Since the end of the recession, consumers of all ages have made significant progress in trying to get out from under the debts they held for long periods of time, but none have been more successful in this regard than those between the ages of 18 and 29 years old.
Some of our readers may have missed our post from September 2012 in which we showed that far from being used for their generally accepted purpose, student loans - now well over $1 trillion and more than the total credit card debt outstanding - in numerous instances are instead abused to fund virtually everything else besides paying for tuition. Recall: "Robert Thomas Price Jr. borrowed about $105,000 for his tuition at Harrisburg Area Community College from 2005 and 2007, federal authorities say.
When Deacon Hayes and his wife Kim sat down to discuss their finances, the newlyweds discovered they had $52,000 in debt, including $18,000 in car loans, $27,000 in students loans, and $7,000 in outstanding credit card balances.
On one hand, we’re finally getting smart about this whole money-management thing. Consumers have built up savings from the pre-recession years, and are more likely to pay credit card bills on time. A lot of younger Americans are avoiding the credit card debt trap entirely. But experts say these efforts still aren’t enough: The economic current is running against us, so even those who are swimming like they were taught are probably just treading water. Collective consumer debt was cut by $100 billion in the first quarter of 2013, according to the credit reporting agency Equifax.
You’ve just come into a little bit of money and you have decided that you want to pay off one or more of your debts. The problem is this…you’re not sure which one to pay off first. Conventional wisdom tells you that you should choose the debt with the highest interest rate because it’s the most expensive to service.