Monday, March 22, 2010

The Financial Woes of Our Youth. (Part 1)

I’ll admit it – I’ve been in the workforce 23 years, that makes me older than the youth I am about to discuss. But I’ve mentored several people from the youth group regarding finances and have tried to dig them out of the self-dug holes, they find themselves in.

It is so easy to get into trouble, you may not even realize it until it is too late.

You want the newest mobile phone, bugger going prepaid and finding the money for the handset, stuff it just go on contract. You don’t read the contract properly and you end up with a bill of $2000.00. This occurs because you are used to the service cutting off when you used pre-paid. This is the first error. Some kids are smart and will ask for help, others think it will just go away and this is the first step into the troubled lands.

You want a new laptop – easy – Harvey Norman are offering interest-free for 24 months, no problems, I’ll pay it off before then. You always have something else to pay and you don’t pay off the bill, even though you get sent monthly reminders. 2 years race by and suddenly that $2,000.00 laptop is going to cost $3,500.00 assuming you pay it off immediately, when you realize that they interest free period has expired. (27% interest, back dated AND compound)
This is assuming you have job and haven’t lost it yet, due to economic downturn.

The car that you drive, your parents helped you with the personal loan and probably went guarantor. Lucky you, but you haven’t paid the monthly loan amounts, you would much rather spend the money on partying, then paying stupid bills which will always be there. Suddenly your parents are receiving nasty letters, saying you have defaulted on your loan. You now owe another $500-$1000.00 in legal costs and you have your first black mark against your name.

Let’s add this up - $2000.00 phone bill, $3000.00 Harvey Norman, $500.00 court costs, $1200.00 loan costs. This totals approx $7000.00 in debt before you are even 21.

Look out for part 2 tomorrow. It will give you tools you need to fill in the hole you have dug.

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