Financial experts are seeing a historic increase in debt among Gen Z, according to Money Management International, with a 35 percent spike in younger consumers seeking credit counseling.
Millennials have continued to sustain an average of $40,000 in debt, and they too are looking for help to course correct.
“A few years ago, I ended up with kidney stones and all the bills came due from the hospital, the surgery, the doctor, anesthesiologist, all of that, and didn’t have the FSA money to cover it. So we put it on a lot of credit cards just to be able to get it done,” said Riverton resident Kaleb Knobel.
As we know, getting things done can create a snowball effect. A snowball that turns into an avalanche you can’t control.
“I was trying to work with credit card companies, trying to explain, trying to see if we could make some plan with them, maybe turn off the credit card, but do small monthly payments, lower the interest rates or something,” Knobel said.
Kaleb did the right thing, working to find a solution with his debtors. But financial experts say they’re seeing a trend that might be more detrimental to your financial journey than beneficial: taking out loans as a short-term fix.
“A problem that we see, especially with personal loans, is that people run the credit cards back up, so now they have more debt than before,” explained Ted Rossman, principal consumer finance analyst for Money Management International.
Money Management International is a non-profit debt-relief counseling program that works with consumers to pay their debt little by little according to their income and what they can realistically pay a month.
Rossman said Kaleb had the right idea at the start, but sometimes it can be easier when you have someone working on your behalf.
“Let’s get you into a lower interest rate, so the average credit card charges about 21%, according to the Fed, you can bring that way down,” said Rossman.
One of the best things any consumer can do to pay off debt on the back end is to make their concerns known on the front end. At the first sign of trouble, seek solutions.
“Don’t be afraid to ask for help; it’s better to speak up sooner rather than later," said Rossman. "A good first step is just see what help is out there. A lot of times there is some sort of accommodation or hardship program.”
As Kaleb knows, catching things before they spiraled has helped him save money in the long run.
“It’s nice to know there’s an end in sight,” he shared.
