My daughters first car was a 3 year old Fiesta aged 18, replaced the following year by a brand new Renault? She financed both......

Graham_Devon

Just thought I would highlight it again

analysis of clients under 40 showed that one in three had no money after covering basic living expenses each month. This rose to up to 70% of those in younger age bands

HAMISH_MCTAVISH

Graham_Devon wrote: »

spend it all on tat and alcohol

Even that can be a good thing.

http://forums.moneysavingexpert.com/showpost.php?p=48189127&postcount=10

Linton

Graham_Devon wrote: »

Just thought I would highlight it again

"analysis of clients under 40 showed that one in three had no money after covering basic living expenses each month. This rose to up to 70% of those in younger age bands "

yes - that's 1 in 3 of those people consulting a debt management service. Hardly surprising as if they could manage their debts they wouldnt be clients.

HAMISH_MCTAVISH

Linton wrote: »

yes - that's 1 in 3 of those people consulting a debt management service. Hardly surprising as if they could manage their debts they wouldnt be clients.

Ahhhh.

So 1 in 3 of the few people in such a mess they have to consult a debt management service.

Not 1 in 3 of all people.

Quite a difference then.

Good to know.:beer:

FATBALLZ

ILW wrote: »

If you don't buy stuff you cannot afford, you will have no debt. Simple really.

The only exception being a house.

You might want to think that one through again.

Graham_Devon

Linton wrote: »

yes - that's 1 in 3 of those people consulting a debt management service. Hardly surprising as if they could manage their debts they wouldnt be clients.

It's still the people in debt. Not all of them obviously.

I'm not sure I get your point? I was making the point that the debt isn't neccesarily all due to iphones, holidays and wastage etc.

dtsazza

Graham_Devon wrote: »

Just thought I would highlight it again

analysis of clients under 40 showed that one in three had no money after covering basic living expenses each month. This rose to up to 70% of those in younger age bands

The question is, what do they count as basic living expenses?

Does that include repayments on personal loans and/or minimum payments on credit cards, for example? If you already have those loans, then it presumably does, and I don't really have any problem with that. "Paying off the loan" is not a discretionary spend any more than "paying the rent" is.

Yet if you took the loan out for a holiday or a souped-up car, the outlay can hardly be said to be a sensible one, and you're still paying for being imprudent, despite not spending anything on frivolities now.

And even if it doesn't, I could rent a £4,000 place in Mayfair and have no money left after paying rent. It doesn't imply that those basic living expenses are as cheap as they could possibly be (which for a lot of people would be near-free if they moved back in with their parents).


Besides, as Linton and Hamish have said, these are people who are consulting a debt management service. Regardless of their income, if they cut their cloth to fit they wouldn't be in debt and need those services anyway.

So it's hardly a surprise to state that 1 in 3 people with debt problems have issues with cashflow.