Subject: Financial Literacy Tool for Students. How do you calculate bankruptcy?

Posted by Michael Hillier on 4/13/2004

Message:

Hi Everyone,
Financial debt is a major problem for young people in Australia with
bankruptcy rates highest among people aged in their 20 - 30s. Financial
cousellors often complain that they see young people too late to make any
difference to their financial fate as the debt cycle has well and truly
kicked in before a person asks for help. From my cursory research the key
drivers of money problems among young people is easy access to credit,
mobile phones, and peer pressure for the latest fashion accessories.

My model is targeted at high school students in Year 10; young people who
are about to start the long journey towards financial independence. The
model's purpose is to improve a young person's critical thinking skills
around debt and savings and most importantly for a person to come away with
an understanding of exponential growth. I want the model to have a degree of
financial realism therefore I would like to build in a bankruptcy feature,
so at what point does a person have to reach before there is no return. The
model currently captures a range of different debt structures such as credit
cards and interest free loans.

I was examining some common system designs and I thought that maybe
overshoot and collapse structure could be a way of incorporating bankruptcy
into my model. But I am not so sure and I am hoping someone out there could
give me some guidance. Any help would be gratefully received.

Kindest Regards

Michael

P.S I really enjoy the email discussion group as it has greatly enriched my
learning in systems dynamics.

Follow Ups:

Financial Literacy Tool for Students. How do you calculate bankruptcy? - Delbert Adams 4/14/2004