A study released recently by the investment bank Charles Schwab suggests that many young people in Texas and around the country get into problems with debt even before they are old enough to legally purchase alcohol. The researchers also found that many millennials and members of Generation Z see student loans and mortgages as bad debt while viewing credit card balances as good debt. Financial experts generally believe the opposite.
The researchers found that Generation Z Americans, who are between 16 and 20 years of age, have an average of $4,343 in debt while younger millennials owe a worrying average of $11,663 to banks and credit card companies. However, it is the lack of financial understanding that the Charles Schwab team found most alarming. Only 3 percent of the respondents said that they would use a $1,000 windfall to pay down their debts, but most said that they expected to retire before reaching the age of 60. The study was based on a poll of 2,000 American adults between the ages of 16 and 25.
The study reveals that most young Americans would be unable to cope with a financial setback. More than 8 out of 10 of the young people polled said that they had seen their parents struggle financially, but more than half reported having less than $250 put aside for an emergency. The researchers say this is a reflection of a debt culture that values consumption over thrift.
Young Americans struggling with unmanageable financial situations are sometimes unaware that the nation’s bankruptcy laws were written to provide people with second chances and an escape from overwhelming debt. Attorneys with debt relief experience could clear up many of the myths surrounding bankruptcy and explain how filing a Chapter 7 or Chapter 13 bankruptcy petition puts an immediate halt to collection efforts and wage garnishments.