MSE News: Rise in young people's debt forecast

Former_MSE_Helen · 2 November 2011 at 12:34PM

This is the discussion thread for the following MSE News Story:

"Youngsters are saddled with debt but are unlikely to build up assets like previous generations were, a report says ..."

Read the full story:

Rise in young people's debt forecast

CLAPTON · 2 November 2011 at 1:07PM

there's nothing in the article to say that youngster are 'saddled with debt'

it would seem they choose to spend more than they earned without good reason
and reading the 'loans' board here they continue to want to borrow silly sums of money even when they have modest incomes

ACynic · 2 November 2011 at 1:08PM

"This may be because younger consumers tend to be less financially aware and more inclined to rely on credit to make ends meet."

Or maybe it's because younger consumers have a sense of entitlement to the latest iPhone, xBox, designer clothes etc that they can't afford and use credit to bridge the gap....

It's the difference between those of us (I'm 31 BTW) who do without those things in pursuit of a nice house, nice car etc in a few years time, and those who want it all and believe they can have it alll!!

alja · 2 November 2011 at 4:06PM

I'm in my early twenties and apart from my standard student debt (which I don't have to pay off yet) I have no other debts, and actually have decent-ish savings that I have saved up myself from working (apart from other bonds to fall back on which were given to me by relatives) I feel so proud of myself having quite a different headset to a lot of people my age who buy all the latest brands and gadgets!
Hopefully with having this mindset early on I will be one of the lucky ones...as one of my main goals is to own my own home before having to rent anywhere...
One thing I also noticed was the amount of people my age saying 'noo don't get a credit card' when I said I was going to get one..many seem to see them as a bad thing that gets you into trouble and don't seem to realise the benefits if used properly i.e. building up a good credit rating...

setmefree2 · 2 November 2011 at 4:20PM

It's funny but you seem to have missed out a bit.

Higher student debts and lengthier student loan repayments will make it even harder for young households to save, invest or acquire other assets. Total student debt is expected to grow to £153bn in real terms by 2031, with loan repayments amounting to nearly £7bn a year.
The CCCS says this will leave younger generations unprotected should they suffer a fall in income.

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

From the actual report

KEY FINDINGS
Student loans will also impact on the ability of
younger households to acquire wealth. There
are nearly 3.2 million student loans in place with
total debt outstanding amounting to £35 billion,
an increase of £13.25 billion over the previous
three years. Total student debt outstanding is
expected to grow to £153 billion in real terms
by 2031, with loan repayments amounting
to nearly £7 billion a year. With student loan
repayments reducing available income, future
generations will find it difficult to save or invest
in pensions until they are older, which will
impact considerably on their quality of life when
they reach retirement age (page 13).

http://www.cccs.co.uk/Portals/0/Documents/media/reports/additionalreports/Report_Debt_and_the_generations.pdf

I've no idea why you would have missed that bit? *Thinks*

dtsazza · 2 November 2011 at 6:24PM

ACynic wrote: »

"This may be because younger consumers tend to be less financially aware and more inclined to rely on credit to make ends meet."

Or maybe it's because younger consumers have a sense of entitlement to the latest iPhone, xBox, designer clothes etc that they can't afford and use credit to bridge the gap....

If you read between the lines, your response and the article are materially similar, the difference being in where they imply blame.

Both sides agree that young people's expenditures are more than their income. (Hardly rocket science; fundamentally that's the only way that you can get into debt anyway.) The two ways to address this imbalance are to reduce expenditures, or temporarily increase "income" via taking on debts.

The article refers to using credit to "make ends meet" - the implication being that the expenses are fixed and necessary and so the amount of money coming in must be increased, via loans. Your analysis suggests that the expenses are voluntary, and expanded to meet the larger possible influx of money that can be drawn from lines of credit.

I agree with you as it happens, but I feel it's useful to illustrate that at heart the question is to what extent those expenses are necessities vs luxuries.

It's the difference between those of us (I'm 31 BTW) who do without those things in pursuit of a nice house, nice car etc in a few years time, and those who want it all and believe they can have it alll!!

By all means, you can have it all - but you need to work hard and smart to make sure you have sufficient income first.

MSE News: Rise in young people's debt forecast

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