Young adults in Miami and across the country are racking up more debt than ever, thanks to the escalating costs of a college education and the dismal job market that these young people face once they do graduate. Many run the risk of declaring Chapter 7 bankruptcy at a young age.
The Wall Street Journal recently focused on this problem, highlighting the escalating debt incurred by a 24-year-old who graduated from college in 2010. According to the Journal’s story, the man has taken on a loan for a new car, taken out a $154,000 mortgage loan and put $4,000 on his credit cards to furnish his new home. He is also helping his wife pay off about $20,000 in student loans.
This young adult is far from alone, according to the Wall Street Journal story. Fortunately, the story also provides some suggestions for young adults who are ready to pay down some of their debt.
First, the Journal recommends that young adults divert as much money each month as possible to paying off high-interest-rate debt, especially the debt on their credit cards. Even putting away an extra $100 a month to pay down that debt can pay off.
Secondly, the Journal recommends that people burdened with an overwhelming amount of debt meet with a reputable credit-counseling service. The Journal recommends the service offered by the National Foundation for Credit Counseling. Young adults can also call their lenders directly to seek lower interest rates on their debts; many creditors are willing to lower interest rates if it means that they’ll be more likely to continue receiving payments from those who owe them money.
Finally, under some circumstances, debt-burdened young adults can chose to file for bankruptcy. This financial tool will leave a mark on young adults’ credit record for seven to 10 years, depending on the type of bankruptcy filed, but for some people, it is the best way to gain a fresh financial start.
Source: The Wall Street Journal, “Confront Your Debt,” Rachel Louise Ensign, June 23, 2012