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> Joe Average has $80,000 in student loan debt, $25,000 in credit card debt, and a $10,000 car loan. His total monthly debt payment is about $1,200 and he’s goi

> Joe Average has $80,000 in student loan debt, $25,000 in credit card debt, and a $10,000 car loan. His total monthly debt payment is about $1,200 and he’s going to be making those payments for the next, say, ten years. Okay, I'll just go ahead and ask: why? Why are so many young people so heavily in debt? Is this an American thing? Or a Western thing in general? I see people like this in every online community. They barely make enough money to pay for housing, food and utilities, yet they use credit cards to purchase Xboxes, e-readers, smartphones, expensive computers, Netflix, Pandora/Last.fm/GrooveShark/whatever, iPods, tablets, games off Steam and FSM knows what else[1]. And then they go eat at the local fast-food chain because it's cheaper than eating real food. Sometimes I have serious doubts about the sanity of these people. Why are young people who don't make money being given credit cards? Why are they purchasing cars with money they don't have? I'm curious. This cultural phenomenon of spending more than you make is completely foreign to me. --- [1] List not limited to technology, of course.

Woost 15y ago
A big part of it (I think) is the student loan debt. 80,000 is huge, and can lead to just giving up and spiraling(I already owe 80k, what's another 2?) The car loan is really low, 10k is just about as cheap as you can get a new car for, and you'll never get a loan for a used car (so if you don't have 2-5k in savings to buy it used...you're SOL) Biking/walking is only really feasible in certain cities. And if you really want to know why young people are being given credit cards...it's because they don't make money! No, really. Not a conspiracy, but without a steady income they can only make the minimum payments for a while, which gives the card issuers more money than someone who has a job. Plus, they get to charge higher interest on it.
- philwelch 15y ago
  and you'll never get a loan for a used car (so if you don't have 2-5k in savings to buy it used...you're SOL) This isn't true at all. You might not be able to get a car loan in the 2-5k range, but for a used car, especially a certified used car in the 10k range, those are almost always financed. One also makes a down payment on a car, so a 10K car loan may be for a car that's up to $15k. $15k is plenty for a decent used car.
  - Woost 15y ago
    Yes, that was my point. A decent car will put you at least 10k in the hole, unless you have the cash to buy used from someone who isn't a dealer.

Woost 15y ago

A big part of it (I think) is the student loan debt. 80,000 is huge, and can lead to just giving up and spiraling(I already owe 80k, what's another 2?) The car loan is really low, 10k is just about as cheap as you can get a new car for, and you'll never get a loan for a used car (so if you don't have 2-5k in savings to buy it used...you're SOL) Biking/walking is only really feasible in certain cities. And if you really want to know why young people are being given credit cards...it's because they don't make money! No, really. Not a conspiracy, but without a steady income they can only make the minimum payments for a while, which gives the card issuers more money than someone who has a job. Plus, they get to charge higher interest on it.

philwelch 15y ago
and you'll never get a loan for a used car (so if you don't have 2-5k in savings to buy it used...you're SOL) This isn't true at all. You might not be able to get a car loan in the 2-5k range, but for a used car, especially a certified used car in the 10k range, those are almost always financed. One also makes a down payment on a car, so a 10K car loan may be for a car that's up to $15k. $15k is plenty for a decent used car.
- Woost 15y ago
  Yes, that was my point. A decent car will put you at least 10k in the hole, unless you have the cash to buy used from someone who isn't a dealer.