Gen Zers are taking on more debt, roommates, and jobs as their economy gets worse and worse

• Gen Zers are taking on credit-card debt — and missing their payments — at a rising rate.
• We spoke with three of them about the financial challenges they're facing.

Anthony Strain was desperate for another roommate.

The 26-year-old from Pittsburgh is currently unemployed, $50,000 in debt, and falling behind on his gas and electricity payments. To provide "financial breathing room" and help shoulder their $800 monthly rent, Strain said he and his partner found another person to move in with them and help split the bills.

"We wanted this system to minimize the average cost per person of living here," he said, adding that the trio splits the costs of rent, utilities, and subscriptions to streaming platforms.

Strain isn't the only young American experiencing financial challenges right now. Amounts of credit-card debt and delinquency rates are on the rise, especially among 18- to 29-year-olds. It comes as most economists predict a recession in 2023, as inflation is up 7.7% versus this time in 2021, and as rents — while beginning to fall in some cities — remain elevated. It's caused young Americans to take out more debt, bring on more roommates, and pick up more work.

To be sure, not all Gen Zers are struggling. Americans aged 16 to 24 have seen a wage growth of 13% over the last year — well above the 7.7% inflation over the same period — as companies have raised pay to attract workers. But if a recession comes, Gen Zers could be among the hardest hit due to mounting debt, few savings, and vulnerability to layoffs.

The ones Insider spoke with don't have a lot of hope for the near future.

"We try to endure, but I don't know if we will last the winter unscathed," Strain said.

'My generation and I will not have the same opportunities to build our futures as our parents and grandparents did'

Strain said that the over two-year student-loan-payment pause has helped, but that he's continued to struggle with private loans and credit-card debt.

"It's gotten to a point where my payments cover the interest and not much else," he said. "Both of my credit cards are maxed, with one actually surpassing the credit limit thanks to interest."

US credit-card debt overall rose $38 billion between July and September of this year, per the New York Fed. The 15% year-over-year increase was the largest in over two decades. While overall delinquencies remain below pre-pandemic levels, all age groups saw upticks in missed payments over the past quarter. For older Gen Zers, the delinquency rate rose to over 6%, though still below the roughly 9% pre-pandemic rate.

"Is this simply a reversion to earlier levels with forbearances ending and stimulus savings drying up, or is this a sign of trouble ahead?" New York Fed researchers wrote of the overall rise in missed payments.

One 24-year-old Californian who asked to remain anonymous told Insider she's had to "deplete her savings" to financially support herself while pursuing a master's in finance program in Paris.

She said she works as an intern but makes roughly $1,250 per month. She's taken on babysitting jobs to bring in extra income, but even so, she said her bank account "goes to zero or below every month."

She hopes that taking on student loans for her master's will ultimately pay off financially, but she's not overly optimistic.

"Honestly, I don't think that any amount of education can save me or others from what is happening," she said. "My generation and I will not have the same opportunities to build our futures as our parents and grandparents did."

Among 2019 and 2020 graduates, the average borrower had a student-loan-debt total of over $28,000. While the Biden administration's student-loan-forgiveness plan could reduce balances for some borrowers by up to $20,000, the plan is currently on pause after opponents have challenged it in court.

As a finance student, she knows she's supposed to start saving for retirement as soon as possible, but said this is challenging with expenses and student-loan payments weighing her down.

"I don't know when I will even have the ability to begin saving for retirement if I can barely feed myself now."

Laurence Kotlikoff, an economist at Boston University, previously told Insider that due to savings challenges and rising costs, over half of Gen Z could enter retirement without sufficient savings.

'At this point, I can barely scrape together enough to stay afloat'

Another Gen Zer who asked to remain anonymous told Insider they were making over $50,000 a few years ago through education and freelance-programming gigs.

The 23-year-old said they've since been laid off from the position that provided the bulk of their income, however, and have seen their financial situation slowly crumble as a result over the past few years. They're now over $20,000 in debt, and between all their expenses, they said they're lucky to have $5 in their "checking account at the end of the month."

"At this point, I can barely scrape together enough to stay afloat," they said.

Per the NY Fed's report, the average credit-card balance of 18- to 29-year-olds rose to roughly $2,000 in the third quarter, up from roughly $1,500 the year prior, and rising prices are among the reasons why. Inflation cooled slightly in October but remains well above the Federal Reserve's 2% target.

"I am someone who got lucky, who got a great job, followed sound financial advice, and was doing well," the Gen Zer said. "And I still got stung."

While unemployment rates remain low relative to historic levels, employers laid off nearly 1.4 million Americans in October, and the 26-year-old Strain is currently among the unemployed.

He works in the film-and-television industry, which he said is in a "slow season" until spring. He's applied for unemployment benefits in the past, but said the last time he did so he didn't receive his first check for six months, which has discouraged him from trying again.

He's explored working for Amazon, but said the company is cutting back hiring and that he's found it hard to find another job. His partner is employed, which has helped them meet expenses in the short term.

"The pressure is on," he said. "I'm hopeful that I can secure work soon and stay buoyant. It'll be tough, but I have no other choice than to stay determined. A lot of peers my age are in the same boat."