CLARKONOMICS: The average person in their 20s has a backbreaking load of debt and it’s not all about student loans.
A new PNC Bank survey found that the average 20-something is carrying debt approaching $50,000. While student loan debt represents the bulk of it, there are also credit cards and car loans in the mix, in addition to a very small percent of mortgage debt.
I believe parents have a responsibility to guide teenagers when they’re in high school about making wise college choices. Many parents feel reluctant to do this because they feel guilty they don’t have the resources to pay for a kid’s college.
But you need to let go of that if you’re a parent. Have a conversation based on the realities of your financial circumstances. Tell your son or daughter what you can contribute to their education and then leave it up to them to decide where they go to school. Starting out a degree at a community college before going on to a four-year school is one idea I love to reduce the overall cost of education.
In addition to the student loans, there are credit card debts and car loans impacting 20-somethings. It’s so common that a graduate will get their first job out of college and buy their first car, usually on a five- year loan at a higher interest rate because they have little work history.
That’s getting things backwards. It limits your options moving forward. Nowhere is it required that your graduation gift from college be a brand new car!
If you are a 20-something, please resolve to come up with a plan to tackle these debts one at a time. You have so many more options in life as you reduce the debt you have, no matter what decade in age you are.