Millennials Have Racked Up $3.8 Trillion in Debt

NEW YORK, March 14, 2023 (Newswire.com) - Credello: It might shock you that the Millennial generation has racked up an astonishing $3.8 trillion in debt. That number has gone up quite a bit since the pandemic started. 

We'll talk about what this means. Some of the individuals responsible for this debt might be looking at rebuilding their credit score after bankruptcy before long. However, all is not lost for those with debt if they moderate their behavior from now on.

What Are Millennials?

First, let's define the word Millennial, so you know exactly who we mean. The Millennial generation is generally understood to be any individual born between 1981 and 1996. That means the oldest Millennials are 41 or 42, while younger ones are in their late 20s. 

Millennials are considered the most ethnically and racially diverse group of individuals in the nation's long and storied history.

Why Do Millennials Have So Much Debt?

Millennials had plenty of debt before the pandemic, but they have considerably more now that we're three years into it. Inflation accounts for much of the problem. Inflation occurs when the price of services and goods in society rises faster than the income that should accompany it.

Many Millennials must put almost their entire paychecks toward rent, utility bills, grocery bills, car payments, and other necessities. If they don't get healthcare through their jobs, they must pay for that out of their own pockets.

The Debt Trap

Some Millennials feel that they are in what they've begun to refer to as the "debt trap." They don't want to get further into debt, but they find themselves sliding slowly into that condition because they're not getting paid enough to get ahead. 

Instead, they're paying most of their money for housing, but they're renting rather than building up equity in their homes. Fewer Millennials own homes than the previous generations did.

Credit Card Payments Are More Popular Than Ever

If a Millennial feels that they don't have the cash to pay for a necessity, they may charge it to a credit card. When the time comes to pay off the balance, though, they don't have the money to do that.

This becomes another aspect of the debt trap. When some Millennials pay for necessities with credit cards, and they carry a balance from one payment period to the next, they start owing money in interest as well. Some credit card companies can charge as much as 35% interest once the introductory period has concluded.

What Can Millennials Do About This?

While there's no single, easy answer to this problem, some Millennials have found a workaround. Many are living with their parents to a much older age than they might have previously. 

This helps them because they can save their money rather than spend it. They might give their parents some of the cash they earn, but they can also save some in anticipation of buying their own home someday.

This also helps the parents. They have someone to help care for them as they age.

Moving to Less-Expensive Cities

Other Millennials are moving to less expensive cities where rents are lower. Some are taking on multiple jobs if they find their schedule permits that.

Some others are pursuing higher education in states where community college is free or drastically discounted. Getting a degree makes them more attractive job candidates.

Millennials Can Fight Out of the Debt Trap

The figure of $3.8 trillion gets your attention, but Millennials have ways of fighting back. They can live with their parents if that's an option. They might work multiple jobs or move to cheaper cities. Others may pursue higher education at community colleges for free or at discounted rates. 

These aren't easy times for Millennials, but if they show fortitude and resilience, many can improve their situations.

About Credello

Credello is a financial tech company offering a personal finance tool that simplifies financial decisions through personalized, on-demand recommendations — so users can borrow, save, or invest with confidence.

Credello believes that finding the right financial product should be as easy and interactive as online shopping, and we are on a mission to make that possible. For more information, please visit https://www.credello.com. 

Source: Credello