I hate money. There is so much stress involved with it. Lacking it makes life difficult. The more you make the more you owe. The government rips you off with high taxes then gives all the breaks to only the big earners. It breaks up relationships, it creates emotional and physical ailments. There is never enough.
I was listening to a show on the radio a couple of weeks back. They were talking about how young people should start saving for their retirement because by the time they get old the Canada Pension plan will not exist. If this is the case, why do we pay into it?
The biggest question I have is with the cost of living (rent/mortgage, food, power, entertainment, car loan, insurance, education loan, line of credit… the list goes on) when you are working your ass off at a job which does not pay you half as much as you deserve. How is it possible to find the money to save for the future?
In school I never had the opportunity to learn about the “costs” of life as it was never offered. My parents never subjected that sort of stress on me when I was a child (and why would they? I wouldn’t have understood it and that’s not something a kid should have to deal with). No one told me it would be this hard. Please tell me I am not alone?
What is the “right amount” of debt to be in as a young person between the ages of 18-25? Thoughts? —Monetarily Exhausted
This article appears in May 26 – Jun 1, 2011.
In response to your first paragraph: Yeah, it kinda sucks, but that’s just the way the world is.
In response to your second paragraph: That’s just speculation. I personally wouldn’t devote much thought to it.
I don’t really have a response for your third paragraph, but in response to your last paragraph I think there should be a mandatory high school class about personal finances.
The answers to the first and third paragraph are tied to the fact that the world works the way it does for a reason. It is very lucrative at the top and the way to retain that is to keep the order of things so that it is all tightly controlled. Or so some people think.
don’t collect things op, they slow you down…plus me and chickpea are not within your age parameters^^
The right amount of debt for someone 18-25 is next to none. Other than a student loan, possibly a mortgage, or a car loan you should not have any debt.
No, you are not alone. You’ve become a full-fledged member of the rat race. Welcome to the pack!
As for a solution to your troubles, you’ve come to the right place. We meet here every week to solve the world’s problems.
Right now we are stuck on which is the correct course of action: maintain the status quo (more of the same bullshit); reforming the current political and economic systems from within; or bloody revolution.
Regardless of which course we choose, I would suggest that you avoid taking on any more debt. The bankers will make life very unpleasant for debtors before it’s all over.
It all boils down to this: what have the Romans ever done for us!!!???
life is deffinately a bitch o.p., but if worrying now, you will never see old age. sometimes tha just doesn’t pan out, for any of us. i made my choice a long time ago, and have to live with it, so will you.
not sure which planet informant is living on… but it sure sounds like a perfect one.
the one hard part of adjusting to how the world round here works is that the debt looms over and so you fear not paying back…. which may just trap you in a job you hate simply because you need to repay.
vicious indeed… and can seem like you’re wasting many prime years of your life…
seriously.
http://www.singlespeedstella.com/buried-in…
I do believe they have a course though, isn’t it home econ? I remember taking a semester of it in HS. Learning useless shit like how to properly endorse a cheque depending on the situation… budget spreadsheets… you know, all the things you never need as a kid and didn’t seem to prove very valuable at the time.
it’s the student loans that blow man….
just get used to being in the red for a decade or so.
NO DEBT
If you are in any kind of debt that young than you are overspending. I work full-time making min wage. I have a nice apartment and am about to graduate university debt free. If you have debt then you are buying silly things that you dont need. Stop being so silly and you wont need to bitch about money anymore.
A very good friend of mine used to work at the custodial bank that had the account for CPP and all this hype around no CPP being left when we get older is just that: hype.
We’re more likely to have no old age pension than no CPP. So worry about THAT.
In any event, retirement savings NOW when a person is in their 20s is very important. If you save from age 25-35 you’ll have more when you retire if you start at 35 and save until retirement.
I’m sorry, but your parents did a shitty ass job preparing you for life if they didn’t teach you about money from an early age, OP. I always knew the realities of financial life at a young age, and now I have no problem managing my money. I’m not rich by any stretch of the imagination, but I knew shit was expensive and there are things in life you can’t get around paying for. Then again, I always knew how much my parents made and how much their gross versus net pay and all about tax brackets and stuff when I was a kid (12-ish is when they started teaching me about this stuff).
Since the begining of university, my parents have preached to me about how I should start a retirement savings account when I got my first post-university job. And I have. They have an excellent investment manager and I have a small portion of every pay put into a retirement account. I also have another savings account with high interest with the same manager that takes off a considerable chunk each pay. I’m saving up to move out and it’s easier to just have that taken off because I don’t miss it. I can access this money whenever I want with no penalty like the retirement account which does have a penalty and taxes put onto it. I also set up the “bank the rest” account with my bank and when I use my debt (which I usually do), the amount is rounded up to the nearest dollar and put into my saving account. In one month I can have 30 bucks or more put in that account just for using my debit card. That’s money I won’t even touch because it’s $5 to take any out and it’s not linked to my debit card.
My parents also taught me about debt and drilled into me the idea that if you don’t have the cash to pay for something you want, you can’t afford it. They, nor I have any credit cards, yet, for instance, they still bought a new sofa set, HDtv, a car, etc… without going into debt because they saved for it. With our culture of “buy now pay later” the younger generations feel like they can just charge something and have something they can’t afford to pay for right now. It’s the same with me — I save my money and THEN pay cash for things I want and it feels a whole hell of a lot better to not owe anyone for the things I buy.
Problem *is*: credit card companies and banks are throwing credit cards at people, especially students, who see it as free money and don’t know the realities of the situation including interest rates, credit ratings, credit scores, min payments and how only making the min payments can jack your interest rate up…. Youtube the episode of “undeclared” where they all get credit cards…. It’s a sad reality, I’m afraid.
And to answer your question, OP: you shouldn’t be in debt at all between the ages of 18-24 besides student loans. Maybe a car loan. But for consumer debt (i.e. credit card debt) — I can’t see any reason for young people to have credit cards to just charge liquor and fancy toys they wouldn’t be able to pay for otherwise (or can hardly make payments on). And if you’re living on your credit cards (i.e.: buying your groceries with it, paying your rent with it, using one card to make payments on the other) and only making min payments, you’re living beyond your means.
Also: with repayment assistance options (the new plan as of last year) with student loans, payments are very reasonable and in the end you won’t go over 15 years with a student loan — if you don’t have the money after 10 years to pay for it, the gov’t pays for it for you.
I’m on the new plan and I really don’t see why everyone bitches about how hard it is to deal with repayment. My payments are super affordable. I have 100k in student loans, and I still have a decent amount of money left to live off of after my reduced payments come out of my account.
Also: the class I think you’re referring to, zed is “CALM” (career and life management) — it was paired with “PAL” (physically active lifestyles) and was taken in grade 11. If you were under the same school board as me, which I think you may have been, you would’ve had to take those two courses.
No debt, don’t go into debt at that age. Act responsibly, save your money to buy what you want, don’t go into debt for it.
A lot of it is your mindset. There are some definite things you need to do, like pay enough of your debt off per month that you can start catching up with the interest charges. The most major thing is to start enjoying the things you already have. Don’t worry about buying a new TV, or a new PS3, when you still have loads of games on your PS2 that you haven’t finished, for example. And start saving a little bit, make sure you have at least $1,000 emergency fund you can dip into. You might not have $1,000 now but you’d be surprised how quickly $25 or more per paycheck can add up. Everyone has debt these days but money comes and money goes, you just need to stop the flow of money out a bit and work towards more money in.
Zero debt! How about saving up for things? What a concept!
Right on Just Mel! My lifelong motto has been pay cash – no credit. Result? I have always been debt-free. Saving for things is a novel concept in our instant-grat-get-it-on-credit-commercialism-driven society. Just because everyone’s doing it doesn’t make it right.
amen, op, amen…
i understand and completely relate to your thoughts/fears/stresses, and trust me… i have been there.
some other responders make it seem as if it’s easy- IT’S NOT. and like you, i was not taught financial lessons, through school or elsewhere. i was sent a preapproved credit card at 19 years old, which naive little me saw as “free money.” a couple years later, i had grown to $4000 in credit card debt and no means to pay it off. it’s scary stuff.
yes, my example is one of stupidity, i got way ahead of myself, trying to have everything my friends did, plus paying rent, insurance, car loan, student loans, etc. but it’s SO EASY to fall into… too easy. years later, i’m still paying for it, financially and credit score wise. i’ve learned my lesson now, but not without racking up a whole lot of debt.
so many people graduate university/college with huge student loans, and minumum wage or low paying jobs. most of them have gone there whole lives with mom and dad paying for most everything, and are thrown into the big cruel world with little to no direction.
my advice: budget, budget, budget. i budget every week. every single little thing i spend money on. there are great places you can have free or cheap consultations with to help you if needed (i did this and it was a LIVESAVER). they advertise on tv all the time. there are also great books, some directed towards young people starting out, which can also be very helpful.
i’m not a good judge of what a ‘good’ amount of debt is, for obvious reasons. if your debt amount is in student or car loan, i say it’s probably ok if you’re making your regular payments. if it’s racked up in credit cards, and line of credits used to purchase unnecesary things (or if you need them to pay for the necessary costs!), get help now!
most of all, know you’re not alone op…. i feel for you and completely understand how you’re feeling!:)
Welcome to the big people’s table. If you don’t want any of it then go to the woods and live off the land.
I wholeheartedly second everything PK said, save for one thing. Having a credit card can have one use and advantage if and only if you manage it very responsibly and -immediately- pay back -in full- anything you buy with it (basically not using it like a credit card but more like a wallet). It’s a very useful tool to improve your credit rating, which helps for long-term stuff like mortgage and car payments. Apparently having ‘no’ credit history is almost as bad as having a bad one.
Oh, when traveling abroad, preloading your credit card and using it for your expenses also avoids the (rather high) fees you’d have to pay to do the same with your debit card and you’re usually a bit safer if it gets stolen.
The “paying it back in full right away/before the end of each month” is capital or you will get burned by the interests. Obviously that requires that you have the cash available when making a purchase.
As for debt at 18-25, the lower the better. I went without tv, cable, beer (save for the occasional night out w/ friends), movies, music or concerts while in university and took the bus or walked instead of buying a car. Obviously it’s no fun, but I stayed at zero debt because of that and even had some savings when I graduated. When I got my first real job, I bought a brand new car with half of it paid upfront and finished paying the remainder within a year.
I normally don’t post but this is something that i have to post on. Debt isn’t a bad evil thing. I admit the only debt i have right now is my student loan which i am working diligently to pay off but i find there are 2 types of people in todays society. Either people who have no control over their own spending or those that are terrified of debt. I have a credit card, i love my credit card, i use it to pay for absolutely everything even my rent. The key is i know what i make, i know a credit card is not free money, i have never paid 1 cent interest on my credit card. The only reason i use it is because of the thousands of dollars in free stuff that i have gotten out of points. This is almost completely self taught common sense to life. People just need to take responsibility and use their heads with money.
Calm Pal was a course that i took in high school but to be honest i think that it did more harm than good. At the beginning of our life challenge project we drew our “jobs” out of a hat. The lowest paying job anyone got was 130 thousand a year. We were marked down if we didnt immediately put at least 40% of every paycheck into a retirement fund. Every single person in the class retired as at least a multimillion at the age of 50. Is this really teaching people how the real world works?
I just had a wicked donair fart.
EW …
Financially responsible people are out making money work for them, not bitching about it on here. Open a TFSA investment account and buy high yield dividend stocks, or stocks with a proven track record. All the money you make in the account is tax free. The recession was an excellent opportunity to pick up stocks on the cheap, and guess what, most have rebounded to pre-recession values or higher…..and thus huge profits 🙂 I love my account. If you don’t have money in the first place, well you’re fuct and good luck panhandling.
Life is a bitch, eh.
I too am busting my hump and am no closer to seeing the end of the debt tunnel than I was when I began the repayment process.
Car loan? check.
Student loan? check.
General life debt? check.
If all goes “well” I should have the major stuff paid off in 10 years. Awesome.
While I am older than the age bracket you are questioning, I do wish I had gotten some sort of lessons on how to manage money, whether it be in school or elsewhere. I was thrown out into the big wide world and left to figure it out on my own. Yeah, that seems to be going well for me.
The only thing I’ve found that helps with repayment is getting a second job. It sucks, you’re constantly tired, you have precious little time to yourself, but you have the extra income which allows you to pay more off more quickly.
Good luck.
If you’re having issues paying back your debt, go to Access NS and talk to a counsellor there.
Hate it or love it, you need money. No sense hating something your life depends on.
OP, it’s not about how much debt – it’s what kind of debt. Student debt, whether it’s loans or line of credit, is good. Credit cards aren’t necessarily evil – but credit card debt is pretty crappy. Two cases come to mind: a friend of mine who had a tough time getting a credit card and a line of credit (for a car) after university – they pretty much throw credit cards at university students – and a friend who even though he’s perfectly capable of owning a credit card doesn’t, and therefore couldn’t rent a car last weekend.
Here’s the deal: don’t rely on the CPP. Yes, you’re paying into it but it’s essentially going to pay for the baby boomers, and there won’t be enough people paying in to keep it at the same level. But my parents talked about there being no pension by the time they retired when I was a kid, and they’re only 5-10 years from retirement now. I am 27 and I have an RRSP and a work pension plan that I pay into – and that’s what I’ll be relying on.
As for the government taking more money, yes that’s annoying, but it’s sort of just part of life. You’ll get used to it eventually, and budget your life accordingly.
Lots of great advice here for you OP. If money troubles really get to you, just hum that Jessie J song ‘Price Tag’ to yourself. I know it’s stuck in my head.