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♥ & $: When It Comes To Credit Card Debt, Millennials Have It Figured Out

As a generation, Millenials carry less credit card debt.$13,740.

That’s a lot of money. A fiscally smart person could use it buy a car, pay rent for a year, or feed a family of four for even longer. But when I was in my twenties, I wasn’t fiscally smart. My husband was in graduate school, and I was supporting us. My salary was good and covered our basic expenses, but I was lonely and bored and really, the idea of living “within our means” seemed so, well … conventional.

In those days, getting a credit card meant you had “arrived” because banks only gave them to their best customers. So when I received an invitation to get a credit card in the mail (something relatively rare in those days), I thought, “Let the fun begin!”

I remember the first time I flashed that card. I was sitting with friends at a bar, and instead of forking over the requisite cash, I pulled out that shiny new plastic and said to the waiter, “Drinks are on me.”  Soon I was buying shoes, dinners, tickets to concerts, wine (lots of wine) and paying for it all with money I didn’t have. I did my best to pay off the bill each month, but the expenses got ahead of me.

And then came the reckoning.

Not long after he graduated, my husband and I sat down to review our financial situation. He’d been so busy with school, he hadn’t focused on bill paying or money management. For two years, I was exclusively in charge of our financial life. I’ll never forget the look on his face when I told him we had thirteen thousand, seven hundred and forty dollars of debt on our credit card. Oh, and by the way, our monthly interest rate was nearly 20 percent.

Yeah. Not exactly one of our marital high points.

Together we made a plan. First, we borrowed money from his mother to pay off the bulk of it. She gave us a much more reasonable rate and agreed to waive the interest for the first six months until we could “get back on our feet.”

Then, my husband became a Kelly Girl. We were in the process of moving across country so that I could start graduate school (it would be his turn to support me now). We had three months between the time he graduated and I would be starting. So instead of taking a much needed break, my husband typed, filed and answered the phone as a temp. His meager salary was enough for us to pay off another chunk of what we owed.

For the next two years, while I was in school, we lived frugally. We didn’t buy a much-needed second car. We rarely went out to eat. I never shopped. And what vacations we did take almost always entailed staying with friends or family. It worked. When I graduated, we had no additional credit card debt and had even managed to save a little for the down payment of a house.

We believe we were lucky. Without the help of his mother and the determination to live within our means, we could have landed in bankruptcy. Since that early painful lesson, we have NEVER incurred credit card debt again. We pay off our monthly expenditures in full and do our best to keep unnecessary spending in line.

Apparently, we are in the minority.

According to the Washington Post, Americans have nearly 700 million all-purpose bank credit cards and nearly 500 million retail store cards. And today, the average credit card debt is over $15,000. My generation just refuses pull in the reigns on its spending.

But the good news is Millennials have it figured out. A recent report from the Pew Research Center shows that young adults are not spending what they do not have.

From 2007 to 2010, the median debt of households headed by an adult younger than 35 fell by 29%, compared with a decline of just 8% among households headed by adults ages 35 and older. Also, the share of younger households holding debt of any kind fell to 78%, the lowest level since the government began collecting such data in 1983 … Younger households have pared their credit card balances. In 2010 only 39% of them carried a balance, down from 48% in 2007 and 50% in 2001.

Millennials are postponing the purchase of big ticket items such as cars and houses until they have the financial stability to do so. And when they do spend, they are investing in their future. We know student loan debt is at an all time high, but I believe this investment will pay significant dividends over time in both their own careers and what it means for our society. A better educated, more informed populace benefits us all.

So, on behalf of my generation, thank you Millennials.

Are you a millennial without credit card debt? What inspires you to be financially responsible?

Published or updated on March 13, 2013

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About Lisen Stromberg

Lisen wishes she had money under 30, but she didn't. She had credit card debt, a husband with nearly $200k in school loans, and a job that barely covered the rent. Today at 50, she's made some, lost some, and learned a lot along the way. She had a successful business career, started and ran a non-profit, opted out and then opted back in. Now, she's an award-winning writer who focuses on issues important to women, men, and families. Read her personal blog, follow her @LisenStromberg or become her friend. Email her at lisen (at) prismwork. com with your ♥ & $ questions and concerns.


We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30.

  1. Justin says:

    Never carried a balance, never will. I’ll be 25 in June and going on my 7th year with a card. Both of my parents have credit scores north of 830 so it was instilled in me to not miss payments. I also am intelligent enough to understand how compound interest really works. There are so many better ways to finance things if you really need to than with a 20% APR card. Having a well-paying job out of college is a huge factor as well.

  2. Shannon says:

    I was debt free after college for years until one bad year of one car problem after another and then health problems with crappy insurance while in grad school (so I could get a better paying job), then a roommate screwing me over. Living at home with my parents to save money wasn’t an option, nor was public transportation. It’s great to talk about how financially responsible you are, but sometimes shit hits the fan and it takes more than “living within your means”. It’s not just about spending responsibly, it’s about saving responsibly so when things don’t go as planned, you don’t need to rely so heavily on credit. I’m clawing my way out slowly, but credit card debt really really sucks. The “You need a budget” software has been a lifesaver, not to mention eyeopening as to where the money is really going.

  3. Mara says:

    It’s fantastic that millennials have much less credit card debt than generations before them. I don’t think this is strictly based on common sense or financial education though. I think there are larger factors at play. With the credit regulations that were enacted in 2009, it became much harder for young people to even obtain credit cards. Also, it is much more difficult to obtain loans for big ticket items like cars. Since the recession, debt has gone way down for Americans and savings has gone up. I attribute this simply to the economic uncertainty. Unfortunately, for young people, student loan debt continues to rise. It’s worrisome that young people will have to postpone things like children and purchasing their first home because they have a large amount of debt from their college education.

  4. AJ says:

    Millenial here. What inspires me to be responsible? YOU do! Your story, I think about if I were in that situation, and how I couldn’t borrow money from a parent to help out. So pretty much this mess of an economy and stories about those a little bit older who ran into big time financial troubles. That’s my motivation anyway. Thanks for the great post.

    • Lisen Stromberg says:

      Thanks AJ! I try to write with the Millennial me in mind. Glad to know it’s helping you. Stay motivated. Stay focused. Stay responsible. Or, as my father used to say, “Work hard, play hard and have a good time!”

  5. Bethany says:

    Another Gen Yer/Millennial who has never had credit card debt. I had a credit card (with father as a co-signer) for a couple of years as a teenager, for which I had full responsibility. As my parents had taught me by example when I was young, I diligently saved all my receipts, checked through all of the charges once per month, and wrote a check for the balance in full. If the cash was not in my bank account, I didn’t swipe the plastic. I’m now in my late 20s, and the rule remains the same: the balance is paid off in full each month. Having always been on time with credit card and student loan payments, my credit score is in the 830s; this side of my financial house is in order.

    For me, while it has never been difficult to avoid spending money I don’t have – what’s been more difficult is to avoid spending the money I do have. E.g., I have been contributing to, but not maxing out, my Roth IRA and 401(k), and the reasons for this failure are more lifestyle-oriented (e.g. checking out the hottest restaurants in town) than due to any compelling financial pressures. Living in San Francisco is also extremely expensive — but that is also a lifestyle choice. So that’s why I’m subscribed to this site – to pressure myself at least save the 23K/year inherent in maxing out my retirement accounts – and perhaps to set more stringent financial goals above that thereafter. When I read the comments on this site from people who have been more diligent than me about saving, it adds some very helpful pressure.

  6. JP says:

    I’m a millenial, and while I’m guardedly optimistic about these statistics, I wonder how much of the debt that millenials haven’t accrued is being taken on by our parents’ generation. Just because the millenials do not have the debt does not always mean they’re not getting these “big tickiet items.”

    I graduated college in 2007 and saw this a lot during my four years. Granted, I went to a private university. There were plenty of kids like me who were worked their way through school (I afford the tuition with about 2/3 scholarships, 1/3 student loans, summer jobs/internships, and one beat-up pickup truck), but there were also plenty of kids driving nice new cars, living in fancy apartments, and taking big trips every break — all on mom and dad’s dime. Even if that debt does not fall onto millenial shoulders, it has to go somewhere.

    My personal rule with credit cards has been: If you don’t have the money and wouldn’t be willing to ask the bank for a loan, then that purchase is not worthy of a credit card. The cards can be a great way to build credit quickly when you have the cash anyway — but when you don’t, you have to treat that card as a (vindictive, greedy, unforgiving) little loan officer.

  7. Keisha says:

    I’m also a millennial with no credit card debt, and my parent’s were my biggest inspiration to be financially smart–we were always struggling when I was a kid, and I never wanted to live like that again! Right now I’m rarely using my credit card (a few times a year to keep it active) and focusing on paying off my student loans (half of them are paid off 3 years out of college, and my partner’s loans will be completely paid off this year). Instead of the fancy apartments and houses my parents had at my age, I’m living in the cheapest not-scary apartment I could find and I try to budget for everything. Last year we paid off 3 student loans, went on a vacation, and paid for our wedding thanks to not buying into the “you work hard, you deserve to have it all!” mentality my parent’s generation seemed to have.

  8. Kristen says:

    I know your question was referring to those without credit card debt but I feel I have something that I can contribute. In 2011, age 24, I got my first 0% for the first year credit card – AWESOME! I’ll start building my credit now so in 5 years or so I’ll have some credit to buy a house. At first, I started using it solely for gas and groceries – paying off the balance each month. Then, a few months later, I put on a huge purchase, $2500, and couldn’t pay it off. I was making the minimums and was still bringing out the plastic on almost everything. About 5 months later, my year of 0% was over and it went up to 19.99%. I didn’t know what that would really do until my debt got up to $7000 and I could barely make the minimum payments. I stopped using my card with the exception of gas once a month. When I stopped using the card completely, in August 2012, I was up to $8500 debt. I NEVER thought I would ever get that in debt with a credit card.

    That was IT! I’d had enough.I was moving in with my boyfriend in September and we had to go through our financial situations. I was so nervous to tell him and also make it real for me the lack of responsibility with my finances.

    Once we got real about it, we created a game plan. He supported me, I started a new job with a higher income, and cut out almost every unnecessary expense. I took any odd-job I could, cleaning, organizing, bookkeeping, to bring in any extra money I could.

    Now, 6 months later, after putting as much as I could toward paying off my debt, I’ve reduced it to $2850. My credit card will be paid off in full by June and I am SO ecstatic!

    The best thing of all is when I could get completely 100% responsible for how my life goes, I took actions to have it go how I say it should go. Believe me, having $8500 in debt at 25 was not in “the plan” but then again, most things don’t happen the way we think they will.

    My best advice – CHARGE RESPONSIBLY.

  9. Jon says:

    I have it figured out: The ONLY time you should ever carry a balance on a credit card is in an emergency, like if you have medical bills you can’t really afford or an unexpected car repair comes up. You should NEVER carry a balance because you bought unnecessary stuff, like a new iPhone or that popular video game that just came out. For those unnecessary purchases, if you don’t have the cash in your pocket (or money available in your checking account) right at that moment, you simply cannot afford it and should not buy it. You should pay off any credit card debt you already have FIRST, then save up until you have enough money to purchase the item in cash, and ONLY then can you buy it. I’m not saying you have to literally use cash to buy it; you can use a credit card. But make sure you set aside the cash (or money in your checking account) so that when your credit card statement comes, you can afford to pay the balance off in full.

    In other words, if you’re wondering “can I afford this [unnecessary thing]?” you should NOT be thinking about your credit limit. You should be thinking about your checking account balance. If you don’t have the money in your checking account right at that moment, the answer is NO, you can’t afford it.

  10. Yes, I am a Millennial, and no, I don’t have credit card debt (and never have). I was very afraid of credit cards when I started managing my own money post-college because I didn’t know if I could trust myself with them. I got one just for “building credit” that I rarely used and I trained myself to live within my means by always using debit. Three years later I switched to using credit cards for all my purchases (for the rewards) because I was confident that I could handle them properly – I had proven to myself that I was responsible.

    I simply didn’t see being financially irresponsible as an option. I had a job so I lived within my means (my means were and are about $25k/yr). Why would I live any other way?

    • Corinne says:

      I’m pretty much where you are except I wasn’t very responsible in college. I had some late payments (that stick with you for over 7 years, I wish I knew that then), but luckily my CC debt was barely over $1,000 at the time and I quickly paid it off.

      It took me a couple years after college to trust myself with CC’s (and actually get approved for one), but when I finally got one, I started slowly. Now, I use my CC (I have 3 but only use 1 for purchases (and put 1 or 2 charges on the others each month to keep them active), for almost all purchases but pay in full each month. I also track my spending to make sure I’m spending less than I make every month and save the rest.

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