Why Americans in Their 30s Are Racking Up Historic Debt | WSJ Your Money Briefing

[Music] here's your money briefing for Monday April 17th I'm J.R Whalen for the Wall Street Journal Millennials have faced economic challenges since many of them began their careers during the 2008 financial crisis but now the group born between 1980 and the early 2000s is falling deeper into debt at a faster rate than any other segment we'll talk to a 31 year old mother of two struggling to make ends meet in a moment but first wsj reporter Gina Heap joins us Gina thanks very much for being with us thanks so much for having me so Gina a lot of people across age groups have racked up debt as we've emerged from the pandemic but how bad has it gotten for Millennials so Americans in their 30s have taken on debt at a really remarkable Pace since the pandemic their total balances Rose to more than 3.8 trillion in the fourth quarter which is a 27 jump from three years ago before the pandemic it's also the fastest pace of debt accumulation over a three-year period since the FED started this survey in 1999 that's excluding the financial crisis of course in which a housing bubble drove those numbers to something like 40 percent but still that's an enormous ramp up right it's a pretty stunning Trend we're seeing so how does their debt profile compare to other age groups the rate at which Americans in their 30s are taking on debt is higher than any other generation for example the average credit card balance for Millennials Rose to about six thousand seven hundred fifty dollars in January a 26 rise from 2019 levels balances didn't really change for Gen X and for older Generations they actually fell between 11 and 15 percent so you can see it's a pretty stark contrast how did Millennials get themselves into this really tough debt situation so what we saw over the pandemic is that households in general did Better Than People expected in 2020 they were stuck at home because of lockdown they were receiving stimulus payments and they were able to pay down some debt but those benefits are over the economies reopened and people are back to traveling and commuting and those stimulus payments have ended and they've ended at a kind of a tough moment for the economy inflation pressuring people's budgets and the last round of stimulus checks went out in 2021 and Millennials are getting hit the hardest in some ways many spent thousands of dollars on unplanned child care costs when schools were closed and some relied heavily on a pandemic era child tax credit program that stopped and a lot are trying to buy homes Stacy Copeland is among Millennials facing this uphill battle she's 31 has two children and lives just outside of Miami she was saving money to buy a home before the pandemic Stacy thank you very much for being with us thank you for having me so Stacy what do your personal finances and your debt in particular look like now compared to say the start of the pandemic before the pandemic I didn't really have any debt and I had less credit cards and then from the start of the pandemic and then to now I've gotten like three more credit cards and now they're all pretty much maxed out I have been able to tackle two of them this year and get done totally at a zero balance which is great it just takes a lot of dedication you just gotta live off of nothing just get it done so how are things going now how are you trying to manage your debt and do you see some sort of path to relief from that debt right now I've cut out eating out I don't go out anymore I've don't buy anything that I don't need I live like I have absolutely nothing like I can go and spend money if I really wanted to but that extra money that I don't need to be spending I'm just putting it throwing it at the debt like did The Snowball Effect with my credit cards so I paid the lowest amount got that done once the second one and just kept going I'm keeping that transition and going that way huh sounds like a series of small battles yeah you feel good and then your determination gets even more and more because you actually see progress and you're doing it so it's good how is this increase in debt change the way you spent before the pandemic both my kids were in sports my daughter did swimming for a while and they both did flag football and my son is always an Aftercare program at school and even before the pandemic it was about 170 a month and now after it is I pay a little over 200 a month so you can see how much it really has changed before the pandemic things were a lot cheaper you go to store and you have a full card and you know be like a little under a hundred dollars now forget it after the pandemic it's close to 200 300 just for two shampoos I took my daughter she got two shampoos and a body wash and a deodorant and I spent forty dollars and it's just basic stuff nothing crazy it's crazy all right that's Miami area resident Stacy Copeland Stacy thank you very much for being with us thank you for having me I really appreciate it so Gina let's look long term here what does this debt picture look like for Millennials going forward so there was already a really significant and growing wealth gap between Millennials and other Generations before the pandemic and this rapid build up that we've seen the past few years could actually worsen that Trend it's really important for people of prime working age to feel like they're on Good Financial footing because it empowers them to take risks that can empower the broader economy so that includes things like starting a new business or investing but for Millennials in their 30s they haven't been feeling that way they weren't before the pandemic and they certainly aren't now we know that this group has much lower rates of home ownership than other generations and that's the main way that we build wealth in this country and a lot of Millennials feel like that's Out Of Reach for them like we saw with Stacy the housing boom that we saw over the pandemic really drove up prices as well as mortgage rates and it's made monthly payments unaffordable for a lot of people in this group so this current experience they're going through can have a lasting effect exactly all right that's Wall Street Journal reporter Gina with us Gina thank you very much for being with us on the show thanks so much for having me Jr and that's your money briefing I'm J.R Whalen for the Wall Street Journal foreign [Music]

Channel: WSJ News

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Keywords: americans, debt, american debt, millennial money, millennial debt, debt by age, average debt by age, racking up historic debt, your money briefing, wsj, why americans in their 30s, 30s, age groups, post pandemic debt, financial crisis, housing bubble, credit card balance, gen x, gen z, debt repayment, stimulus payments, stimulus checks update, child care costs, daycare costs, child tax credit, personal finances, housing market, aftercare program, childcare costs, pfin

Id: x4wxG2PT7h8

Length: 6min 38sec (398 seconds)

Published: Mon Apr 17 2023