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OVERVIEW
Debt life stages
The debt treadmill can start during youth and keep going, sometimes straight into the not-so-golden years.
Out of the red and into the black

Life stages of debt

The borrowing doesn't stop there for college students. Undergraduates make easy targets for credit card companies that often give out swag for signing up for a card. Already susceptible to the slings and arrows of outrageously shallow peer assessments based on clothing and music preferences, kids can bump up against their credit limit pretty quickly.

Debt life-stages
College
Young singles
Young families
Mature families
Empty nesters
Seniors

"Young people are starting off graduation not only in debt, but it also shows that that competitive pressure that they experienced in high school is what they see as the norm when they go to college," says Manning.

"As we start to see the competitive consumption start at an earlier and earlier age, it's not surprising that it then continues in older age groups," he says.

Young singles
Getting established in the world costs money -- lots of money. In a cruel twist, people starting careers fresh out of school often don't have a lot of it.

Some lucky people can fall back on their parents for help, but not everyone has that option or wants to take it.

"It's unfortunate but people have always judged others on superficial stuff. So you have to have nice clothes, a nice car, a nice apartment," says Lewis Mandell, professor of finance and managerial economics at the University of Buffalo.

"You have to be willing to spend money at bars just to socialize. I think this is considered the norm, it's not considered extravagant. But even normative behavior is expensive," Mandell says.

Earnings have been really flat for young people with college degrees.

But college graduates can probably waltz into a cushy corporate job that offers ample pay for a worker bee living in the big city, right?

Not necessarily.

"Earnings have been really flat for young people with college degrees," says Draut.

"Incomes are not really keeping up with costs, but one particular difference is that you're talking about a starting salary and a lot of debt that has to be repaid," she says.

With tight budgets and soaring living expenses, young people end up on a tightrope between paydays and too often credit cards are their only safety net.

"There is not a lot of cushion left at the end of every month, which makes young people very vulnerable to amassing large amounts of credit card debt when the car breaks down or when they need to go to the dentist," says Draut.

But if college graduates are feeling bruised by harsh economic realities, those without college degrees feel it even more.

-- Posted: Feb. 25, 2008
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