The Curious Case Of Millennials And Debt

Millennials have a complicated relationship with debt. As the first true ‘digital natives’ this generation grew up in the most media-saturated and consumerist culture in recorded history. And many came of age during and immediately following the 2008 financial crisis. Sandwiched between headlines about multinational corporations going bankrupt, families losing their life savings and the perils of taking on more debt they can afford, they saw ad after ad prodding them to spend more, save less and worry about paying for it later. In many ways, their skepticism is completely warranted. But regardless of how they feel about credit, most seem powerless to avoid it. A Culture of Credit Across most of Canada, post secondarytuition costs have historically outpaced inflation by a factor of nearly three times. In all but a minority of cases, student loans or alternative financing are the only ways most can afford a professional certificate, bachelors or graduate degree. The same is true of housing costs in the country’s largest cities. Millennials often face criticism for continuing to live with their parents late into their twenties, but their choices are few. Rental options are often sparse and prohibitively expensive. And those set on homeownership are taking on mortgages that even a decade ago would have seemed outrageous. And then there’s the matter of interest rates. Closing the loop back to the ‘great recession’ – even after several increases over the past couple of years, borrowing costs in Canada continue to hover near record lows. Simply put, millennials have never had to navigate a time where credit was costly or difficult to access. Their experiences and expectations deviate so far from the historical norm that one has to wonder whether they’ve been set up for failure. Worrisome Viewpoints As millennials begin to settle into career and family life, theMNP Consumer Debt Index is revealing some major concerns about how they’re interacting with debt and their long-term outlook. A full one-third (33%) worry about their current level of debt – the most of any generation. Almost one in five (18%) rate their financial situation as ‘bad’, and 10 percent say things have gotten significantly worse in the past year. After subtracting bills and debt payments, one quarter (25%) of millennials surveyed say they have nothing left at the end of the month. When it comes to the continued uncertainly around interest rates, millennials are the most concerned (47%) about their potential impact on the financial situation across the generational divide. Almost half (48%) fear an upward trend could push them closer to bankruptcy – compared to only a third of Gen Xers (36%) and a quarter of boomers (24%). And nearly 6 in 10 (57%) are concerned financial trouble will follow if rates go up much more, compared to half (50%) of Gen Xers and two-fifths (37%) of boomers. Interestingly, at close to half (46%) millennials are also the most likely to blame themselves for the amount of debt they currently have. While this kind of self awareness is admirable and could indicate a willingness to take ownership over potential solutions, it also underscores several of the concerns outlined above. Namely that millennials struggle to avoid spending opportunities, high housing and education costs and apply the lessons from 2008. Changing the Narrative Thankfully, the future is not set in stone. Millennials can reverse many of the financial difficulties they’re currently facing and begin positioning themselves toward greater wealth and security. They key is recognizing those challenges and, if necessary, seeking the assistance of a qualified professional. A Licensed Insolvency trustee can outline options and help create a plan to address and permanently eliminate unsustainable debt. Life-Changing Debt Solutions likeBankruptcy orConsumer Proposals could help kickstart a financial fresh start, halt creditor actions and eliminate fears over rising interest rates – all while allowing debtors to build toward the lifestyle and long-term wealth they want to enjoy. Even if that’s not appropriate, a Licensed Insolvency Trustee can also offer referrals to other services such as financial counseling and education which can guide millennials through better money management skills and help chart a more productive path forward. The sooner this process can begin, the more options that are available – and it all begins with aFree Confidential Consultation. Based out of Vancouver, Grant Bazian is a Licensed Insolvency Trustee and President of MNP LTD. To learn more about how MNP Debt can help, contact our local office at 778.374.2108 or toll-free at 310.DEBT (310.3328).