Many Young People Will Die in Debt, but Hopefully Not From Debt

I had a weird night’s sleep and then openned up my e-mail to find this headline from credit and collection news “Does The Consumer Bureau Harm Those It Claims to Protect? & Study Predicts Millions Will Die In Credit Card Red.” The immediate implication in my drowsy state was that the CFPB was somehow killing people. Wow. As it turns out, these were two headlines from two different stories, first one about how the CFPB was hurting Americans and the overall economy by constricting credit, according to a  Heritage Foundation
paper by Diane Katz, available here. 

The second story was by Laura Rolland of the Huffington Post, and contained some grim news from a recent Ohio State Study published in the January issue of the Journal of Economic Recovery. It claims, consistent with informal data from my financial literacy class, that young people are up to their eyeballs in debt. According to Rowley, Millions of young Americans will die in debt to credit card companies. The study data show that people in their late 20s and early 30s (born 1980 to 1984) carry significantly higher credit card debt than older generations and pay it off more slowly, have about $5,700 more than people born 1950 to 1954, and $8,200 more than those born 1920 to 1924. The study even predicts that these young people will continue to charge well into their 70s.

The study examined Capitol One credit card data for more than 32,000 people from 1997 to 2009, including borrowers age 18 to 85, and examined both how people borrow and how they pay off their cards, allowing researchers to forecast payoff times. The paper posits that people born in the early 1980s have been guinea pigs in a massive social experiment, as the physics of spending have been radically changed by the internet, which requires nary a physical movement from the couch, and  exposure to and access to luxury goods has skyrocketed. Stagnant wages help complete the picture.

Does this matter? Rowley thinks so, and reports upon the health risks of debt, including ulcers, migraines, back pain, anxiety, depression and even heart attack. Perhaps my drowsy rendition of today’s news was not so far off? Life-long debt equals stress equals shortly and less enjoyable lives.