Student loan debt is very much in the news these days, but it actually isn’t the biggest debt crisis that millennials are facing.
That issue is … drum roll… credit card debt. A lot of credit card debt. Per data from Northwestern Mutual’s 2019 Planning & Progress Study, millennials (defined as people between the ages of 23 to 38) have an average of $27,900 of personal debt — not including mortgages.
The biggest debt that this group is facing? Yes, you got it, credit cards.
“One issue that a lot of millennials have is that they have not wanted to sacrifice their lifestyle, even though they have student loans or lower incomes,” Chantel Bonneau, a financial adviser for Northwestern Mutual, told CNBC. “That has left us in this spot where they’ve accumulated a significant amount of credit card debt.”
The impacts of this are going to last for decades. “The likelihood that millennials are prioritizing retirement in any meaningful way as an overall generation seems unlikely,” Bonneau says.
All that said, don’t be too quick to point at the millennial generation for being too spendy there are lot of factors that are going into this. Inflation coupled with wage stagnation, the impact of having student loans (an impact that is being felt much harder by millennials than it was by Gen-X) have all led to the predominance of so many people living paycheck to paycheck. And when your living paycheck to paycheck, credit cards are there to help bridge the gaps.
Bottom line: Just pointing to millennials and telling them to spend less isn’t really going to do the trick with this complicated issue.
If this sounds like you at all, we have put together some pretty robust guides for how to get out of debt. It might not happen overnight (or over a year), but it can be done.