Financial literacy is obviously an important “skill” for young people to have, particularly in an economy where unwise use of credit can mire one in a mountain of debt. For many young people nowadays, though, the challenges in this area are significant.
According to a recent report entitled, “Millennials and Financial Literacy: The Struggle with Personal Finance,” many young people struggle with significant debt and low savings. Evidence listed in the report includes the fact that almost 42 percent of millennials make use of risky alternative financial services such as payday loans and auto title loans. In the midst of this, very few millennials—around 12 percent—seek out professional help with debt management.
Debt management, for those who aren’t familiar with the term, refers to counseling programs which aim to help people manage their budget and decrease/eliminate debt. Companies offering debt management services can negotiate with creditors to obtain lower monthly payments and interest rates, to waive late fees and over limit fees, and sometimes to stop collection calls. These programs do cost money.
Whether or not debt management is the right choice for a millennial, or any debtor in a desperate financial situation, is not always easy to determine. In some cases, of course, debt management is really not going to be the best solution and bankruptcy will be the more sensible option. How does a debtor know when he or she is in a bad enough spot that bankruptcy is the best decision, as opposed to debt management or some other alternative for debt relief? Consulting with an experienced bankruptcy attorney can help provide guidance, particularly if bankruptcy is determined to be the best decision.
Source: Phys.org, “Report shows millennial have high debt and little savings,” Jan. 14, 2016.