Credit is an important part of an adult's financial health. It can be used to purchase a home or other investment, to fund a college education, to start up a new business and more. However, the use of credit can quickly spiral into a huge debt issue. According to the AARP, approximately one-quarter of all bankruptcy filings are by those under the age of 34. In addition to the number of young adults who have filed for bankruptcy, there are millions of other young adults who struggle financially under the burden of high credit card balances, a large home mortgage payment and car loan payment, student loan payments and more.
The Conundrum of Credit and Debt for Young Adults
It is common for young adults to take on their first “real” job and enjoy a rather sizable income in comparison to their earning power from typical “teenage” jobs. The income of a young adult can double, triple or more almost overnight when this happens. A steady stream of a higher level of income from a new job creates the perceived ability to take on additional monthly payments through a higher car loan payment, a home mortgage and more. Further, many young adults are aware of the importance of credit. Some may open credit card accounts and other types of loans or credit accounts with the main intention of establishing credit. Many, however, take on more debt than they can easily pay off, and the problem of debt can quickly spiral out of control.