What Are the Effects of Debt for People Under 25?

• Debt can be a hard burden for young people under 25. Scott Quinn Photography/Brand X Pictures/Getty Images

  Being in debt at a young age can have serious implications for your future. Not only might you leave school with a heavy load of student loan debt, but you might have also picked up debt with a credit card or cards, cell phone bills, or data usage charges for those mobile devices. All that debt could have implications for your credit score, mental and physical well-being, and plans for building a solid financial future.

Bad Credit

• Debt can have a lengthy or lasting effect on the credit scores of young people, especially if that debt is tied to late payments or, worse, default payments. If you are under 25 and own a credit card (or two), make sure to always pay your bills on time, avoiding not only late payment fees, but also red flags on your credit score. Another factor in eroding your credit is the amount of debt you owe. If you hold several cards and are near to maxing out each one, your credit report will suffer, and you will be seen as a credit risk. Make sure to keep free at least 30 percent of your available balance on each card so you do not appear to be debt heavy. This could also have a long-term implications for automobile or house ownership or even employment.

Anxiety

• Debt, especially for young people, can cause anxiety. Not only can student loans and credit card bills pile up, but data charges on mobile devices and monthly cell phone charges can really add up as well. Worry over those unpaid bills can have an effect on a young person's physical and mental health, leading to anxiety attacks, headaches, ulcers, and feelings of depression and despair. This is especially true if the young person has a low-paying job or, worse, no job at all, increasing concerns over how to pay for all the charges he has incurred. A solution, of course, is to create a plan to pay off debt, develop a monthly budget to control spending, and get on the right track. However, that is sometimes challenging for young people who are just learning about fiscal responsibility.

Changing Life Plans

• The excitement of landing that first job, forging out on your own, and maybe even making that first big purchase can be tempered under the weight of debt. Young people, under the age of 25 might be looking to buy their first car, move to another city to land that dream job, or perhaps buy their first property, but all those plans can be thwarted by debt. Bad credit created by a bad debt-to-equity ratio could make qualifying for an automobile loan or mortgage nearly impossible. Add in the monthly bills accumulated through credit card and phone card charges or student loans, and a young person may not even afford the extra payments for rent, car payments, or moving expenses, resulting in a generation "delaying" adulthood.