During the first half of 2015, the number of payment orders from the Swedish Corona Magistrate increased for 26 years in 15 of Sweden’s counties compared to 2014’s first half, which is a lot since Sweden has only 21 counties. This is a rather dismal statistic, as payment orders for the Swedish population as a whole have decreased.
But how can this come about? Why are so many young people indebted? Is it only about young men and women between the ages of 18 and 25 taking sms loans that they cannot afford to repay or is it also due to other things? Yes it does. Certainly there are quite a few young people who have unpaid sms with it is not the whole truth behind the dismal statistics, moreover, young people are actually under-represented compared to other groups when it comes to debt due to sms.
Here we will show you why young people are indebted, which can be a good read for you who are just 18 – 25 years because if you know what the traps are then it is easier to avoid them.
Ignorance when it comes to personal finance
Many young people who live at home and start making money see the whole salary as a surplus that you can spend on fun things until you get the next salary. It does not matter if the money is over before you have received your next salary because you can still manage when you live at home with the parents. It is quite natural that you behave this way because that is what you used to do when you got a monthly allowance or study allowance.
Sure it works to live this way as long as you live at home but it can be the biggest problem when you have moved away from home. Then there is a risk that you behave in a similar way after the bills are paid, but because there is less money left over, they run the risk of ending long before pay and then the following can happen:
- The 18-year-old, or how old the youth is now, takes out a sms loan or a private loan to manage until the next salary.
- When the loan is to be paid off, or repaid in full, it remains even less after the next salary, which makes it again difficult to manage until another salary. Sure, you can skimp hard for a month and get in balance again, but because you are used to spending money you might not do it anyway.
- In closing, the 18-year-old cannot repay his loan or pay off his private loan and is therefore indebted. Or the 18-year-old pays the loan but ignores any other bill instead and is still indebted.
So what can you do? The main responsibility lies with the parents, they should teach their children to manage with their money and get a financial thinking before the children move away from home, but unfortunately many young people ignore it anyway.
Payment on invoice and part payments
When you shop online you can almost always shop on invoice which means that you do not have to pay for what you buy until a few weeks. Often, you can also pay part-time for several months and many times the e-retailers are attracted with the slogan like “buy now, pay in two months”. All this means that the expensive computer may not feel so expensive when the purchase is made, but after all it has to be paid in closing and sometimes with interest.
Unfortunately, it is not at all uncommon for young people to shop more than they should. Statistics show that people between the ages of 18 and 25 more often make impulse purchases than those who have passed 25 and the impulse purchases decrease the older the person is. They have learned from mistakes, so to speak.
This with paying impulse purchases on invoice or part payment is a real debt trap that can easily be compared to sms loans.
Unnecessary loans and credits
When it becomes difficult to pay invoices and bills or if you want to buy something you can’t really afford, there are many young people who obtain a credit card or take out a loan. This may involve both private loans and sms loans. Those who have a low income or have already received payment notes usually take sms loans because it is very difficult to get private loans with payment notes.
It is not particularly difficult to get a private loan if you have a stable and reasonably large income (if you have no notes) and it is even easier to get sms loans, this makes many who should not take a loan do.
Changes in their life situation
Young people are more often affected by major changes in their life situation than older people do. Many young people move together too quickly just to notice that it does not work and then they separate. After the separation, you suddenly have to pay the entire rent and the electricity yourself and it can be tough if you draw on loans and part payments for products you have purchased.
The risk of being laid off is also greater when you are young and that if anything can impair the economy, which also causes many young people to be indebted.
How to avoid this!
If you are young and want to avoid falling into the debt trap, you must first read our article on how to avoid debt and first read the article on what to think about before taking a loan. If you want to know what the most common debt traps are, read this article so you can avoid them.
If you are already indebted, read the article on how to become debt free and if you want to know what the most common debts are in the age group 18 – 20 you can read about it in our article on the most common debts among young people .