Are millennials being crushed under a mountain of credit card debt? Is bankruptcy lurking on the horizon for many millennials?
Today’s millennials have more debt than ever, between credit cards, expensive student loans, car payments and (sometimes) mortgages. Over two-thirds of millennials are paying back at least one source of long-term debt. Over one-third have more than one source of long-term debt. And given that the average millennial salary is less than $35,000, this age group faces a huge struggle paying off these debts. Millennials forego cars, moving out of their parents’ houses and getting married because it just isn’t financially feasible to do those things.
Among all types of debt plaguing millennials, the largest by far is student debt. And because student debt is such a problem, many millennials fall into a debt spiral. Because they must pay expensive student debts, they have a harder time paying off other debts. They may resort to loans, which can result in lower credit. Lower credit means lower borrowing power, and lower borrowing power means you can’t pay for a house, or a car – and the spiral continues.
While millennials are facing a debt crisis, credit card debt is not the most major problem among this age group. The average household carries $135,000 in total debt. For student loan debt, the average is $50,000. For auto loans, $29,000. And for credit cards, $17,000.
What Do I Do If I Cannot Escape My Debts?
While some debts, like student loan debt, cannot be discharged in bankruptcy, many can. The stigma of bankruptcy can be especially difficult for young people, but bankruptcy is not a bad thing – it is a valuable tool that can help set you up for better finances later in life. Your best bet in getting your debt issues solved is to discuss your finances in a free consultation with a bankruptcy attorney.