Some Legal Advice for Borrowers

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Taxes are quite annoying for all of us. Many would love to live in a world free of taxes. Sadly, such world would be incredibly imbalanced and unfair. This does not mean that you must blindly abide all rules of the system and increase your debt just because. In fact, tax laws are flexible and allow you to significantly reduce the total volume of debts. Here are some tips that will help you to avoid unnecessary expenses when receiving a loan.


Don’t Give the Government a Loan Free of Interest

Some money can be taken back in case you have big annual tax returns. You will have to fill out the W-4 and the way you do it determines a lot of things including the amount of money that you pay as taxes. However, when a certain threshold is exceeded, you may return excess pay.

This process may seem really attractive and cost-efficient, but it also opens up some avenues for loaners to increase your debt. When you return taxes and get your sweet cash back, the interest on all of your debts keep piling up. This can be avoided by simply filing out yet another W-4 with more information regarding your current financial situation. Define your deductions appropriately to extract good benefits.


Use Deductible Tax Money to Pay for Non-Deductible Interests

Some forms of interest are deductible. Examples are your mortgage, various types of student loans, and other. The majority of cases require you to carefully describe potential deductions in order to get it. However, even non-deductible interest can be covered in case a new tax law is implemented. Depending on your current debt structure, you will be able to significantly cut down the cost of a loan. At the same time, certain types of credit interests are not deductible at all.

If you have money that you acquire by deducting specific interests, you should use it to cover non-deductible ones. This will allot you to avoid expenditures and keep the bottom line without a single touch of red ink.


Student Loan Interest

After several changes, tax laws became a little bit more forgiving and allow you to claim the interest on your existing student loans. It is possible to get back up to two and a half thousand dollars. This is a huge sum of money that will definitely allow you to deal with debt much easier.

Student laws are quite volatile. Conditions and rulings change every now and then. Depending on the nature of changes, you may be qualified for significant returns that will restructure your whole debt. It is imperative to regularly consult with the IRS in order to learn about possible ways to work around your student loan. Do not think that the IRS knows what is best for you.


Debt Settlement and How It Affects Tax Laws

Loaners often decide to offer a settlement to their borrowers. This may happen due to a plethora of reasons. Sometimes, loaners want to get their money faster even if it means a significant reduction of their gains. In other scenarios, such moves allow loaners to deduct taxes. The difference between the amount of money owed and factually paid can be presented a taxable interest. Too many settlements over the course of several months can be ineffective.

Insolvency is one possible solutions this situation. You just need to declare yourself insolvent by using a 982 form. This will notify the IRS about your new status. By doing so you will avoid the necessity to fill out forms on your savings generated by settlements. Depending on the overall structure of your debt, you may save a considerable amount of money.


Don’t Let Your Credits and Deductions

Tax Laws are not set in stone and can be changed. This is very important when it comes to claiming loans for your relatives or friends. For example, the level of income can dramatically change tax return rates. Some people are eligible for earned income loans which allows you to increase the amount of potential tax returns by thousands dollars. There are lots of nuances and intricacies regarding loans and taxes. We highly recommend you to consult with an experienced seasoned veteran to learn everything you need about taxes and loans.


Advantages of the Extensive Tax Knowledge

There is nothing wrong with paying taxes. They help to maintain infrastructure and develop the country, but we also need to know how to pay them wisely without overpaying for anything. This is how you will be efficient with your loans. Whenever you engage in financial activities, you should always consult with a trained lawyer.

A Faithful Payday Lender for Catholics

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Just in 2016, a group of people from the community of St. Vincent de Paul Diocese of Columbus decided to focus on creating a completely new way of helping out people in need. Even a small expense can easily push you off the track and even ruin your life if there is no reserve. The idea of a loan administrated by people of faith and provided to those who require a small financial aid right here and right now was conceived after long discussions and years of planning.


Catholic Payday Loan Details

The first experience was more than successful and 5 other counties decided to pick up on it. The plan is to expand even more and provide help in all 23 counties at some point in the nearest future. If everything goes according to the plan, thousands of people will have a place to go when they direly need money.

There are several key features of this microloan that should be noticed:

  • The borrower may receive up to $500;
  • Very low interest rates;
  • The borrower may take a loan for up to 15 months.

Credit history is mostly ignored.

Compared to some interest rates that may be as high as 500% annually in some states (Ohio is one of examples), these conditions seem to be more than simply attractive for the vast majority of borrowers. If you are in a desperate situation and require help, you can easily apply for a loan and return it gradually. Payments will be structured in a way most comfortable for the payer.

One of key moments here is that your credit history improves as you pay back to the community meaning that some people could use this service to improve their chances of getting a bigger credit eventually in case such a necessity occurs. One of goals is to allow people to improve their relationships with various lenders and banks.

This community administrated operation is a great way of reducing the burden of interest rates for those who simply cannot afford to pay them. There are thousands of people in America whose financial situation is astonishingly fragile. Paying even a single extra cent could mean trouble in their scenarios.

The core idea behind this new service is to reduce poverty and introduce new effective ways to deliver money to those struggling to make ends meet. Driven by kind people and faithful enthusiasts, this service starts gaining momentum and sparks excitement in many regions of the US.


The Future of Catholic Payday Loans

The tomorrow does seem brighter for this idea. It has a robust structure supported by the community which assumes all risks related to each loan allowing the borrower to breath freer. Simultaneously, people do not have that gnawing feeling that they are being robbed by powerful banks and other financial institutions. Everything happens within a much smaller community interested in helping you out.

Scores of people face difficult times that do not allow them to fulfil even the tiniest of goals like changing tires on a car or fixing broken windows. This new alternative to standard payday lenders who are preying on weak is something that every county in the country should have. Hopefully, the day when this will be available everywhere will come soon.

Some Facts from the History of Payday Loans

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Payday loan is a quite young phenomenon. It appeared in the 20th century, but the industry of payday loans has developed a lot since that time. Every day thousands of people step over the sill of a lending organization to take a loan.

It is hard to say when payday loans appeared in the USA. But this phenomenon seems to have roots in 1956, when the Senate Bill was issued. This Bill allowed people in need to take small loans that had been forbidden before. Then, 30 years later, in the 1980s people could use services of pawnbroker’s shops and so-called loan sharks. Today payday loans are really popular among those who are short of money.


Who are “loan sharks”?

Loan sharks are lenders who provided short-term loans. It should be mentioned that this kind of loan was not a really good option for people who needed money as the interest rates were very high. The study conducted by Consumer Federation of America in 2004 showed that the interest rates of loans provided by loan sharks could have come up to 1000 per cent. Of course, many people could not repay their debts especially at the time of the Great depression.


First payday loans

First payday loans appeared by the end of the 20th century,but, unfortunately, they resembled shark loans in some ways: new lenders yet again provided their customers with high-interest cash loans in exchange for post-dated checks.

At this time payday loans were called “check cashing services”. But this phrase did not fit the state usury laws and it was decided to substitute it by the word “loan” to avoid breaking of the law. Payday lenders usually provided additional fees for every $100. These fees ranged from 10 to 20 per cent for every $100.

Deregulation of banks that took place in the end of the 1980s affected small banks and forced them to vanish. This deregulation caused the appearance of organizations that offered payday loans. Moreover, lenders had to change loan procedure after deregulation to fit the terms of new laws.


Payday loans became more popular

In the beginning of the 1990s, Allan Jones, an American businessman, founded an organization that provided short-term loans. In 1996 these short-term loans were legalized, which contributed to the development of Allan Jones’s business. For some years this organization has grown and became the largest company of this type in the USA. At first, the company had about 500 offices, but now it has more than 20 thousand offices around the USA, and their total income equals to 45 billion dollars per year.


Payday loans Online

With the appearance of the Internet in the 1990s, many businesses started to use it to offer their services. And the sphere of payday loans is not an exception. After the rise of the Internet the number of organizations that provide payday loans has increased as well as the number of people willing to become their customers. It can be explained by the fact that many people do not have to visit any lending office personally, because sometimes they neither have time for it, nor desire to talk to an agent about their financial state.


Competition

Today the industry of payday loans involves a lot of controversy. There are supporters as well as opponents (i.e. the CFPB, an organization that argues against short-term loans), also, there are companies that offer some alternative ways of getting money. Some of them, for example, provide a possibility for a worker to get their salary at any time their need it. In addition, many companies direct possible borrowers to some special organizations that provide lower interest rates.

Payday loans appeared not long ago. The “ancestors” of modern lending organizations are “shark-loans”. They led their business unfairly and people remember it. Because of this fact, many people are biased against lending organizations and do not believe them. But the times have changed and the way lending organizations provide their services has changed, too.

Florida Is Going to Increase the Maximum Sum of a Payday Loan

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The lawmakers from Florida want to change the rules of payday loans. They want to increase the sum people may borrow from the organizations that provide payday loans. Still, many people are arguing over this initiative, thinking that this new law may bring more harm than good.

Payday loans have always been a stumbling block for common people and politicians. Many of them believe that payday loans are a good source of money for those who need it immediately. On the contrary, other people think that payday loans may lead you to a debt hole. They say that by taking a payday loan a person starts an endless circle of reborrowing.

The lawmakers from Florida do not think so. They have introduced a bill that presupposes the increase in the amount of money that people can borrow as a payday loan. So, what are the pros and cons of this bill?


Pros

As it has already been said a payday loan may be a good way out for those who are short of money but really need it right now. In addition, people who cannot take any credit from conventional banks because of a low score or other reasons find this option really suitable.

If the legislation of Florida approves the new bill concerning payday loans, these people will have a possibility to take more money. The maximum sum people can take now is 500 dollars, but it may increase up to 1000 dollars. Moreover, the terms of repayment will also rise from 30 days up to 60 or even 90.

Now the legislation of Florida forbids issuing loans to people who have any other outstanding loan or to who have repaid their last loan fully in past 24 hours. Lawmakers say that they are going to preserve these restrictions for taking a payday loan in the new bill. So, these restrictions may prevent people who are not able to repay from taking a payday loan and somehow to ensure the debt repayment for the lending organizations.


Cons

Today the maximum sum of a payday loan is 500 dollars. If a person borrows this money from a lending organization, this person will have to pay total 50 dollars of fees, and the final sum of repayment will be 550 dollars. You may think that borrowing 1000 dollars, you will have to pay 100 dollars of fees that is quite logical, but in fact, the bigger sum you borrow, the higher your fees are. It means that if you take payday loan in amount of 1000 dollars, your fee will be 216 dollars.

It is said that the new bill requires lower annual percentage rate for payday loans. Now this rate is 300 per cent, but the bill will provide 200 per cent of annual percentage rate. We can treat it as an advantage, but many experts believe that, on the contrary, this measure can attract more people to use payday loans and, thus, increase the number of people who are dependent on loans.

Experts believe that the industry of payday loans gets more than 300 million dollars in fees from their customers. If the maximum sum of a loan is doubled, the amount of fees charged may also increase more than twice. And it means that the industry of payday loans will expand. Many researchers do not believe that this expansion may be a good sign, because in this situation these lending organizations acquire more customers and more people will live on a loan. And it may harm the economy of the country.

As we can see, the new bill has its advantages and disadvantages. The increase in the amount of a loan may be a good thing for people who need money and who are able to repay their loan. But people who do not have enough money to pay their loans back are risking falling into a trap or reborrowing. It means that having no money to repay their debt, they would have to go to another lending organization to take another loan and repay the first one.

Is the Unbanking of America happening?

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The issue of payday loans is widely discussed by many people and in many books as well. One of such books is The Unbanking of America written by, a professor from the University of Pennsylvania, Lisa Servon. The author lets us see the banking system from inside, and at the same time she delivers portraits of businessmen, who react to the unbanking of the USA.

Let’s imagine that you have a low paid job and are living from paycheck to paycheck. You might have a poor credit story that does not let you borrow some money from a bank. And finally your car that you use to get to your job every day breaks down. It is obvious that you do not have enough money to fix the car and to pay your rent; you have to choose only one option. What would you choose? Ariane, a heroine of the book The Unbanking of America by Lisa Servon, was in exactly the same situation.

Ariane believes that the perfect solution in this case is to take a payday loan. And Ariane is not alone in her opinion that the payday loan is the best option when you urgently need some money, about twelve million of Americans are in the same mind.


Who uses payday loans?

As it has already been said, payday loan is a good way out for people who have some unexpected expenses. They might include money to repair a car, money to pay for a medical bill and money to pay a rent. It is stated that people, who are ready to take a payday loan are female or African-Americans, who have low credit score and whose annual income is less than thirty-five thousand dollars. These people are more likely to take a payday loan rather than to use their credit card. They believe that taking a payday loan would be cheaper than to use a credit card.


What is the Payday Lending Business Model?

Some people think that payday loans are evil and bring profit only for the lenders, but, in fact, many specialists confirm that the sphere of payday loans is driven by consumer’s demand.

Lisa Servon worked as a check cashier in one of the organizations that provide payday loans. She admitted that people liked that such organizations are more transparent and do not make you pay any extra fees as conventional banks can do.

In addition, a lot of borrowers complain about high cost of payday loans. The cost of payday loans is determined by the risk that the lending organization has. It is the risk of default on payment. An average default rate for payday loans is twenty per cent. It is very high in comparison with the default rate of conventional banks that is about three per cent. But we should know that about two thirds of the money payday lenders collect is used to repay the overhead on payday loan stores. How to repay?

Experts say that about eighty per cent of people who have a payday loan cannot manage to repay it on time. We might expect that these people curse the very day they stepped over the sill of the lending organization, but actually their opinion is absolutely the opposite.

Although Ariane had not managed to repay her debt on time, because she needed money to pay her rent and to buy food, anyway she had her car fixed and she still had her job, and soon she was able to repay her debt.

In addition, Lisa Servon highlights that the process of taking a loan in conventional banks takes a lot of time. You have to go to the bank with all the required documents and then wait for your loan to be approved and only after that you can take the money you need. But when you lack time and money you cannot wait for so long.

Nowadays, when the banking system is not transparent and when bank loans are not available for everyone, more people feel positive about taking a payday loan. Even if payday loans are not suitable for everyone, they can be a source of money for thousands of desperate people.

Read more:

The Unbanking of America: How the New Middle Class Survives – PW
THE UNBANKING OF AMERICA – KIRCUS
How the Consumer Financial Protection Bureau’s Payday Loan Rule Hurts the Working Poor – CEI

Collection Agencies and Your Debts

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People who do not pay off their debts risk to become clients of a collection agency. But sometimes such an agency calls you up and asks for repayment of debts that you do not even have. What can you do in this situation?

Debt is always an unpleasant thing. We are always concerned about them and try to pay them off on time; otherwise a bank may refer to a collection agency that will force you to pay your debts. Unfortunately there are cases when collection agencies ask people to pay debts that do not belong to them. The reason might be a mistake of a bank or a collection agency itself. Anyway you have to know how to deal with collection agencies.


How does a collection agency work?

If you do not pay your bank debt during one hundred and eighty days from the moment of its receipt, the bank will hire a collective organization that has to collect your debt. And usually after some more months the bank sells your debt to a collection agency. In this case, when the bank has sold your debt, it does not have any relations to your debt anymore. And because of that a collection organization might take from you more money than you should have paid to the bank to make a profit from buying this debt.

It should be mentioned that not only bank debts can be transferred to a collection agency. Any debts you have including medical loans and utility debts can end up in such an agency.

After the information about your debt comes to a collection agency, a notification about it will appear in your bureau. This notification can significantly influence your score.


How can activity of a collective agency influence your score?

As it has been mentioned, once a collective agency receives your debt data, your bureau acquires a status of a “collection account”. These harmless at first sight words can greatly affect your score, and the degree of this influence depends on the size of your score. The higher your score is, the more points it can lose.

This information about the status of your account remains in your bureau for seven years. It should be mentioned that those seven years start only after one hundred and eighty days of non-payment, or after a collection agency receives the information about your debt.

The only way to get rid of this status is to make a collection agency remove your debt after paying it. You may ask this organization to have a “pay for delete” deal. It means that you agree to pay the sum that a collection organization wants you to pay, and after the repayment is done they remove a notification “collection account” from your bureau.


What can you do to change the situation?

If you are sure that the debt a collection organization wants you to pay is not yours, you can write a letter to it within thirty days from the first collection activity confirming that you do not have any debts. If the organization does not provide any proof that you owe the debt, the information in your bureau will be renewed and all the collection activities will be stopped.

In the situation when the agency provides proof that you actually have the debt, but you do not agree with it, you can search for help in CFPB. Consumer Financial Protection Bureau is an organization that helps people in the situation when their financial rights are violated. This organization controls the work of banks, credit unions and other financial companies and ensures compliance with financial laws that protect you from fraud and abuse.

So, you have to remember that if you have any debts you have to pay them on time unless your debts may be bought by a collection agency. And this purchase can bring you a lot of troubles. You will receive unpleasant calls from the agency workers asking you to pay your debts off, and in addition you will acquire the reputation of a “bad borrower” and that can cause problems with your future loans.

In What Way Are Payday Loans Connected with Native Americans?

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Payday loan is a controversial issue. Some people do not hesitate to take it, while the others cannot even bear the idea of taking any payday loan. And they have every right to do it, because of all the news and talks about organizations that provide such loans. So, if you are going to have a payday loan you should study information about this organization beforehand.

No one wants to be deceived especially when it comes to our money and taking loans. We are trying to act as careful as we can, but unfortunately it is not always possible. We fall into the trap and stay duped. Usually it happens because we do not study all the information about the organization that provides these loans. The first thing we should do before borrowing money is to check all the information about the organization and payday loans in general and find out if you can trust this organization or not.


Check if Native Americans are involved in the organization

It is said that some payday lenders in America use sovereignty of Native Americans to avoid consumer protection laws. It is really useful for lenders who want to breach the law, because the sovereignty of Native Americans prevents them from being sued for violating consumer protection laws. And if an organization wants to earn a little bit more money on their clients, its head just has to find a tribe and ask for help.

You may have a reasonable question: why do tribes need this? The answer is very simple: money. Of course, they enter into such business to get some money from it. The statistics says that one out of four Native Americans is living in severe poverty. That is why they are ready to earn some money even if the way of getting it is not quite fair. But in fact, a tribe usually gets only one per cent from the average revenue of a company. It is not a big sum in comparison with the revenue of a company that can be more than several millions of dollars.


In what way does it violate the law?

According to Public Justice Report, some payday loan organizations provided loans with an interest rate higher than 700 per cent.  The organizations knew it, but they could not be judged by court, because an accused organization formally looked like tribal business and its activities could not be sued according to the local consumer protection laws. And the organizations continued to take profit from their existence.

These details were opened when the police started to investigate the case of Scott Tucker. Scott Tucker used to be a race driver and an owner of some payday loan organizations at the same time. He has been recently sentenced to more than sixteen years in prison for illegal loan practices that affected about four and a half million customers. According to the documents, Tucker’s companies were affiliated with the Miami Indian tribe of Oklahoma.

In fact, sometimes leaders of the tribes which names are used by payday lenders do not even know of that. It happens because a lender needs approval of just one member of a tribe to use its name. And there are cases when the heads of the tribe did not agree to take part in this business, but anyway they participated in it without even knowing about this fact, because of the agreement with one of the tribe members.


Many people can assure you that payday loans are absolute evil and such loans are not worth being trusted, but actually payday loans cannot be called so. As in every business there are companies that are not so light-fingered. You as a customer and user of these loans have to think of your safety and find out as much information about the organization you want to borrow from as possible. Except for the information about the address of the company, its reviews and reputation, you have to find out who the head of this company is and check if it is affiliated with any tribe.

5 Things You Had Better not Take Payday Loans for

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Sometimes we face such situations when we really need some money, but actually there is no opportunity to earn it. In this situation we are thinking about payday loans. They are the most convenient; you do not have to spend a lot of time waiting for an approval of your loan application and you do not have to give a lot of different documents to get it. Unfortunately, there are cases when people take payday loans to spend money on something ridiculous.

Payday loan is a good source of money for those who need it immediately. But anyway it is a loan and you have to pay back the money you borrow. So, before taking any loan you should think of where you will get money for repayment and be sure whether you can pay this money back or not. Sometimes people are not able to demonstrate such responsibility and take payday loans without even thinking that the day, when they will have to pay the bills, will certainly come. They take a loan guided by some insane reasons and after it, do not know how to pay it back. So, what are these reasons?


Loan for a wedding day

Some people are so obsessed with an idea of luxurious wedding day that they are ready to spend millions of dollars on it. But what can they do if they have only one hundred dollars in a pocket. There is a way out! Payday loan! They celebrate their wedding day and then understand that they have to pay back quite a big sum including interest and fees. And of course these debts affect their married life a lot.


Loan for shopping

There are people who cannot imagine their life without buying some new clothes, shoes or jewelry. They cannot wait for their salary to come to buy some new clothes. And because of that they go and take a payday loan and then spend all the money shopping around. When the day of repayment comes they do not know where they can take this sum of money and some of them go to another organization that provides payday loans and take another loan to repay the first one.


Loan for gadgets

TV sets, computers, laptops or smartphones are the things that many people get payday loans for. But, again, they are not worth it. The reason is that gadgets are not essential goods; you can easily live without them. It is senseless to buy a gadget with the help of a payday loan and then repay the money including all the fees. It is better to save some money and when you get the sum sufficient to buy the gadget you need, you can easily do it.


Loan for addictions

Gambling, drinking or smoking are not the right things to spend money for, especially the money you get from payday loan. Spending money on it you harm not only your health, physical and mental, but your financial position as well. It is 100 per cent obvious that people who borrow money for such purposes will have problems with repayment, because they will spend this money for their addictions and will hardly think of paying it back.


Loan for socializing

Of course, it is great to enjoy your life and spend your time with your friends clubbing, for example. But if you do not have enough money for your social life it is not the reason to take a payday loan. Everybody likes spending time with pleasure, but people who have little money by the end of the month should be more careful with their spending on social life. Otherwise, they are risking to get themselves into financial difficulty.

Payday loan can help people who really need money to buy necessary things, but, also, it can do a lot of harm for those who borrow money guided by some insane reasons. If you need to buy some unimportant things, such as gadgets or new clothes, it would be better to save some money or earn it somewhere (work some extra hours, for example). And in this situation you will not have to pay any money back.

Four Bad Money Habits We Have

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We are usually very busy to notice that we spend our money improperly. We do not have a chance to stop and analyze our financial behavior. And that is why we do not even think that some financial habits we have sooner or later may lead to some unpleasant consequences.

It is not a secret that sometimes we spend our money unreasonably. We buy some things that we do not even need, we lose our money playing some games of chance or we do not pay enough attention to the terms of our credit card repayment. Usually we do not really notice such things thinking that we can afford being free with money from time to time. But, in fact, such behavior forms our “bad” money habits. So, what are the most common “bad” money habits of people in the USA?


More than 40 per cent of Americans do not pay back their credit card debt in time

In the USA many people do not pay their credit card debt every month. They just pay some minimum sum and wait for the other settlement period to come. It is not quite right attitude, because in this case you will have to pay back more money than you actually spend because of the interest rate. According to the statistics of NerdWallet an average American family who has credit card debts pays about 1300 dollars in interest per year.


About a half of Americans do not have enough money for a rainy day

It is important to have some money saved because one day you may really need it. It is a pity that many people ignore this advice and spend everything they earn in one month. Some extra savings may help you at the time of trouble, such as job loss or any health problems.

The experts recommend that everyone has some savings in the amount of six salaries. They advise to put at least ten per cent of every income aside to save some sufficient sum. It may sound difficult for those who are not used to making savings, but when it becomes a habit your savings account will add up quickly.


The number of parents who take student loans has increased

The statistics say that the number of adults with student loan has quadrupled in recent years. Parents take student loans to provide good education for their children, but, in fact, such debt aggravates the position of the parents themselves. They have fewer options for loan repayment and in addition they are closer to retirement, which means that after their retirement they might not have a chance to pay this debt back successfully.

Parents who want to take such a loan should think not only about their child’s education but also about the sum they have to borrow. It is a good decision to find some cheaper colleges or some other variants of financing. For example, a child may take on some part of the student debt too.

The statistics says that an average student loan is about 23 000 dollars. Total debt on student loans in the USA is 875 billion dollars and it increases every second.


Only 58 per cent of Americans have retirement savings

About a half of the adults in the US does not have any savings for retirement. There are two reasons for that. The first one is that they simply do not bother to do it, and the second one is that they just do not have any money for that, because they have to pay back their debts.

Again the experts recommend put some 5 – 15 per cent of your income on your savings account to prepare for your retirement. It is important to save some money today, because tomorrow it will provide you a good life.

Today money plays an important role in our lives and because of that we should learn how to manage it correctly. The first step that should be done is to get out of debt. It is not the easiest thing to be done, but you just have to do it to provide better future for you and your family.

Credit Card Debt of Different Generations

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The world does not stand still, but moves and changes. And people are changing together with the world. They change their behavior and attitude to different things. People of different generations have different attitude to money, their accumulation and their spending: and also they have different attitude to the debt. So, what generation has the highest debt?

Some people are okay about living in debts, some of them are totally against it. Why are their opinions so different? Such difference in perceiving of the notion of debt can occur because of the different lifestyle and different outlook, but in fact this difference may occur because of the age gap between them.

The research conducted by 2017 showed us the attitude of different generations to their debts and answered the question “which generation has the highest debt”.


What do people born between 1961 -1996 think of their credit card debt?

People who were born from 1961 to 1996 are usually divided into three generations: Generation Z, Generation Y and Generation X. The research found out that these people use their credit cards in comparison with the other generations less often. The study proved that people who belong to the Generation Z spend less money than the others. An average debt of this generation is about 630 dollars. The debt of the generation Y and X does not exceed 660 dollars.

Now many people from these generations leave their parents’ homes to buy their own. And this is the reason why their mortgage debt is the highest in comparison with other generations. It is more than 230 000 dollars.


What is the debt of Baby Boomers? (People who were born after WWII)

An average credit card debt of a Baby Boomer is about 700 dollars that is just a little bit higher than the debt of a person belonging to previous generation. Although, these people are in a very good financial shape, their mortgage debt cannot be called the lowest, it is about 190 000 dollars.

Such mortgage debt may be the cause why many Baby Boomers have no retirement savings. The research of 2016 showed that three people out of ten are not able to save money for the retirement.


The attitude of the Silent Generation to their card debt (from 65 and older)

Silent generation has the highest credit card debt among the other generations. Their average debt is around 730 dollars. And their mortgage debt is also surprisingly high: about 157 000 dollars.

The research of 2015, though, found out that this generation is the most responsible. It is said that 72 per cent of people who belong to this generation usually pay their debts each month.

But not many people pay their credit card debts each month. Many of them do not pay their debts off even in some months and wait until the sum they have to pay is “high enough”.

In the situation when you cannot manage to pay your card debt you have to follow some important tips:

  • Track down your money. If you have a constant credit card debt it is obvious that you spend more than you make and in this situation you have to find out what you actually spend your money for. Install a special app on your phone that would show you the list of things you buy or just write down them in your notebook. And then you will see what the reason of your excessive expenditures is.
  • Cut your expenses. The next step is to get rid of your expenses to free up more money for debt repayment.

People belonging to different generations are accustomed to different ways of spending their money. They have different attitudes to their debts and their repayment. But every generation should remember that it is important not to spend more than you can afford, more than you earn. Because in this situation you would not have to think of your debt and how to pay it off, and, also, you would be able to save some money “on a rainy day”.