Young Americans erasing debt fast, study says

Nam Y. Huh/AP

Household debt for homes headed by people under the age of 35 plummeted by 29% from 2007 to 2010. One big reason is the millennials are getting by without buying houses and cars, a report by the Pew Research Center found.?

The millennial generation seems to have figured out the formula to avoiding racking up debt: buy less stuff.

The median debt of American households headed by young adults has plummeted over the course of the great recession, a new study by the Pew Research Center has found.

In all, debt in households headed by people under the age of 35 fell by a whopping 29% between 2007 and 2010, the study said.

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By comparison, households headed by adults over the age of 35, debt fell by just 8%.

More good news for millennials was found in an analysis of their credit card debt. While 48% of adults over the age of 35 carried a credit card balance in 2007, just 39% did in 2010.

According to Pew, the sudden frugal streak was best illustrated in two main areas where Americans have routinely found themselves piling on debt: homes and cars.

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The share of younger households owning their primary residence fell sharply from 40% in 2007 to 34% in 2011, the study stated.

Whether they couldn?t afford to buy one, or identified automobiles as another source of debt, just 66% of millennial households owned a car in 2011, down seven percentage points from 2007.

While remaining more or less flat for American households lead by adults over the age of 35, the big drops in the percentage of debt for millennials may signify a cultural sea change.

?These shifts in the debt profile of younger adults reflect a broader societal shift toward delayed marriage and household formation that has been under way for decades,? the Pew report stated.

Though student loan debt has continued to edge up over the past 12 years, a record high 22% of younger households reported having no debt whatsoever, which Pew noted was the largest number since the federal government began gathering the data in 1983. ?

Source: http://feedproxy.google.com/~r/nydnrss/life-style/~3/klppOB9BH3Y/story01.htm

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