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Bad economy and lack of financial education causing debt problems

Right now there are more and more people in their 20s and 30s who are struggling with debt. And while the tough economy and high unemployment rates can be partially to blame for this increasing trend, some experts are also saying that it's a general lack of education about finances that is contributing to this high consumer debt.

For one thing, credit cards don't come with specific instructions on when and how to use them; rather people just qualify for one and can immediately start spending. Along those same lines, student loans are necessary for many students who want to earn a college degree, yet there is no manual on how to pay them back and how much it may actually affect a person in the future - especially if that person is unable to find a job after graduation.

When looking at the numbers, a recent report that cited Federal Reserve numbers found that almost half of all people under the age of 35 who are running a household have debt. And while this number looks at those who are living on their own, experts also point to the fact that many young adults are moving back in with their parents because they cannot find a job in this tough economy, yet still have monthly credit card and student loan payments to worry about.

To try and combat this rising number of young people drowning in debt, financial experts point to a three-fold idea that includes an increase in economics classes, parents talking with their children more about finances and people getting more first-hand experience learning about money through employment.

However, while these are all great ways to learn about finances, many young people are already in the situation where they need to learn not about how to avoid debt, but how to get out of debt.

In those situations, those in their 20s and 30s should know that there are debt relief options that are available that would cater to their situation. But, when looking at the different choices, it's important to keep in mind that not all options are a one size fits all and while filing for bankruptcy might work for one person, debt consolidation may actually be the best choice for someone else. Because of these discrepancies, it's best to look into all that is available before making a decision on what financial option to choose.

Source: The Arizona Republic, "Lack of financial savvy hinders youth in debt," Russ Wiles, 25 April 2011

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James H. Monroe, P.A.
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