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Households struggle with rise in costs while income lags behind

While many Massachusetts college students carry credit card debt along with their student loans, it appears that most millennials are responsible with credit cards. More than two-thirds have never maxed out a credit card, and most pay their balance in full each month. However, in addition to a student loan debt that was calculated to be an average of $37,172 per student for those graduating in 2016, some students are struggling with credit card debt as well. More than 30 percent of students graduating in 2017 have made a late payment on a credit card.

The job market has been improving, but improvement for new graduates just entering the market has been the slowest. Meanwhile, adults of all ages are struggling with credit card debt as well as a rise in the cost of living that is not equaled by an increase income. While household income only rose 23 percent from 2003 to 2016, the cost of medical care went up 57 percent and the costs of drinks and food went up 57 percent.

Across all households with credit card debt, the average amount is $16,061. This hits lower-income households disproportionately because even when they owe less in debt than higher-income households, they often end up paying a more significant percentage of their income.

This can become a vicious cycle for people who are unable to build an emergency fund because of debt and consequently must continue to use credit cards in emergencies. If debt has become overwhelming, a person may want to talk to an attorney about bankruptcy. Filing for bankruptcy puts at least a temporary stay on collection efforts, and this includes any legal action or harassing phone calls.

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