The Ys And The Wherefores Of Youth Debt

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The Ys And The Wherefores Of Youth Debt

Sun Herald

Sunday July 11, 2004

By DAVID POTTS

HOSPITALITY graduate Elke Braithwaite has no savings, but she has HECS and credit card debts and owns two big money drainers, a car and a mobile phone.

Pretty normal for a 22-year-old, or typical generation Y, as marketing departments call 18- to 24-year-olds.

But unlike the two previous generations, X and the baby boomers, she's not expecting to own a home.

Not that the baby boomers can crow. A survey of 450 by CPA Australia also found that the more you earn, the more you owe.

Those earning more than $100,000 a year owed an average $283,000. On $75,000 to $100,000 the average debt was $161,000.

Even so, those earning below $30,000 still owe $27,000 and none of that would be a mortgage.

"A third of respondents feel over-committed on the amount of their debt and interest payments due to recent interest rate rises," the survey said.

Nearly half of the generation Ys surveyed said home ownership was not attainable for them.

Ms Braithwaite, whose personal debts amount to about $6000, doesn't rule out owning a home, but concedes she puts "stupid things" on her credit card, which is hovering around its $1000 limit.

"To get a credit rating you need a credit card so you can get a mobile phone," she said.

CPA Australia financial planning adviser Kath Bowler warned against putting off saving until one earns more. "The discipline of saving doesn't get easier the older you get," she said. "Saving and spending attitudes are habits and habits are hard to break."

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