Youth Debt

Reporter: Natalie Bonjolo

Fiona Lander says "credit is freely available these days, and young people maybe have one or two credit cards"Mark says "I couldn't afford it, I was getting a weekly pay that didn't cover my expenses"Like many of today's teenagers, Mark Johnstone is a victim of easy money, credit card kids, who are up to their eyeballs in debt, "by the time I turned 21, I owed $32 grand. "32 000 dollars in debt, with nothing to show for it. at an age when he should be out having fun with his mates, Mark is working hard, to pay back money he borrowed as a boy"

"It started off with $500 but when you keep getting letters with people throwing money at you when you 18 or 19 years of age, you've just come out of high school, you don't even think about paying it back until you have to" Bombarded by finance companies offering quick and easy loans, Mark was sucked in, what he didn't count on was the massive interest rates he'd pay. "They kind of sugar coat it by saying listen you've got five years to pay it off and the payments a week are only 50, 60, 70 dollars, so you say to yourself wait a minute I can afford that" It wasn't long before Mark was in way over his head. "A $5000 personal loan then went to another company and got another $5000 personal loan and an AGI card for a bed I didn't need but wanted, a credit card and eventually a car as well"

"I think young people are susceptible to incurring debt because they are inexperienced consumers" Fiona Lander from the Office for Children and Youth believes Y generations big spenders are falling into a dangerous trap. "The advertising campaigning that target young people are more and more sophisticated and they do fall victim to that and I think they do spend more than what they can afford" Recent statistics are alarming, people under the age of twenty five account for ten percent of all bankruptcies in one year, that's about 2000 young Australians broke by their twenties. Fiona Lander says "the main debt traps that young people get into are mobile phones, when you enter a contract young people often don't understand what the contract entails"

The top three temptations sending teenagers to the wall are mobile phones, credit cards, and car loans, Mark says "the car was the thing that really put me over the limit when I really couldn't afford it anymore" Within months of taking out a $20 000 loan for a car he couldn't afford, Mark fell behind in payments. "The car was repossessed 3 months after I had it, they sold it at auction for $18 000 and I was left paying $9000" Nine thousand for a car he longer had, not to mention two personal loans worth $10 000, which had now blown out to $22 000 with interest. "They'd be calling me all the time, I'd be telling people just to tell them I wasn't home, yeah to avoid them, I didn't know what to do I was in so much debt and yeah I was confused"

Cheryl says "the longer you leave contacting creditors the more penalties you are going to accrue, youth legal services take 14 000 calls a year from young people in strife. Cheryl Cassidy-Vernon says at least half are from youth drowning in debt, "they vary from $3000 to $4000 to $50 000 $60 000" One of the calls came from Mark, he made an appointment to turn his life around. Cheryl says "Mark is the perfect example of a young man very committed to taking back control of his life"

"they went through my debts and they actually called my companies up and worked out a payment plan"

Cheryl says "just the process of budgeting and spending was an important step for Mark to claw his way out of massive debt"

By working hard, and sticking to a strict budget, Mark slowly chipped away at his massive debt managing to avoid going bankrupt. Mark says "if I didn't do this I wouldn't have learnt my lesson and to just sit back and say yep I was in a lot of trouble, but yes I got myself out of it, yep it's huge to me"

  • According to the experts there are several simple rules to avoid the debt trap
  • Have a realistic budget and stick to it
  • Don't be tempted to spend ... leave the credit cards at home
  • Think twice before buying a car, it's not just the original outlay your up for, but also ongoing expenses
  • Know what your getting into before signing any financial contracts

Fiona Lander says "it's always buyer beware, do not enter into agreements you cannot afford to pay later"

  • And if you do get into trouble
  • Don't ignore your debts, let creditors know you're struggling, they may be able to help you with a payment plan
  • And get advice as soon as you know you're in over your head

In six months mark will be debt free, he still has nothing to show for the money he's blown, but he only hopes others will learn from his mistakes, Mark says "I don't want anyone to go through what I had to go through"

For more details contact

The Office for Children and Youth Website:

http://www.childrenandyouth.wa.gov.au/

Youth Legal Service:
(08) 9202 1688 or 1800 199 006 (country callers)