How Can I Tell If My Teenager is Taking on Too Much Debt?

[Learners Quest]

To know if your teenager is taking on too much debt, you must first understand the different types of debt and how different amounts impact their future. Common types of debt include credit card debt, car loans, mortgage loans, student loans, installment payments on a major purchase like a home or car. Each type of loan requires different repayment terms and can have an effect on your teenager's financial health. Knowing the type of loan they are in will help you to better help them manage it or get out of it as needed. Let's explore each type in more detail so that parents can better understand how debt affects their children:

Credit Card Debt: Credit cards offer people instant rewards once they earn some cash back or reach a certain amount as part of their normal spending. Credit cards also offer great flexibility as they can be used at any store or business and access to consumer goods. However, there are always charges attached to these cards that include something called interest payments. Interest rates can vary a lot which means it may be more costly to carry a balance than if your teenager paid the full amount right away. For example, on a $20,000 car loan at 18% rate the balance would be $14,235 while paying off all of it in an instant would only be around $10,000. This is why credit card debt becomes big trouble when your teenager starts making minimum payments late into the year and further into their life as they get older with higher penalties to pay off more expensive loans.

 

[Augusta]

Well, there's no other way out than to open up and tell the teenager that getting too much debt comes with a lot of issues in the future.The person might be doing all of that out of ignorance.Theres nothing as bad as living in ignorance so some people might just need to be guided a lot of times

So yeah if you have a teenager that doesn't know or knows but doesn't really understand the consequences have taking too much debt which might negatively affect his or her future financial life it behoves on you as the parent to set the record straight for the minor.