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Millennials on Millennials: Let’s Talk About Debt Baby

By Kathleen Krilanovich and Michelle McMurray

Myth: “Millennials want to live with their parents for the rest of their lives”

Fact: Actually… this has some truth to it, but it is a lot more complicated than you would think.

Debt is the new black — everyone has it and everyone is trying to get rid of it. Mortgages, credit cards, and auto loans have always been the major debt categories for Americans. Then came student loans. Over the past decade, student loan debt moved up the ranks snagging the title as second largest debt burden in the United States, behind mortgage debt. As mentioned in Millennials previous posts, we millennials grew up with the expectation that we had to go to college because you need a degree to get the green. Many of us piled on debt to achieve the better future that advanced education promised us.

The aftermath of all the hype around college is that now many millennials are struggling to find jobs that allow them to payoff what they owe to their colleges, as well as plan for the future. The results? No extra green with many millennials stuck living paycheck to paycheck.

Let’s talk about all the Bad Things

In case no one has noticed, tuition prices have gone up an average of 3.0% every year since 1983. Within the millennial generation loan debt has been on the rise and since the Class of 2003 the average student loan debt has more than doubled from $18,271 to $37,172. By the end of 2016, 44.2 million borrowers carried $1.3 trillion in student loan debt, 64% of which are below age 39 aka, millennials. Oy Vey!

Let’s Tell It Like It Is

The average millennial makes a pre-taxed salary just north of $35,000. After taxes they’re looking at a whopping $545 per week or $2,362 a month. A breakdown of expenses shows that the average millennial has little to no disposable income. If we want to purchase big ticket items, we have to look to our parents (not an option for many), we have to take on additional credit card debt, or continually defer our student loan repayment. Even without student loans, it is a vicious cycle that most of our generation struggle to overcome. For many of us, we be broke the day we graduate.

Keep in mind, we did not add the costs of our groceries (necessary for survival), parking (for work), or even fun money (say bye to Sunday Fundays). So the question is, with what little “extra” the average millennial has, how are they expected to buy a home, save for retirement, get married, or even start a family?

Use What We Got to Get What We Don’t Got

  • We’re not living alone: It is simple math — living with someone is cheaper than living alone. Whether it’s living at home with your parents to save up money (like Michelle did for the first six months out of college), or living with roommates (like Kat), it is fiscally smarter to live with someone, making apartment housing more appealing. You’re welcome multifamily developers.
  • We’re not the only ones suffering. The number of older Americans (parents and grandparents) that have taken on student loan debt has quadrupled in the past 10 years. According to the Consumer Financial Protection Bureau, Americans older than 60 are now holding $66.7 billion of student loan debt. Sadly, nearly 40% of federal student loan borrowers older than 65 are in default, beating out millennials for the highest default rate for any age group.
  • A lot of our paycheck goes to loans: The average student loan payment is taking about 12% of a millennial’s pay, thus forcing millions of us to make the decision to either pay off our student loans or save for retirement.
  • Those “milestone moments” are happening later in life: At Michelle’s age, her mom owned a home, was married with one child (Michelle), and had another coming on the way. We are pushing off buying a home, getting married, and having a spawn later than any generation before us because we can’t afford it. Despite the both of us being in long-term relationships these milestones are millions of miles away. How are we supposed to afford it? Trust me, we googled and pinned the dream, and we know we can’t.

Tune in to a future edition of the M.O.M blog where we will dive deeper into what the average millennial is earning versus older generations.

Next time on the M.O.M Blog…

We’ll discuss how despite inflation and added costs, the 20-somethings income is not where it once was.

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From the Writers: (In the Style of Salt-N-Pepa)

Michelle: Let’s talk about debt for now, to the people tweeting and reading this. It keeps coming up anyhow. Don’t defer, avoid, or make void the topic. Cause that ain’t gunna stop it. Now everyone’s talkin’ about debt on the radio and video shows.

Kat: We had it all in the bag so we should have been glad but we were mad and sad and feelin’ bad. Thinkin’ about the things we might never have. No money, just debt, every two weeks following with a bill that the last work weeks check went poof. Let’s talk about debtttt.

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