How Much Debt Is the Average 25-Year-Old In

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Real Estate Agent with Real State Company

Debt management has become a concern in Singapore. Statistics show that the level of debt has been on a constant increase. Financial experts know what it means to owe too much to others. It is vital that you avoid debts to the extent possible. You are not supposed to let yourself overwhelmed with loans. But again, you don't wake up in the morning and full of debts. Accumulating debts is something that happens gradually. With poor financial habits, you can quickly get into debt. But getting out of debt is something that requires a lot of effort.

Is it possible to live a debt-free life? It is very possible. This is a dream of nearly everyone, and many have been successful. A debt-free journey begins with understanding why you are in debt. You cannot solve a problem without knowing its root cause. If you want to live a debt-free life, start by acknowledging the things that drove you into debt and make relevant changes. Without a change in behavior, you cannot get out of debt, even with increased income. Have you ever asked yourself the reasons why individuals on high incomes struggle with debt? It all boils down to financial discipline.

For instance, you may get cash online by clicking here yet it might not be the right thing to do? While we acknowledge the fact that no one is immune to the conditions that necessitate borrowing, most of the problems individuals’ face, especially being overwhelmed with debt is often a result of poor decision making and financial indiscipline.

But then there are cases also when borrowing can be justified. In fact, there are so many instances when the decision to borrow can be considered reasonable and welcomed. The most important thing is to ensure that you are within the right limit of debts. The most unfortunate thing that can happen to your financial life is borrowing too much than what you can actually afford. And now we just want to respond to a critical question in this blog – how much debt is the average 25-year-old in? At the age of 245, you are still young, and you shouldn't be overwhelmed by debt. At each age bracket, there is a specific range of debt you shouldn't go beyond.

Average Debt by Age

The Younger millennials

These are individuals aged between 18 and 24 years. These individuals have an average debt of $22,000. In Singapore, such individuals are supposed to be between high school and college. It would be ridiculous to imagine that such individuals being overwhelmed by such loans as mortgages. In general, these young millennials are plagued with student loans. These loans take the most significant proportion of their overall debt, probably 28%, and then credit cards. The good thing about student loans is that they are considered good debt since they often have lower interest rates and carry tax advantages.

In contrast, a credit card balance is considered to be a bad debt due to the high-interest rates. You may qualify for higher student loans. But then that does not mean you should take them. Like other loans, apply only for the amount that you need. This should be an amount you feel you can comfortably repay using your first-year wages. For instance, if you feel you can earn at least $60,000 right from the university, then do not apply for more than that,

The Older Millennials

These are individuals aged between 25 and 34 years. The average debt here is $42,000. The primary source of debt for these individuals is the credit cards, taking a quarter of their total debt.  Still, some individuals in this category are homeowners, and as a result, mortgages contribute to 3% of the debt they owe, while student loans account for up to 16%.

In general, people's responsibilities increase as they age. This means the average expenses also increase. In many cases, the disposable income lessens significantly, even if you have a pay increase. The most important thing to do in t5his regard is to avoid accumulating more and more debt.

Generation X

These are individuals aged between the age of 35 and 49 years. The average debt here is $39,000. In this category of individuals, mortgages dominate the debt. They actually take up to 32% of the total debt amount. They are closely followed by credit cards, car loans, and student loans. This is the most critical phase of life, and you need to clear all your debt, including student loans and mortgages. The age of 45 years should be the turning point of everything. Why do we say that? It is because this is the period when you are halfway through the journey to most aspects of your life. For instance, you probably started your career at the age of 20s, and you are expected to retire in the 60s. This means you are slightly past the middle of the game.

Baby Boomers

This is the final category, and it is made of individuals aged 50 years and above. The average debt amount for these individuals is $36,000. The main composition of debt of these individuals include mortgages and car loans. Although nearing the retirement age, most baby boomers often lack savings. It is important to try and avoid debt to the possible extent. In fact, your primary concern at this age bracket is to finish paying off all your debt. So, work towards that.

The Bottom Line

It is difficult to avoid debt altogether, but it is possible to manage them and live a debt-free life. And if we go back to the question we asked at the outset - how much debt is the average 25-year-old in? Financial experts suggest a debt of $42,000. As we mentioned earlier, it requires financial discipline life to get out of debt. You can set a goal and put effort into that. It is possible to live a financially independent living in the coming days. But whether you will get there or not depends on what you do now.

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Rainer
552,871
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Financial management is a tough road to be on!!!

The most unfortunate thing that can happen to your financial life is borrowing too much than what you can actually afford. 

Nov 23, 2019 06:01 AM #1
Rainmaker
402,170
Doris Freeman
RE/MAX REALTY SOURCE - Jackson, TN
Broker/Agent, Realtor, Madison-Gibson-Crockett

We need more education in High School about debt and management, so that these newer generations can ENJOY life instead of living just to pay off debt.

Nov 23, 2019 07:16 AM #2
Rainmaker
39,353
Krystin Mitchell, CPA CFE
KLSM CPA Firm, PLLC - Houston, TX
Strategic Accounting & Tax Solutions

Alex,

How i wish the education system would teach the importance of credit, finances, and debt management in middle school and high school. 

Nov 23, 2019 07:37 AM #3
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SHAKEEL AHMED

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