Young people living a lavish lifestyle on credit card debt | 60 Minutes Australia

Generation Y faces a debt crisis, living lavishly on credit cards amid a global financial meltdown, risking their financial futures.

Key Takeaways

Generation Y is heavily reliant on credit, accumulating unsustainable debt levels.
Easy credit availability and aggressive lending practices contribute to the crisis.
Young people often lack financial literacy and underestimate the consequences of debt.
The debt crisis among youth mirrors factors that led to the global financial meltdown.
Without intervention, this debt burden threatens the economic future of this generation.

What the video covers

Generation Y, aged 18-28, has accumulated $60 billion in credit card and personal debt.
Young people like Amanda Naborsi spend heavily on credit despite earning modest incomes and living with parents.
Many in this generation have never experienced economic hardship, leading to reckless spending habits.
Zoe Zirkler exemplifies the crisis, with $70,000 in debt on a supermarket salary, nearing bankruptcy.
Debt management services report increasing calls from young people overwhelmed by debt.
Easy access to credit and irresponsible lending practices fuel the debt accumulation.
Economists warn this mirrors the bad debt that caused the global financial crisis.
Banks continue to offer risky credit to young consumers for profit despite past lessons.
Students like Emma Lovell graduate with significant HECS and personal debt but view borrowing as necessary.
The generation risks long-term financial instability, including inability to afford homes or families.

Chapters

Why is Generation Y accumulating so much debt?

Generation Y accumulates debt due to easy access to credit, aggressive lending practices, and a lack of experience with economic hardship, leading to reckless spending.

What are the consequences of this debt for young people?

The consequences include potential bankruptcy, inability to afford homes or start families, and long-term financial instability.

How do banks contribute to the debt crisis among young people?

Banks continue to offer high-limit credit cards and loans to young consumers despite the risks, driven by competitive pressures and the desire for high margins.

Full Transcript — Download SRT & Markdown

Speaker A

It's been a hell of a week. The global economies are in meltdown, the financial markets are in chaos, and it's not over yet, not by a long shot. Basically, greed, dodgy loans, and bad debt are to blame. So you'd think we'd all be a bit cautious

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with our credit cards. Some of us may be, but not the kids. They call them Generation Y. They're young, reckless, and they've racked up an astonishing 60 billion dollars of debt. New cars, new clothes, new toys, no problem, just whack it on the

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card. These kids have never known tough economic times, so they think they're invincible. But now they're in for the shock of their lives. [Music] The world economy is in free fall, on the brink of recession, but 20-year-old

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Amanda Naborsi couldn't care less. How much do you spend a week on your credit card? 1500. And you don't blink at that? Not at all. No, it's a lot of money. It's all right. It's happiness. [Music] Amanda's typical, like Generation Y, those

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aged between 18 and 28. She still lives at home, has no bills to pay, she earns 35,000 a year, and happily blows every cent. Don't look at the price of the prop, don't have hesitations about it. On her second thoughts,

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working on the card, yeah, pay it off. That's like a take-home layby, pretty amazing. Today she's unleashing a brand new credit card limit, five thousand dollars. That's beautiful. Her age group is now known as Generation Debt, owing a staggering 60 billion

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dollars. Are there any coins or notes in your wallet? And underpinning their attitude is a naive confidence everything will be okay. What do you think older generations think about your attitude to spending? We spend too much money, that's

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what they think. I get told off by old ladies about, you know, you're spending too much money. I mean, that's my concern, not anyone else's concern. Where I'm heading, it's got to deal with me. It has nothing to do with anyone else. You

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know, it's my bill, it's my debt, I'll deal with it. And if I can't afford it, I'll just, I don't go bankrupt. Oh, I don't know. This is a generation which is only going to know debt and no assets, and it's an

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extremely dangerous combination for an economy facing a global recession. The world financial crisis has been caused by debt. Why does Gen Y keep spending? Because it's just like having a car accident. You only stop driving irresponsibly after you've hit the wall.

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This is my life, Pete. This is 70 grand's worth of debt. 21-year-old Zoe Zirkler has hit the wall big time. It's an 11 grand personal loan, nine grand TV, yeah, 10 grand car, there's a two grand credit card, there's

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a one thousand dollar credit card. Just three years out of school, Zoe's on the brink of bankruptcy. This folder is my life. This is who I am, what I do. This is, this is me. 70 grand's worth of debt.

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On a supermarket salary of about 35,000, Zoe bought a car, a PlayStation, a state-of-the-art laptop, two huge televisions, and much more, all on credit. When you look at all this paperwork, seventy thousand dollars worth of debt, what do you think?

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Why I was so stupid? Why wasn't I just happy with what I had? Sorry. [Applause] I truly got, it's, it's that bad for you. Yeah, they're destroying their future. They're not going to be able to afford to have

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kids. They're not going to be able to afford to have a home. You know, more than likely, they're going to be on a pension, you know, and they should be set up for life, and we've squandered it on, on

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what? Like a big screen TV and a flashy car. It's, it's soul destroying. Okay, that gives us a total of twenty-five thousand dollars worth of debt. Ben Paris runs a debt management service. This into my calculator, this is their

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last stop. People with that are calling here, it's either this or bankruptcy. As he goes into bat for people like Zoe, trying to negotiate a deal with creditors, business is booming. Does it worry though that you were getting 8,000 calls a year from people

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your age in massive debt? My age and younger, they're the, they're the ones that really worry me. I'm 26, and we're getting calls from 18-year-olds who just eligible for a credit card debt, and they've got a five thousand dollar

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phone bill, a five thousand dollar credit card bill, you know, a ten thousand dollar car loan, and they're 18. I could see myself with this. What's fueling this crisis is ridiculously easy credit being offered to a generation who are used to getting

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what they want. This is so exciting. Amanda has only 22 cents in the bank, but she's preparing to buy a 60,000 car on credit. That's really pretty. It's breathtakingly reckless, but if it all goes pear-shaped, Amanda believes she's not to blame. It's like

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I'm a celebrity. Hello. Are you saying you're a victim in all of this? We are. We're targets. We are targets to the bank because we know that we're, they know that we're gullible. They know that anything they say, we'll just follow, you

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know, it's just they're the leader, and we're just, you know, the little people walking behind them. They give me money, you're loving it. You could have sent the card back, but I needed it. I need it for emergencies. I think your

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definition of emergencies is different to my definition of emergency, and I'm loving it. I really am. It's fabulous. What role does easy credit play? An enormous role, because even if you only knew the good times and you're willing to be irresponsible, it takes an

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irresponsible lender on the other side to give you that credit. And I really don't blame the kids for this. Economist Steve Keane says the bad debt Generation Y is accumulating mirrors the bad debt that's led to the global financial

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meltdown. Have the banks learned their lesson from the subprime debacle? They haven't learned it because they're still looking for the best possible margin, and the competitive pressures in the market mean that they don't provide an irresponsible bit of credit card lending to some Gen

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Y. Somebody else will do it, and they want to get hold of the fees and get hold of the high margins they get on those loans. Only when the whole thing goes belly up will they suddenly turn this app off.

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All right, Pete, this one's my shout. But until that crunch comes, Gen Y will just keep on spending. So this is an indulgence? It is a little bit of an indulgence, but, uh, you know, why not splurge sometimes? I'll have a beer. Okay,

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I'll have a passion fruit mojito. Emma Lovell is a full-time student. She'll finish uni with a business degree and forty thousand dollars in the red. For students like her, debt is a way of life. How much are you guys in digital?

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Um, by the end of my degree, I'll have around forty-nine thousand dollars. Around 26. Yeah, I'm almost finished, and I've got about twenty thousand dollars wrapped up. So how on earth do you guys afford to drink happy hour prices? Happy

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hour? Okay, about half of Emma's debt is HECS fees, the unavoidable cost of a university education, and the rest she's borrowed to pay for a car and that other Gen Y essential, world travel. I'll be going to South Africa, then to

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Tanzania, Nairobi, up to, uh, Scotland, a quick visit over to Germany, fly over to Dallas for a stop. How are you paying for it? Um, with this little beauty, my loan, which, um, was for my car, and I've now

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refinanced it, so I've added on another ten thousand dollars. So this twelve and a half thousand is absolutely money well borrowed, definitely, and as well, learn to manage it now and use it for great things like this, you know, I don't

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think this is a waste at all. So what's it like walking into a big shopping center for you? God, Zoe's money was wasted in shopping centers like this. I want to walk into and buy stuff, stuff she didn't need and couldn't afford.

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Remember, her debt is more than seventy thousand dollars. At exactly what you were doing, you were just coming in and laying down the cart? Yeah, yeah, just credit. So to sign away a sucker for interest-free deals. By the

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time she realized her debt was out of control, so was her life. I thought about going and being a stripper for a couple months just for the money, but when it came down to it, I couldn't do that to my mum. I couldn't do that to

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my family. I couldn't do it to myself. What stopped y

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now back living at home I did the dishes as well a vastly different life to when her mum was her age so you've been sitting around watching television when I was young for us to get credit we actually had to get our parents to

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basically go guarantor for us I'd know I'd get the horse whip if I didn't pay back my debts from my dad oh guess what there's no horse whip in this household just a caring mum still providing for her adult daughter it's taken a long

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time do you know what Gen Y how much debt they're in overall in total no how does 60 billion dollars sound really and look at how much of a chunk I have of it yeah but you'll get through it there

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as a parent I still worry about that sort of thing Emma Lovell also still lives at home but despite owing tens of thousands of dollars she's supremely confident of her future I want my life to go in a certain direction and I can't

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do that if I you know sit here saving it's not it's not it's not possible to sit here and just save and save and save that's not the way we do things wise Generation Y so ballsy about that and

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confident that you can pay it off I know that I will be successful because I will make myself a driving factor it's scary though it really is it but unfortunately we need it we need the money what's really scary though is the amount

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of Interest Generation Y will ultimately pay to service its debt Emma we've projected forward to when you were 40.

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this is what you're going to look like I hope not [Music] but more importantly if Emma continues to borrow at her current rate by the time she's 40 she will have paid 77 and a half thousand dollars in interest

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when you put in a lump sum like that yeah it's horrendous and it's scary but that's what I've got to do to to have a future hopefully better than that one [Music] the story's the same for Amanda you had 40.

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put it on the card but the real crunch is your financial situation when you're 40. with your credit card debt a big car loan and if you don't pay it on time you would have paid 82 000 in interest are

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you worried about the future now 82 000 is the price that I pay for being happy for being able to indulge myself in all the luxury items that I've bought over the past 40 years that's what it is it's

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worth it it is it's worth it where does gen y's 60 billion dollars in debt in Australia now fit into the Global Financial meltdown that's happening now that's the poisonous icing on top of a very poisonous cake the cake

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was going to sink anyway and the icing is going to drive it down even further they've got all the debt and no assets and at some stage then they're going to have no income and that's a deadly combination

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it's a lesson Zoe zirkler had to learn the hard way but finally she's quitting credit it's really got you shaken hasn't it it does because of what they've done she's working full time and you can't help but admire her decision to pay back

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what she owes Time to Say Goodbye [Applause] but for most of Generation Y they'll continue to buy now and pay later so this is your home this is where I was born here I would die in here it's great it's great hello I'm Tom

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steinfit thanks for watching 60 Minutes Australia subscribe to our Channel now for brand new stories and exclusive Clips every week and don't miss out on our extra minute segments and full episodes of 60 Minutes on nine now.com dot a u as well as the nine Now app

Topics:Generation Ycredit card debtfinancial crisisdebt managementyouth spendingeconomic meltdownpersonal loansfinancial literacybank lendingstudent debt

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