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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.
Recently I was deeply struck by a post called The Statute of Limitations on Regret- posted on the Get Rich Slowly blog. It was on the author’s reaction to a couple who was beating themselves up for the money mistakes they made. And now they are focused on just getting through the day, marking time and feeling depressed. Yikes.
Well, we all make money mistakes. And on top of our mistakes, we feel horrible about them. Do you struggle with being critical of yourself over a money mistake? Are you plagued with regret over what you did- or didn’t do? Do you keep thinking and thinking and thinking- swirling in a circle—wishing you’d done things differently?
To compound our woes, we rarely talk about them. When we make relationship mistakes, we often hash over the “I can’t believe I did that” with girlfriends over a glass of wine. But when it comes to money, we can be extremely self-critical—suffering pangs of regret and remorse- replaying our money mistakes over and over in our head– mostly in isolation.
I guess at some point this was inevitable but the day I always feared has finally arrived (excluding Sarah Palin as President of course). Tomorrow my doorbell will ring and Apple will start to consume my life.
For a PC guy like me this event is a pinnacle moment in life where one truly has to learn how to communicate again.
Gone will be the days of asking someone for their blackberry pin (only for them to say what do you mean), navigating the web on a screen that you can barely see and taking photos with a state of the art camera phone (if it was 2009).
However, even with all your flaws I still love you.
In my post on understanding your brain, I shared six tips to avoid overspending when you are out shopping. But what about on-line shopping?
On-line shopping can be VERY hazardous to our wallets, and yet we often only think about its virtues. We think we won’t be tempted to buy other things that catch our eye if we are in a brick and mortar store. We love how it can save us precious time. And we can easily shop for the best deal.
However, the longer you “research” the more you spend. (This Yahoo article mentions this issue ) This is similar to brick and mortar shopping. The longer you spend shopping, the more you buy. Period.
A recent survey shows that more adult children are returning home to live with their parents. This pattern has emerged in the past (almost always associated with economic downturns) and this time is no different. As the economy struggles, it becomes more difficult for young people to gain their independence.
Psychologist Jeffrey Arnett suggests that there is a new age classification, emerging adults, which bridges the gap between adolescence and adulthood. According to his theory, people in their 20s go through a time of development that's distinct from other stages of adulthood, and this developmental period explains some of the reluctance of adult children to leave the nest for good.
If this theory is true, though, why should the number of "boomerang" children increase during times of economic hardship? It seems more likely that young people are experiencing failure to launch because of the financial difficulties of living alone during a recession. It's certainly not an easy task. With fewer jobs to choose from and more competition to fill those slots, high school and college graduates have a harder time finding meaningful employment and an even harder time transitioning out of those entry-level jobs and into careers.
It’s that time of year – high school and college graduations. Young women and men are stepping into a new phase of their lives. Unfortunately, financial education is not a mandatory class in most high schools or colleges. But, money plays an important role in all aspects of our lives – career, lifestyle, self-image, marriage, family and health. Let’s test your money IQ.
By law you can request your credit report free every 12 months from: A. FreeCreditReport.com B. AnnualCreditReport.com C. Credit.Com
Let me start with a deep thought: You are the most important person in the world. There is no one more important than you. And you have to take care of yourself. No one will attend to this sacred duty as well as you. And are you taking care of the woman you’ll be in 30 years? If you are not taking care of her, who is?
So, when you are out shopping, I want you to practice “Do No Harm Spending”. Can you say to yourself, “I was not financially harmed in this shopping expedition”? Because really, as in all money matters, this is about self-care. Will your spending cause harmful debt? Will your spending leave you unable to take care of needs such as dental work or retirement funding?
Many families teach children about money management and responsibility by offering them an allowance but what about adults, should they have one too?
An allowance (for those of privilege reading) is not an imaginary thing but rather a pre-set small sum of money a child receives regularly to spend on new toys, clothes, books or whatever. It could be a weekly, bi-weekly or monthly payment depending on how the parents set it up. Think of it as a trust fund, without the fund or all those extra zeros.
Allowances teach children to save and plan for purchases and form the foundation of a valuable life skill, one that many adults really need.
If the Occupy movement does nothing else, it has at least introduced a new set of terms into the American vocabulary to talk about the distribution of wealth in America. Until recently, most average people had no idea how wealth was distributed in the country; most people had a vague idea of a wealthy minority, but they rarely grasped the full extent of income disparity between classes. Now, most people are aware of the notion of the 1 percent, although they still may not know exactly what it means or how that unequal distribution of wealth applies to the rest of the country.
Debt is hardly a new part of the human experience. From the time that man first developed money, people have wanted to buy things they can't afford. Although most Americans don't run much risk of being sent to a debtor's prison like a character in a Charles Dickens novel, debt can still have far-reaching and life-ruining implications.
In the simplest terms, debt happens when a person borrows money to pay for something. When he pays it back he will owe interest, causing the total cost of his purchase to increase, sometimes exponentially, the longer he maintains the debt. The problem is that, for many consumers, the consequences of debt never seem important until it's too late.
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