First Person: Helping My Sons Win the Debt Battle

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As the youngest members of the generation called Y, my sons have learned a lot from their older, broke peers. According to a recent MNS Money article, those born between 1981 and 1995 are losing the debt battle. A recent Saveup.com study showed 48.4 percent of Gen Y has so-called bad debt such as credit cards and car loans. In fact, their total average debt load is $28,930. Helping my Gen-Y sons win the debt battle is tricky because they need to build up good credit scores for their futures.

Losing their credit virginity

My son opened his first credit card at our local bank where he had a checking and savings account. The bank offered a student credit card. Even though the interest rate was high, my son kept a zero balance. His credit limit was $600, but the bank later increased his limit. In some ways, having a high interest rate helped hit home to him the importance of paying off the balance every month.

Avoiding student loan debt

Most people consider student loan debt to be "good debt" because it helps young people get jobs and earn more over their lifetimes. However, more than 53 percent of workers under the age of 25 were unemployed in 2011 even though they held bachelor's degrees. My sons decided to attend college on a part-time basis so they could avoid student loan debt. They view student loan debt as bad debt since so many of their older peers are saddled with tens of thousands of dollars of debt.

Holding off on car purchases

My older son "inherited" our old cars, while my younger son has kept his learner's permit longer. By keeping his learner's permit, we avoid having to pay additional car insurance. By older son stayed on our family car insurance policy until he was 20. According to Saveup.com, Generation Y-ers had about $12,000 worth of car loan debt on average. My sons are saving up for their first car purchases.

Living at home longer

Another way to win the debt battle is to delay moving out. My older son lived at home the first year he attended college. My younger son is living at home as he finishes up his schooling at the local community college. By staying put in our 4-bedroom home, we have been more easily able to accommodate them during their college years.

Many of my sons' older peers are skeptical about buying homes because of the housing crash or they can't qualify for mortgages because of student loan debt. My sons are still optimistic about buying homes in a few years. Although some experts say members of Gen Y just need to spend less and save more, it's not easy to do with massive student loan debt and low-paying jobs. My sons don't want to accumulate debt into their 70s or die in debt. But for some people in their 20s, it's already too late to stop the debt wheels from turning.

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