Gen Z & the Debt Trap, Part 1: A Wounded Wallet
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I owe a lot of money. Well, to me, it feels like a lot. Sometimes I can't even sleep because of it. Thousands of dollars in student loan debt just feels like trying to swim in quicksand. I can only go down. I'm Teddy Ruiz Sandoval for The Wall Street Journal, and I'm not alone in feeling this way. Every three months, Intuit Credit Karma, a free online financial service that provides users with credit scores, credit reports, and other services, releases a report about the current state of debt and credit through a study of 88.5 million people from its U.S. member base. In each report, the debt held across generations is stacked up against each other for comparison and broken down. And at first glance, Gen X, the generation born between 1965 and 1980, holds the most debt.
And that makes sense. The youngest are in their mid-40s and the eldest are reaching their 60s. They've had decades of financial experience with bigger expenses like mortgages, car payments, and many are putting their kids through school. But when it comes to accumulating debt quickly, it's young people like me, along with the rest of Gen Z, that are racking up debt the fastest. Born between 1997 and 2012, Gen Zers range from 12 to 27 years old. For now, we'll be focusing on Gen Zers who are 18 and over, since they qualify for loans and credit cards. Despite their short financial experience, I didn't realize just how fast my generation was racking up debt, and I was shocked. So I reached out to Credit Karma for some answers.
As their consumer financial advocate, Courtney Alev helps consumers make informed financial decisions.
We are seeing a lot of credit card debt, and student loan debt, as well as some other types of debt. But the credit card debt piece has seen the largest increase overall across our members, and that's hitting Gen Z particularly hard. So the financial burden that Gen Z is facing today could really have long-lasting effects on their lives.
This is a special edition of Your Money Briefing for Sunday, August 18th. Gen Z and the Debt Trap. A three-part series that looks at why this generation is accumulating debt so fast and what can be done to slow the growth and how our debt could affect everyone else. I spoke to Wall Street Journal reporters, researchers, and Gen Zers who are carrying debt to look at three key things. How we got into so much debt so fast, why Gen Z is stuck there, and what we can do to get out of it. And at the heart of the series, these are the stories of people who are trying to manage their debt.
I can work two, three jobs, but it still probably won't be enough to pay it all down.
So I feel like money to me now is it's a means of my downfall until I learn how to use it.
In this episode, we talk about how Gen Z racked up so much debt. This is part one, a wounded wallet. That's after the break.
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Money means something different to everyone. To some, it means paying for a new vacation or a new house.
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