Young people should act on debt early
on: November 3, 2008, 9:14 am
Release Author: Think
Release Summary: Financial solutions company Think Money have
responded to a study suggesting that the 18-34 age group are most
at risk from the credit crunch, saying that while this age group
are often vulnerable to financial hardship, debt problems can
affect people from all age groups and should always be taken seriously.
Release Body: Following a study suggesting that the 18-34 age
group are most at risk from the credit crunch, with many carrying
significant debts, financial solutions company Think Money
have advised people in this age group to take extra care with
their finances as the prospect of a recession looms.
they added that debt problems are just as serious for people of
any age, and should always be addressed as soon as they start.
study, carried out by think tank Reform and the Chartered Insurance
Institute, claimed that many 18 to 34-year-olds had so far experienced
a “uniquely gilded life” which had given them a “false
sense of security”.
a result, they have “run up huge credit card bills, smashed
their piggy banks and are now staring at a broken housing ladder”,
the report claims.
report dubs the age group the “IPOD (Insecure, Pressurised,
Over-taxed and Debt-Ridden) generation”, and claims that
one in five such people carry debts of £10,000 or more,
while one in three have no savings.
overall situation leaves the IPOD generation particularly vulnerable
to the current state of the economy, with the report stating that
they “have the raw skills to understand their position and
the dawning sense of responsibility to do something about it (…)
However they are hamstrung by a financial establishment determined
service the old and patronise the young.”
spokesperson for Think
Money said: "It may well be the case that many of
the large numbers of younger people getting into debt do so because
of a diminished sense of responsibility, brought on by comfortable
living conditions and, until recently, relatively easy access
with the credit crunch ongoing and a recession becoming a very
real possibility, a lot of younger people may be about to experience
the kind of struggles that instilled an “instinctive fear”,
as the report puts it, into people from previous generations.
the reason, in the current economic climate, it’s more important
than ever for people to tackle their debts now. Especially with
high-APR debts such as credit cards, it’s essential that
those debts aren’t allowed to grow.
are a number of debt solutions designed to help people in different
"For people with a number of smaller debts, a
debt consolidation loan could help. A debt
consolidation loan involves taking out a new loan to pay off
all your existing debts, meaning you only have to repay one creditor
instead of many. The interest rate is often smaller than your
original debts, especially if you are paying off high-APR debts
such as credit cards - although if you choose to lower your monthly
payments by spreading them out over a longer period, this will
incur more interest which could cancel out the benefit of a lower
overall rate of interest.
you have a number of debts that you are struggling to repay, a
debt management plan might be a better option. This involves speaking
to a debt adviser, who will discuss your financial situation in
confidence, and will then negotiate with your creditors to agree
repayments based on how much you can afford each month. In many
cases, interest and other charges can be frozen, reducing the
total amount you have to pay.
"If you have more serious debts of over £15,000,
an IVA (Individual Voluntary Arrangement)
could get you debt-free in five years. An IVA involves making
regular monthly payments to your creditors based on the amount
you can afford to repay, and after the five-year period your remaining
debt will be considered settled.
be aware that an IVA requires approval from creditors holding
a total of at least 75% of your debts before it can go ahead,
and you may be required to withdraw some of the equity in your
home in the fourth year of your IVA.
affects people of all ages, so we urge anybody struggling with
debt to seek expert debt advice as soon as possible.”
Details: Pennington House
South Langworthy Road
0845 056 6480