A generation weighed down by debt

"Everyone I know has parents helping them out in some way, because it's impossible otherwise," O'Connell says.

But such loan are taking a toll on parents, say Draut. "[Parents] need to ramp up their retirement savings and are still helping to support adult children," she says.

While young people incur considerable debt just to pay for basics, they also get into the hole because of impulse spending.

"I grew up during the Reagan boom and the Clinton boom," Dobbins says. "My generation, we definitely missed the frugal genes. My mom could go shopping for a family of four on $75 a week with her coupons. I don't think I've ever clipped a coupon. It's just not in me."

Although debt is much on her mind, she and her friends, like many in their generation, maintain an ambivalent attitude toward it. "A lot of times we talk about it, but then we say, 'Where are we going to dinner tonight?' "

Her boyfriend, who is in his late 20s, has debts approaching $40,000. At least a quarter of his paycheck goes to pay off debts, Dobbins says. That's typical. The average indebted adult between 25 and 34 spends nearly 25 cents of every dollar earned on debt payments, according to the Demos report.

For Christie Hadley and her boyfriend, indebtedness means delaying marriage. Ms. Hadley, a publicist in Cincinnati who incurred debt during an internship, expects to have all her bills paid in two years. But her boyfriend owes $40,000 in student loans. "He doesn't feel financially ready for marriage until he has all of his credit cards paid off and has a down payment for a house," she says.

Beginning Dec. 1, three credit reporting agencies - TransUnion, Experian, and Equifax - will offer consumers a free credit report annually. Credit experts recommend that young adults, in particular, get copies of all three.

"Once they see what their credit reports are like, they need to get a reality check on what they owe," says Deborah McNaughton, president of Professional Credit Counselors. She suggests listing all credit-card accounts with balances, payments, and interest rates. Then formulate a budget to pay it off.

Americans between 25 and 34 have the second highest rate of bankruptcy, after those in the 35-to-44 age group. Yet Ms. McNaughton cautions against bankruptcy, unless all other efforts have failed. She recommends negotiating a lower interest rate with creditors or contacting a good credit-counseling agency. "Only if people see that they're falling more and more behind and aren't able to follow these programs would bankruptcy be an option," she says.

Although bankruptcy stays on a credit report for 10 years, it's possible to reestablish credit with secure credit cards with high interest rates. But such debt can be perilous, McNaughton cautions. "If you have a $2,000 balance and you only make the minimum payment, with no new charges, it will take 16-1/2 years to pay off. That adds up to more than $2,500 in interest fees."

For Jason Roth, who racked up large debts while working his way through college, financial reality hit home when he couldn't get $1,000 in financing to buy an engagement ring. "That moment turned things around," he says, explaining that he mapped out an aggressive repayment plan by living frugally.

Today he owes nothing on credit cards and has whittled down his student loan to $9,000. Debt collectors no longer call. Mr. Roth and his wife recently moved from Las Vegas to Phoenix to be able to afford a house. He only wishes he could have learned his lesson earlier.

"Every high school student in America should have to take some kind of financial-strategy class to learn about everything from banking, credit cards, savings, loans, and protection from identity theft," he says. "If I had had that type of class, I wouldn't have gotten into such a credit mess."

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