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Christopher Siwy thinks he’s pretty good with his finances, especially for a 23-year-old. Siwy just moved to Alexandria, Va., from Allentown, Pa., and with a starting job in information technology, he has no problem paying $160 on his student loan every month. He even saves a little bit out of each paycheck so that someday he can buy a condo.

But when Siwy wanted some wheels, he turned to the most popular financing plan for someone his age: a credit card. He put a new $7,000 motorcycle on a credit card with no interest for a year, and he plans to pay it off before the year runs out. But if he can’t, he says, he’ll switch it to another interest-free credit card.

“I had to have a motorcycle,” he said with a grin.

Siwy is part of a generation of consumers who have embraced and used debt in a way that no generation has before. The polar opposite of the postwar generation, which feared debt, today’s young adults view credit cards as a welcome and easy path to the lifestyle they see around them.

“What’s extraordinary is how quickly it’s changed,” said Robert Manning, a professor at the Rochester Institute of Technology and author of “Credit Card Nation.” “Now credit is an entitlement — it’s not connected to having a job and being a producer and understanding how much debt one can afford.”

Financial experts are alarmed about this carefree use of plastic because the debts that many twentysomethings are incurring are stacked on top of towering levels of student loans. Yet these young consumers often seem oblivious to the harm that could follow the spending they’re doing today.

Elizabeth Warren, a Harvard Law School professor and co-author of the new book “The Two-Income Trap,” said the comeuppance could be severe. Most people who file for bankruptcy protection in their late 20s and early 30s, she said, “are people who got into trouble back in their late teens, but have rocked along making minimum payments, falling a little behind, often denying to themselves how much financial trouble they’re in.”

The biggest factor pushing up the amount of debt carried by young adults is student loans, which have skyrocketed along with college tuition. According to a study done last year by Nellie Mae, the student-loan financier based in Braintree, Mass., the typical student graduating from a four-year college has close to $19,000 in student loans. Just five years earlier the average was $11,400.

But on top of those low-interest loans, young adults increasingly leave school with substantial credit card debt. In the 1990s, financial markets became more sophisticated and better able to manage the risk of consumers whose creditworthiness wasn’t obvious. The result was that credit card companies started aggressively courting nontraditional customers, including college students. They put sign-up tables at universities and used various enticements to lure these young new consumers.

“They’d say, ‘Come on, if you sign up for this credit card, I’ll give you a free gift,’” said Latouri Mayo, 26, recalling her experience as a student at the University of Maryland at College Park. Mayo ended up with a Discover card with a $1,500 limit and a Visa with a $500 limit, which she soon filled up. Then she couldn’t afford her payments.

Mayo finally paid the cards off two years ago and now, working for a labor union downtown, she’s hoping her good payment record on her car loan will help repair the damage she did to her credit rating.

Nellie Mae’s credit checks on student loan recipients showed that in 2002, 83 percent of college students held credit cards, compared with 67 percent in 1998. The average student’s balance was $2,327 in 2001, up 24 percent from the average balance of $1,879 in 1998. The average graduating senior carried credit card debt of $3,300.

Credit card use appears to be drifting even younger. RIT professor Manning said his research shows the use of credit cards among high school students has tripled in the past two years.

The big problem experts see with all these free-flowing credit cards is that young consumers often don’t make the connection between their spending and their financial resources. While the rising debt from student loans is a direct result of increasing tuition bills, the growth in credit card debt is about instant gratification and the inability to live within one’s means. People used to use layaway; now they just charge it.

“A part of the social aspect of the problem is the desire to be able to consume the way you see others consuming, irrespective of your income,” said Douglas Duncan, chief economist of the Mortgage Bankers Association. “It’s hard to say, ’Well, instead of buying my clothes at Abercrombie, I’m going to get them at Wal-Mart. It doesn’t carry the status, but it’s prudent.”’

Duncan likens the financial outlook of many young adults to the 30-minute sitcom, where crises bubble up, boil over and cool down in a matter of 22 minutes and a few commercial breaks. Younger consumers not only think they should be able to live like the characters on “Friends,” with the nice apartment, good clothes and dinners out, but they seem to think their problems will resolve themselves just as easily and quickly.

“It shortens our belief about how long it takes to acquire certain things,” he said. And that perspective was only reinforced by nearly a decade of economic growth in the 1990s. Students who graduated in that decade never experienced the uncertainty of previous generations, of getting out of school and not being able to find a job.

That made consumers in their 20s more vulnerable to the messages urging people to spend spend spend.

“There are things you can do that are fun and that are cheap, but we’ve forgotten about them,” Duncan said.

It’s not that young consumers don’t know they’re in a bit of a bind. But many just assume they’ll eventually have the money to pay their bills.

“It’s embarrassing to ask your parents for money,” said Audrey Waters, 23, an editorial assistant at the Wall Street Journal who said she had just paid the minimum balance on one of two credit cards she’s maxed out. “I have a good job. I make decent money, and I still can’t make ends meet.”

The idea of adjusting her lifestyle to her income doesn’t seem to have occurred to her. Waters may be out of credit — she jokes that she has no idea how she’s going to pay for Christmas — but she isn’t rushing to change her spending habits.

Of course, young adults have always been impressionable and eager to imitate the lifestyles around them. But just a generation ago, credit had to be earned.

“We were no better than the kids nowadays, but it was much more difficult to get into trouble,” said Lewis Mandell, a professor of finance at the State University of New York at Buffalo who has written numerous books on consumer finance.

It’s typical of consumers who get into trouble to say they don’t know how they got there, and that’s especially true of younger adults. Yet they can spend with abandon for longer now, because credit card companies will let customers get much deeper in the hole before they shut off credit.

At the Consumer Credit Counseling Service of Southern New England, for example, clients a few years ago were typically several thousand dollars in debt and had nowhere else to turn. Now, many people seeking help have been able to rack up $12,000 to $15,000 in credit card debts before running out of options.

Though bankruptcy filings among 18- to 24-year-olds have been rising — doubling in the 1990s — they still represent just 3 to 4 percent of all personal bankruptcy filings. The bigger risk for this age group comes in the next stage of life, which brings suddenly higher bills.

Two young single professionals might get married, find themselves with a house, a couple of cars on credit, continuing student loan payments and every penny of their income committed every month. They get by, but they have no room for life-altering events, such as pregnancy, job loss or severe illness.

“If you’re maxed out on your debt, you have nowhere to run, no savings, no additional capacity to borrow and you’re cooked,” Mandell said. “This is the real problem of being young and in debt.” 

This story ran on theeagle.com on 12/14/03.