Surprise! Young Adults Have Smartened Up About Debt

Credit cards, with their high interest rates and exorbitant fees, have often trapped college students and other young adults in debt spirals that can be almost impossible to escape from.

However, the latest generation to hit young adulthood has learned some lessons that their older peers didn't -- and that's helping many of them avoid the credit-card trap.

Young adults have gotten a lot smarter about using credit cards, according to the most recent data from credit-score company Fair Isaac and its FICO Banking Analytics blog. Outstanding credit-card debt has fallen by nearly a third during the past five years, with the average outstanding balance among those 18 to 29 now standing at just $2,087 compared to $3,073 back in late 2007.

Moreover, a rising number of young adults don't even have credit cards at all.

In 2005, only about 9 percent of young adults went without a credit card, but that figure has jumped to about 16 percent, about double the rate among those 30 to 39 who don't have any credit cards.

 

READ MORE:  http://www.dailyfinance.com/2013/06/19/young-adults-smarter-about-debt/

Three Simple Steps: Managing Debt

Being in debt can be one of the most overwhelming financial challenges you'll ever face. That's one reason that Americans have worked so hard to break themselves of their debt habit, with the Federal Reserve Bank of New York having reported recently that debt levels have fallen by $1.45 trillion since the third quarter of 2008. In particular, credit-card debt is down more than 20 percent over that time frame, reflecting the priority of getting high-interest-rate debt paid down fastest.

Even if you have a lot of debt, don't panic! You can get your outstanding loans under control if you take a long-term view and start taking baby steps toward better managing your debt. Start out with these three simple tips:

1. Order your credit report from AnnualCreditReport.com, which is the free website set up under federal law to provide copies of credit reports to all Americans. You can get one free report every year from each of the three main credit-reporting agencies, and the report will tell you what loans and cards you have outstanding, how much you owe, and your payment history, including any late payments or delinquent accounts.



READ MORE:  http://www.dailyfinance.com/2013/07/29/three-simple-steps-managing-debt/

4 Tips to Help 20-Somethings Manage Their Debt

Debt can be a heavy burden on anyone, no matter what their age, but increasingly, young adults are starting out deeper in the hole. A recent report from credit-score provider FICO shows that student loan debt has climbed dramatically for those ages 18 to 29, with average debt rising by almost $5,000 from 2007 to 2012.

The good news, though, is that young adults are taking steps to get their overall debt under control, reducing their balances on credit cards and their debt levels for mortgages, auto loans, and other types of debt. With 16 percent of 18- to 29-year-olds having no credit cards, young adults are getting the message that managing debt early on is essential to overall financial health.

With the goal of managing debt levels firmly in mind, let's take a look at four things you should do to manage your debt prudently and successfully.

1. Get a Handle On What You Owe.

In managing debt, the first challenge is figuring out all of what you owe. By pulling a free copy of your credit report from annualcreditreport.com, you'll get a list of loans and credit-card accounts that major credit bureaus think you have outstanding, along with contact information to track down any unexpected creditors that might appear on the list.

READ MORE:  http://www.dailyfinance.com/2013/08/08/debt-management-tips-20somethings/

4 Tips to Help the 50-Plus Crowd Manage Their Debt

 

Letting debt overwhelm your finances is bad news no matter when it happens in your life. But for those 50 and older, it's even more important to rein in the negative side of your balance sheet and get a handle on paying it down while you're still in a relatively strong earning position.

Historically, advisors have urged those 50 and older to get their debts paid off entirely before they consider retirement. But the trends in the U.S. show that advice is hardly being followed. The Harvard Joint Center for Housing Studies cites Census Bureau data showing that median debt levels have risen at a much faster rate for older Americans than for other age groups.

Specifically, the median debt level for people ages 55 to 64 rose by more than 60 percent between 2000 and 2011, while those 65 and older saw an even more dramatic increase -- nearly 120 percent -- during the same period. The JCHS also observed that among those 65 and older, the percentage of households with mortgage debt doubled to 40 percent in 2010, while among those ages 55 to 64, 70 percent now carry mortgage debt, citing the Federal Reserve's most recent Survey of Consumer Finances.

That's not the direction you want your finances going. As your future earnings prospects dwindle, it's more important than ever to get debt under control. With that in mind, here are four things that those 50 and older should consider.

 

READ MORE: http://www.dailyfinance.com/2013/08/15/debt-management-tips-50-plus/

4 Tips to Help 40-Somethings Manage Their Debt

Handling debt is a challenge for those of all ages, and the problems start early in our adult lives. It's only natural to incur some heavy debts in our 20s and 30s, as we're dealing with the imbalance between our relatively scarce financial resources and the sizable expenses of getting started with careers and families.

By the time you hit your 40s, you might hope to have moved past that phase. But although many people in their 40s have well-established careers that produce sizable incomes, they also often face growing financial commitments -- both to themselves and to family members. That's a big reason why 40-somethings have the highest levels of debt of any age group, and unlike younger groups, they've seen their debt levels increase slightly since 2005, according to figures from the FICO Banking Analytics Blog.

Debt management in your 40s isn't just about paying down debt. It's also about making sure you're using the right kind of debt to handle the most important expenses you face. Also vital -- maintaining the ability to repay your debts while simultaneously ramping up savings for your longer-term goals.

To address all those issues, here are four things that 40-somethings should keep in mind in dealing with their debt.

1. Anticipate Big-Ticket Expenses.

Dealing with unanticipated expenses can break the budgets of young adults. But by the time you hit 40, you have plenty of life experience behind you and can predict what sorts of financial demands will come up. In particular, major expenses like putting children through college or replacing a vehicle are fairly easy to foresee. The smarter you can be about planning for them beforehand, the better you'll be positioned to minimize how much debt you have to take on to pay for those expenses later.

 

READ MORE:  http://www.dailyfinance.com/2013/08/14/debt-management-tips-40somethings/

4 Tips to Help 30-Somethings Manage Their Debt

Peter Dazeley, Getty Images

No matter what our age, we all have to be careful about the level of debt we hold, but for those in their 30s, managing debt can be especially challenging.

According to the most recent data from the Census Bureau, those ages 35 to 44 have the highest levels of household debt of any age group; their $108,000 in median debt weighs in 25 percent higher than the next most indebted age group.

Increasingly, student loan debt represents a big portion of overall debt for 30-somethings. A Federal Reserve Bank of New York study showed average student loan balances for those ages 30 to 39 topped those of other age groups, approaching the $30,000 mark as of the end of 2012.

It all adds up to an increasingly difficult financial balancing act. Even as their incomes begin to grow as their careers take root, 30-somethings are also in the highest-consumption phase of their lives, as they start families, consider buying a home for the first time or upgrading to a more family-friendly home, and improving their lifestyles as their incomes improve. Debt is a necessary part of meeting those challenges, but you have to handle it correctly.

Let's take a look at four tips for those in their 30s to keep control of debt and use it to your advantage.

 

READ MORE: http://www.dailyfinance.com/2013/08/13/4-debt-management-tips-30somethings/

Sneaky credit card charges can cost you hundreds

NEW YORK (CNNMoney)

Sneaky charges hiding in your credit and debit card statements can add up to hundreds of dollars a year, a new study finds.

There are the charges that pop up when a subscription or membership is automatically renewed, the fees you're hit with when a free trial unknowingly turns into an ongoing membership, the extra charges tacked on to a purchase after you think you've been quoted a final price, and many other misleading and unwanted fees.

These so-called "grey charges" average $61 apiece and amounted to $14.3 billion last year, according to an analysis of 5,000 credit and debit card statements conducted by consulting firm Aite Group.

READ MORE:  http://money.cnn.com/2013/07/25/pf/credit-card-charges/index.html?iid=EL

Millions without credit scores not so risky after all

Millions of people who either have little to no credit history or who have gone credit-free for a long stretch of time don't have credit scores -- meaning many lenders consider them too risky.

Millions of Americans don't have credit scores. And while lenders typically steer clear of this group, it turns out they aren't always as risky as banks think.

There are at least 64 million "unscoreable" consumers out there, estimates Experian, one of the three major credit bureaus. These consumers are often immigrants or recent college grads who have little to no credit history or they are people who haven't had an active credit account for at least six months. They may be completely responsible or they could be financial train wrecks waiting to happen -- lenders have no easy way to tell because there is no credit score available.

Credit scoring company, VantageScore, is trying to shed light on this mysterious group with its newest scoring model, which it estimates can assess an additional 30 to 35 million people who were previously unscoreable. It does this by looking at 24 months of credit history, rather than six months, and by considering alternative data like rent and utility payments and public records when available.
"The unscoreables are a big population and in today's rather conservative credit climate they're having a hard time finding mainstream credit," said VantageScore CEO Barrett Burns. The VantageScore model was created by the three major credit bureaus -- Experian, Equifax and TransUnion.

VantageScore found that 10 million, or about a third of unscoreable consumers, aren't high risk at all -- instead, they were determined to be near-prime or prime. Burns calls this the "sweet spot" for lenders, because it means a consumer isn't so risky that a lender would lose money taking them on as a borrower and they're not such low risk that a creditor is forced to reward them with the best terms available.

READ MORE: http://www.money.cnn.com/2013/08/14/pf/credit-scores/index.html?iid=HP_LN

Debt shouldn't be a four-letter word

IT BEARS REPEATING!  There's no shortage of debt detractors out there, and with good reason. After a credit crisis brought the world's economy to its knees a few years back, the downside of debt is painfully clear.

But there's a bright side, too. 

Case in point: In 2006, Muhammad Yunus won the Nobel Peace Prize for his idea to use debt — as little as $200 or less — as a path out of poverty.

Or consider a young, middle-class American named Barack Obama who took out loans for undergrad and law school. That investment in education seems to have paid off for him nicely.

Last, look at revolutionary electric car company Tesla (TSLA), which recently fully repaid its 2009 loan from the government. If we had to wait until an entrepreneur had enough ready cash to build out an automobile manufacturing company without financing, we would be waiting forever.

The idea is simple: A handhold to opportunity that is out of reach becomes attainable when debt gives you a leg up. 

READ MORE:

http://www.usatoday.com/story/money/personalfinance/2013/07/28/debt-credit-crisis/2586671/