In an exclusive six-week series from Nov. 20 to Dec. 29, 2006, the National Endowment for Financial Education and USA TODAY® launched a study of the twenty-something generation titled “Young & In Debt,” which found that young adults are facing significant challenges in managing their money and their debt. The series paired five different young people with financial planners to give them—and readers—advice on maintaining order in their financial lives, while providing helpful tips on paying off debt, establishing a budget and saving for the future.
A national survey conducted by The Gallup Organization exploring the top concerns of young adults ages 22 to 29 has been released in conjunction with the “Young & In Debt” series. To view the full results of the poll, click here.
Week 1: Struggling with debt
To be young and in debt: High price of college, soaring housing costs force many twentysomethings into an early financial bind.
Budgeting is essential: It's an invaluable tool for setting spending patterns.
Week 2: Paying off student debt
Profile: Chiropractor works 2 jobs to chip away at $165,000 in school debt.
Financial planner's advice: Create a budget, cut living expenses, earn more money.
Grads, you can dig out: Having problems repaying your student loan? Tell your lender as soon as possible.
Week 3: Saving money
Profile: Trying to save is a big challenge when dealing with $30,000 in student loan debt.
Financial planner's advice: Will require cutting back somewhere. Keep a lid on spending, try creating a budget and use cash instead of credit.
Saving early is vital: Even putting away a little bit of money can pay off big in the long-term. Tips on where to put it when you have very little to invest.
Week 4: Cutting credit card debt
Profile: MBA sees the $60,000 debt as worth the trouble as he lands a $100,000-a-year job. But he is having a hard time reducing the $35,000 in credit card debt.
Financial planner's advice: Lifestyle compromises must be made. Set up a budget and get out of individual stocks, for now. Avoid credit card usage and tackle debt on highest-rate card first.
Tackle credit debt, and quick: Owing money on a credit card is like mold: It will get a lot worse fast if you don't take care of it.
Week 5: Getting your own place
Profile: Two years after graduating from college, he finds himself struggling with a bad credit rating, loaded with student debt and working at a job that doesn't pay enough.
Financial planner's advice: "He has to consider if he can afford to be in the job he's in," financial adviser Steve Wershing says. "It's going to take a long time to dig out."
Basics of buying your home: Nearly 26% of people under 25 own their homes, up from just under 20% in 1982. In the 25-to-29 age group, nearly 41% are homeowners, up from 39%. Yet the median home price has more than tripled in the past 24 years. That's made buying a home increasingly hard for young adults who are still renting or living with their parents.
Week 6: Getting health insurance
Profile: A very expensive car accident left her with $16,000 in medical bills and she had no insurance to help pay.
Financial planner's advice: Some type of health insurance is an absolute must, planner Janet Davis says.
Even when young, insurance is important: There are ways to protect yourself from catastrophe without spending a lot of money.
More on the “Young & In Debt” series can be found at youngdebt.USATODAY.com, which provides financial tips, interactive budgets, chats with experts and more.