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Youth debt

Debt limits freedom, so why do so many young people fall into the trap?

Submitted 4/14/2006 By Marnie Views 86011 Comments 10 Updated 5/17/2007

Photographer : Batsignal

What is the issue?

More and more young people are living in some sort of debt. This is concerning because debt limits freedom. It causes people to work to pay off their loans instead of being able to use their money to progress in life.

Who does it affect?

Research commissioned by the NSW Office of Fair Trading in 2003 found that the average debt among young people aged 18-24 is nearly $6000. This implies that nearly all young people are affected by debt in some way.

Why is it happening?

Young people are making bad choices and spending money that they don't have! But why?


Society tells young people through a number of different channels that it is important to have certain things. Youths are particularly perceptible to these messages because they are still figuring out their own individual identities. On top of things like fashion and entertainment, big purchases or investments such as cars and University degrees can put a huge dent in your bank balance. Most young people don't have large amounts of cash handy so they rely on loans and credit cards. The resulting debt makes it hard for young people to move out and start their own independent lives. This can be seen in research that shows more young people are living at home for longer than the previous generation.


It has become very easy to acquire loans and credit cards. Nowadays you can apply online or on the phone and receive approval in no more than ten minutes. The idea of buy now, pay later is very tempting and it is easy to overlook the often outrageous interest rates which can mean having to pay up to 200% of your original loan back.

Mobile phones are becoming an increased cause for concern with a new phenomenon called M Commerce meaning people can use their phones to make purchases and be billed later.An example is the craze of buying ringtones or entering competitions by SMS where there are often hidden costs which can quickly get out of hand. I recently entered one of the competitions they had been advertising on tv where you had to answer several multiple answer questions and I ended up losing over $40 to it! Little did I know they were charging me $2 every time I sent and recieved an answer!

How do I know this?

D’Amore, A 2003,'Youth debt', Adjournment speech, NSW Parliament, 28 October,

Gittins, R 2003, 'Howard's university fees don't look so bad', The Age, 28 May,

Youth Affairs Council of Victoria, Debt sux!,, Managing money

Discuss Now

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adrienne 31-Jan-2008

It is so true about young adults going into debt cause they want to make them selves look good by buying items that they cant afford like expensive fashion labels, cars, jewellery, entertainment commodities. Sometimes we just dont no wen to say no and too late u end up wit a massive debt. Peer pressure has a lot to do with it.

But on the other hand, debts are also growing cause of the high costs of studying at uni. So basically youth never win when it comes to savings. Theres just too many things we need in too little time!



Kelly Simpson 08-Jan-2008

I wouldn't trust myself with a credit card.

Students are already in enough debt, we don't need to add to it with credit card bills.

As for funnelweb's comment about banks being to blame, well I agree. I know a guy who rang up the Commonwealth Bank at 3 am one Saturday/Sunday morning, obviously drunk, and asked them to raise his credit limit. They agreed to.

Save your money. Rejoice every time the interest rates rise, because it means that you'll earn more for your money. Then, when your friends are paying off their credit cards, you can pay off your home loan, or your trip overseas, and have some to spare!



dan 12-Sep-2007

Great article. Debt is almost always frowned upon as an extremely negative thing in society when its an issue that practicly everyone will have to deal with for the majority of their life.

Any major purchase, be it a holiday, a car or even getting to stage of buying a house is going to attract a certain degree of debt but its the responsibility of the individual to ensure that repaying that debt is well within their limits. In turn this breeds good budgeting habits which ensure that you can enjoy more financial freedom in years to come.

One thing to be wary of from my experience is store cards offering interest free terms, pay no interest for 3 years, that sort of thing. While for a limited amount of time it might be easy to pay minimum amounts required on such a card once the interest free period ends it really starts to add up and the interest rates can be ridiculous (up to 26% in some cases). If you can budget and manage your funds before letting it get to that stage then more power to you!

Crackdowns on irresponsible lenders are taking place more regularly and investigations from the ACCC are also aiding in removing some of the temptations out there.

Generally, if something sounds too good to be true... it is.



funnelweb 16-Jun-2007

How relevant it is with recent research suggesting over 60% of young Australians have found themselves in a situation of financial crisis. I had to bail my brother out twice for a mobile phone bill that was impossible to repay and a credit card bill that accumulated to such a degree that the interest repayments were greater than his salary. Who is to blame? Banks for marketing credit cards with huge limits to young low income earners or the young people themsleves for being careless?
See a financial planner. Information on finding a planner can be found on the FPA website: