Financially, most Millennials – those born between 1981 and 1996 – are behind. On average, they earn just over $35,500 a year, and their net worth is a mere $8,000. Debt plays a big role in the low net worth numbers. And, since incomes aren’t increasing at rates similar to what Baby Boomers and Gen Xers saw, many are struggling to keep up. If you are wondering what the debt picture looks like, here’s what you need to know about the average Millennial Debt.
Millennial Debt Total
According to data from the Federal Reserve, Millennials owe more than $1 trillion in debt, in total. That’s across all debt-related categories, including credit cards, mortgage, and other kinds of loans.
Student loan debt for Millennials – the total of what’s owed by approximately 43 million Millennial borrowers – far outpaces previous generations in that category. It’s over 300 percent greater than what Gen X deals with, for example.
However, Millennials tend to have less in credit card and mortgage debt than Gen X. The lack of mortgage debt is partially a sign of the difficulty the generation has when it comes to entering the housing market. As for credit card debt, it’s a byproduct of Millennials’ general aversion to debt.
Credit Card Debt
Often, credit card debt usually comes with higher interest rates than many other types of debt. While Millennials are more debt-averse than different generations when it comes to credit cards, their balances have been rising. Over the course of one year, the average balance grew by 7 percent. As for the average balance, that hit $4,712.
Older Millennials tend to have higher credit card balances than their younger cohorts. For those who turn 39 in 2020 (the oldest Millennials), their average balance was $6,675. The youngest Millennials – anyone turning 24 in 2020 – come in at $2,288 on average.
Mortgage Debt
While many Millennials haven’t been able to buy homes, a decent number of their brethren scooped up properties. On average, Millennials with mortgages owed about $222,211 in Q1 2019. That’s a 5 percent increase over the previous year’s average.
Millennials are outpaced by Gen X when it comes to the average. Gen Xers came in at $237,753 on average. However, Millennials averages are growing faster than nearly every other generation. The only exception is Gen Z, which has a 15 percent growth rate. However, Gen Z had a lower average balance, sitting at $138,193.
Auto Loan Debt
For auto loans, Millennials have the fastest growth of any generation. On average, they owe $18,201 (as of Q2 2019), representing a 28 percent increase in just a seven-year period.
Gen Z does come in with a lower auto debt average, sitting at $14,272. However, both Gen X and Baby Boomers have higher averages, coming in at $21,570 and $18,759, respectfully.
New vehicle prices have mainly been growing. On average, a light vehicle (car, SUV, non-commercial trucks and vans, and other commuter-style four-wheeled vehicles) cost $38,948. As prices rise, loan sizes tend to follow.
Student Loan Debt
Student loan debt has been a shackle for many Millennials. The cost of college is over twice what it was in 1980, and Millennials have largely been told that getting a degree is either the key to success or an outright necessity.
The total amount of student loan debt has already crested $1.6 trillion. During Q2 2019, borrowers between 25 and 34 years of age (a large portion of Millennial graduates) owed an average of about $33,000 in student loan debt.
Ultimately, Millennials often have substantial debt loads and are often financially hindered by their student loans. However, they certainly aren’t the only generation battling against debt.
Do you think debt Millenial debt is holding you back? Do you have any tips that can help Millennials conquer their debt? Share your thoughts in the comments below.
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- Invest or Pay Off Debt? Here’s Your Answer
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There are ways to save money to pay off any debt owned. One is by keeping track on how much you are spending such as photocopy the reciept said for every purchase you have made. Second save as much you can , if you live with your parents and working its best to save more. Lastly cut back on eating out and start buying by getting items at a cheaper price and if possible you can cook from home.
As a millennial myself, these statistics are sobering.
My wife and I are doing better than average, but both know peers that have the specter of low income and high student loan debt holding them down.
Unfortunately, the only way to get out of it is a slow and steady climb. Keep striving to make more money. Pay off debt as quickly as possible. Then, start building up income producing assets that will eventually make more than you do.