Generation Debt

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Rob_s_Wife

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ktul.com/news/stories/1106/376077.html
But, for many living in Generation Debt, paying with plastic is the only option. There is simply no choice.
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"They’ve got student loans, credit cards. And, that first job didn’t pay them 100-thousand dollars
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."

It’s like playing an endless game of catch up with no way out. And, it’s taking its toll. Because of spiraling debt, 44-percent of young people put off buying a home, 28-percent delay having children and 18-percent put off getting married.

😦
Education is supposed to open doors, not close them. I found this article very sad. It really solidifies our resolve to live as debt-free as possible and to teach our chidlren to do the same. If not for their sake alone, then for any family they may one day want to raise.
 
we also started out with 2 student loans, and with my education was protracted throughout my “childbearing years”, and we both went to grad school, so SLs were a way of life. Made the last SL payment the month we paid DD’s first college installment. She went on the DSL–daddy student loan program, and made regular payments for 10 yrs after school (which went into a college fund for her kids). It can be done, and you can still have enough for the necessities of life. What may be harder to come by are the wants and desires above the necessities: having the mega-home in the burbs as your starter, new cars every 3 years, expensive preschool for your kids, newest video game every Christmas, designer clothes etc. You may have to learn the science of delayed gratification, as our generation did.
 
the problem is is that these young kids/adults have no idea how to save or spend or budget their finances…they need to be taught about money, investing, spending etc.
Until they are taught this stuff all they will do is get further and further into debt!
 
I wouldn’t blame it totally on the “younger set’s” lack of financial management skills… but it is a large portion of the problem.

The other contributing factor is there are no consequences any longer!. Charge, Charge, Charge… file bankruptcy. No problem, you get to keep your stuff… wait a few months and get more credit cards. There are ALWAYS more credit/credit cards out there regardless of your history.

Now, having a new car, a huge house, or “toys” is just a swipe away… and people don’t realize they can’t spend their gross income! I’ll guess that most of these “20-somethings” have credit limits (on multiple cards) that meet or nearly exceed their annual incomes!

There’s no “debtor’s prison”, total repossession, or anything anymore. Just a few legal fees and you’re off the hook.

Not too long ago it was socially SHAMEFUL to admit to over-extension and be “bankrupt”. Having nice or new things meant you were successful, had a good job or career, and worked hard.
 
I’m over extended. I have well over 100 grand in student loans, plus car loans, and some credit card debt ( I need to buy text books that I of course never needed to use), So in order to make just slightly over 30 grand a year, I have had to pay more than 3 times that. Hooray for social services!
 
I don’t think that all young people in debt are there because of irresponsibilty. It is tough out there today! Society is set up for double income couples. So when you want mom to stay home and just live off of dad’s salary, it’s near impossible.
But I do agree that we need to teach our children about financial responsibilty and delayed gratification. There have always been spoiled brats, but it does seem like there are many more of them now.
Malia
 
I agree there’s more to this than meets the eye and it is not all the kids fault either.
Parents teaching their kids they don’t have to work (and work HARD) because just going to school is enough - while the debt of the kid and often the parent piles up for 4 or more years.
They need to research the potential of their degrees too. Far too many get a degree that literally will not pay for itself. That may be fine for some, but they need to know they are chosing that situation.
I also think it’s foolish to think at age 18 they are ready to be booted out on their own. If at all possible they should stay home while going to college and saving for the family they will one day have while helping the family they have now. Not being waited on, but contributing to the home for the benefit of their family and their own futures.
I’m sure many people do just charge and file bankruptcy. But most do not. Life happens and health/living needs don’t stop just because the paycheck does and the savings go dry. As for no consequences…
I beg to differ. Only the big corporations don’t suffer personal losses. The only way to keep items accrued by credit is to reaffirm those items - iow those creditors are not put on the bankruptcy and the person is still making good on those credits that they can.
 
Rob_s_Wife said:
ktul.com/news/stories/1106/376077.html

😦
Education is supposed to open doors, not close them. I found this article very sad. It really solidifies our resolve to live as debt-free as possible and to teach our chidlren to do the same. If not for their sake alone, then for any family they may one day want to raise.
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Oh, I see this with everyone my age, at college and work.

My associate has been dating for 16 months to a man who is halfway through grad school. He has 80K in school loans. She has 25K in school loans. They are making less than 9hr. each working 40hrs. a week.

I was just browsing around a neighborhood out here and found a 4bedroom home for 863 thousand dollars. Even if my fiancee becomes a good doctor out here (with the local average being 200K a year for income) he couldn’t afford that. I mean, who is buying a house that costs so much?

Education really seems to be cheapening in front of my eyes. It is starting to seem that a degree means nothing, and experience only gets you so far. Only a few people get lucky in the right place at the right time.

For me, personally, I feel like my fiancee and I have saved every penny, pinched everywhere, invested as much as possible, worked our way up the ladder and crammed on studies, followed every financial tip in the book, and I still don’t see how we can live with anymore than 2 kids unless something spectacular happens. I’m talking about a 2 bedroom home with one used car and no student loans or credit debt. It’s absolutely insane.

I’m guessing the pressure never lets up? I don’t agree with it and understand how wrong it is on many levels, but I do see why 99% of all the young adults I know are sleeping together and contracepting. Our culture and economy is sickening.
 
Karin said:
the problem is is that these young kids/adults have no idea how to save or spend or budget their finances…they need to be taught about money, investing, spending etc.
Until they are taught this stuff all they will do is get further and further into debt!
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That is a valid concern. For example, I know a girl who is 20 and didn’t know what a 401K was.

But, that is not the whole story. Right now I am paying in cash semester by semester, but to do that I passed an oppurtunity to go to a university’s honor organization where they would have saved me a seat in med school. Even after 12K of scholarships and a 6K stafford loan, I was expected to cough up 15K more.

I still remember the little financial sheet that had line by line ideas of where this 15K would magically come from, such as grandparents (dead) parents (ha!)…Or, I could have figured out a bunch of exotic loans and begged my parents into a PLUS loan. I would have had over 60K in debt before even getting to med school!

I don’t have credit debt, I don’t have student debt, my parents have left an open welcome in their home, I work 40-50hrs a week and I still don’t see how I can get ahead, get married, stay at home and have kids. It really does look impossible.
 
Parents teaching their kids they don’t have to work (and work HARD) because just going to school is enough - while the debt of the kid and often the parent piles up for 4 or more years.
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i couldn’t agree more…i worked all through school and put myself through with no loans in undergrad…

i do also want to say that credit cards aren’t all bad…we have several that give us arline miles and hotel points and we put everything we can on the cards and pay them off every month…we never pay interest or a fee and so far we’ve earned several vacations:thumbsup:
 
hasikelee said:
Oh, I see this with everyone my age, at college and work.

Education really seems to be cheapening in front of my eyes. It is starting to seem that a degree means nothing, and experience only gets you so far.
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Yes, my dh and I see this too. Dh does not have a college degree and is doing at least as well as those with 4 year degree. In fact, he is doing at least as well, if not better, as several couples we know where they both have a 4 year degree.
The value of a 2 or 4 yr degree is less than it used to be, some of which is valid. The first 2 years are mostly remedial education to make up for a lack of education in highschool. You should not need english composition or algebra in college for example. The easier subjects also mean more people have the degree, which means it’s not considered an achievement to get it, but a basic standard like a high school diploma.
 
Rob_s_Wife said:
Education is supposed to open doors, not close them. I found this article very sad. It really solidifies our resolve to live as debt-free as possible and to teach our chidlren to do the same. If not for their sake alone, then for any family they may one day want to raise.
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I don’t think people appreciate what a great gift it is to teach their children to make do with less. Kids benefit from learning that if you know how to leave simply, it give you tremendous freedom. You are free to choose a career that pays less, you are free to save for times of need, you are free from running after more and more and more, you are free to drop everything and do what God calls you to do, you are free to share with those you want to help or welcome, you are free from the upkeep and security concerns that come with owning lots of stuff…the list goes on and on.
 
ahh money money money 🙂 DH and I graduated college, got married, and got pregnant within the span of…3 months? LOL so we’re in the real world real quick. My parents were generous enough to pay for my college (what I didn’t pay for through scholarships) but we do have DH’s student loans. He went to a public univeristy whose price tag wasn’t too steep (yet). Thankfully, neither of us have ever had a credit card…and we don’t plan on getting some any time soon. But I agree that college degrees are a dime a dozen. Watching DH job search and be over-qualified for one job due to his degree, and then under-qualified at another due to lack of experience, has been frustrating.

It’s hard to see how we can stay living off of one income and be open to the large family we dream of having, and have basic necessities, and neither of us is desiring a huge house or new cars. I question whether we will be able to afford Catholic schools for our kids. I just want to survive 🙂
 
hasikelee said:
Education really seems to be cheapening in front of my eyes. It is starting to seem that a degree means nothing, and experience only gets you so far. Only a few people get lucky in the right place at the right time.
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Unfortunately, this is true partly because student loans are available to just about anyone and the fact the companies are picking up the tab for so much of so many people’s education costs. I mean, I am in the business world. It seems to me that an MBA is yesterday’s college degree which was its’ yesterday’s high school diploma. it’s too bad.

ETA: I am happy I was able to get student loans, but economically, I see the problems with extending these in the way they are extended these days.
 
queen_anne78 said:
ahh money money money :)… Thankfully, neither of us have ever had a credit card…and we don’t plan on getting some any time soon. But I agree that college degrees are a dime a dozen. Watching DH job search and be over-qualified for one job due to his degree, and then under-qualified at another due to lack of experience, has been frustrating.
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This brings up another frustration. If you don’t amass yourself a record of having credit and using it, it may lower your credit rating and make it more difficult (and expensive) to get a home loan!

My husband, though, has a very high credit rating and before we got our mortgage he had never failed to pay his credit cards in full. I had only done otherwise once, in the mistaken belief that taking some time to pay off the loan made a sizable difference in your credit rating. In other words, you don’t have to have a history of paying interest to get good credit, just a history of having used credit and being reliable in paying it back. You also don’t need to use a huge number of cards.

It is worth it to research what does and doesn’t make a difference in getting yourself a favorable credit rating, and then obtaining a credit card where it would be helpful in that regard.

Also, I have found that it is extremely difficult to rent a car or do any number of other things if you don’t have a credit card. You have to get references and who knows what. Also, one finds that when one needs credit to weather a short period when one’s assets aren’t liquid, it is difficult (if not impossible) to get it right away. On that account, having a card or two that you use wisely and pay off faithfully is prudent for those with the self-restraint to keep them paid up.

We use our credit cards to make purchases that we would otherwise make, paying them off faithfully every month.
If you don’t have a lot of self-restraint, you can autopay things like your newspaper or whatnot with your credit card and encase the card itself in a block of ice in your freezer or in a safe at your parent’s house…someplace accessible on a weekend but not accessible when you would use it on a whim.
 
I’m not totally against plastic, as long as you can use it to your advantage.

As posted, you are really a “non-person” if you don’t have credit debt or a credit rating. I’ll share a few tips here, from a family that has only ONE (1) debt on credit… our mortgage… every thing else is paid for.

Find a card that gives “points” toward a catalog of goods, or a “cash-back” program. Use this card to purchase food, gas, or anything else. Pay it off each month!

Use the credit card bank to “float” your debt for 25+ days! Reap the points, but deny them the interest charges or penalties by paying it off… or very nearly paying it off - let them have their $50 dollar balance! (Best part, as a “good customer” they’ll keep hiking up your limit… in the hope you’ll “spend” what you can’t afford!)

We got 4 airline tickets for a family vacation “free”… working the system. A few years back I needed a new work truck. I shopped around, got my best deal, and said “write it up”. The salesman says “OK, lets go talk to our credit manager to finalize the details…” “No need, just put it on this… (handed him a credit card)”.
“You’re buying a $32,000 truck on a Visa?”
“Yup… just go swipe it through”. (I can just see the creditors going Ooooohh, we got one!)
I signed the slip, and drove away in my new truck. The “points” for that purchase were worth the 4 airline tickets. We floated the Visa card’s money for 20+ days while we arranged the lowest/best “conventional” financing through our bank. When the “conventional” loan was a done-deal (using the truck as collateral) and got the money, we paid off the plastic immediately via on-line transfer.

Shortly thereafter mortgage rates took a nose-dive (at least 1-1/2%), and we re-financed the house, and rolled the truck loan into the mortgage. Cut our term by 15 YEARS, and maintained the same monthly payment as before, including the cost of the truck.

Screw the banks whenever you can. Work the system to YOUR advantage. Like I said before, they are not your friends (even though a major one pays my wife’s salary!)
 
Jay2 said:
Screw the banks whenever you can. Work the system to YOUR advantage. Like I said before, they are not your friends (even though a major one pays my wife’s salary!)
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If you’re not lying, you’re not screwing the bank. You’re being a smart consumer. After all, it isn’t “screwing” them to refuse to be someone who makes what somebody at the bank projected to be profitable for the bank, though foolish for the customer. As I’m sure your wife would attest, you can be certain that they would do no such thing with their own finances! Certainly none of them blame you for being just as saavy.

IOW, banks don’t take it personally when you use their terms to your own advantage. If the terms they set for their business cost them profits in the big picture and over the long run, they chalk it up as a poor business decision, not an instance of fraud. They make their money, though, on people like you being the exception, and not the rule. If there is any question of ethics at all, it is the question of whether it is ethical for banks, who now make a huge portion of their profits on fees and penalties, to make their main profits on the most careless and desperate of their customers…especially since they make some efforts to lure those customers into that foolishness.
 
**I completely disagree about fretting over credit and credit ratings. **I couldn’t care less about my credit score and it has not affected our loans (house and 2 yr loan on a car). We learned this years ago, but I hear Dave Ramsey speaks about this too and gives some really good advice.
Get a manual underwriter (35% of all banking institutions have them) for any loan you do want. And remember, most of the time, they want you to have the loan more than you need the loan. (Those most in need, probably can’t afford a loan!) Be willing to walk if you don’t get favorable terms and know what favorable terms are. Negotiate, negotiate, negotiate! They are not doing you a favor. You are bringing them business and they will make a huge profit off you, so don’t feel like you have to just take whatever they give. The biggest mistake people make is not knowing what they can negotiate or being unwilling to do it. (timid)
**We have a checking debit card with all the perks of a credit card (theft coverage and so on). For reservations, it hasn’t been a problem yet. We usually just drive the baby van everywhere. We go for apartment suites for our hotel stays because they suit our large family better (2 bedrooms, fold out sofa in a little living area and a kitchenette). The debit credit card to hold and cash at checkout as always been fine. We don’t fly much as a family or that might be a credit card issue… If we truely found a need, I wouldn’t get a credit card - I’d get a charge card, such as AMEX. **
In fact, last we checked by following this policy our credit rating is actually better. Which is funny because we completely ignore it.
I have no issues with student loans/grants. I’d like to see a forgiveness program though. Use the degree to work at reduced wages (they still need to make money for food/shelter) in that field for 2 years after graduation and the gov’t pays off the loan. Win/win for everyone.
 
My grandfather, God rest his soul, used to tell me “you can borrow money to make money, but never borrow money to consume”. I did take that to heart, and never, ever borrow money to consume. Well, I did borrow money to buy our house, which is somewhere between an investment and consumption.

But what he did not say impressed me more than what he did say. He was a farmer-a strawberry grower. When strawberry farming crashed because of the big federally-funded irrigation projects and imported labor out west, he turned to cattle. He never made it past the third grade. But he sent both of his daughters to college, one of whom was my mother. My parents didn’t buy half of what they could have bought with the money they had. We came first, and our education was part of that.

My wife and I don’t live anywhere near the standard our incomes and assets would “justify”, and never did. It wasn’t easy, but we put two children through Catholic colleges and professional schools. Another attended a Catholic college for awhile, then transferred to a state college because he was tired of hearing the Catholic Church put down in the supposed “Catholic” college. He went to a Catholic professional school, however. He owes $16,000in student loans, but only because the asset I would have sold to pay for it earns more than the loan interest, and gains in value. When the time is right, we’ll sell the asset and get him free and clear. My youngest is in professional school right now. She might end up doing about the same, but might not need to. She worked hard for a scholarship, found a professional school that would give her one, and went there. She deserves to graduate without debt if I can get it done, and I will, even if I have to sell my favorite stock to do it.

Long ago, my wife and I lived in an old Victorian fixer-upper that we bought from an estate. We fixed it up, used it as additional collateral on our present home, then when we paid it off we gave it to my oldest daughter and son-in-law. I feel it is my obligation, if I can do it, to put my children through school and, because it’s awfully hard for young people to raise a down payment, to make it for them on their first houses, or at least pledge collateral for it.

I have been blessed more than many in a material way. But my wife and I are certainly not wealthy in anything but children and grandchildren. I really do think one of the biggest problems young people have now are parents who consumed too much. Long ago, a farmer who had his farm bought would buy a neighboring forty or so in order to get his sons started out in life. That’s what doweries for daughters were all about, as well. That’s what wedding gifts used to be all about. That’s not heroic, it’s just good sense. I really don’t understand a society in which people buy the big home in the 'burbs and the new car and the boat and the big screen tv and the trips to Cancun and then tell their children they have to borrow $100,000 to go to school.

Now I’m getting on in years. It’s a standing joke in my family that if my children ever see me talking to a sales person in an RV dealership, they have my permission to shoot me without warning.
 
Jay2 said:
The other contributing factor is there are no consequences any longer!. .
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You are so wrong about that–there are plenty of consequences. Get yourself into financial hot water for any reason and it goes on your credit report. A lot of employers run credit checks on potential employees and if it isn’t prestine, they won’t make the hire.

It’s not easy to file bankruptcy anymore–the laws changed last year to make it a lot harder.

Not enough parents teach their children how to deal with money. Some try, by telling their kids to save money but that’s not really *managing *money; kids have to learn how to plan ahead, to budget, to live within their means, and so on. I think junior or senior high schools should have a REQUIRED course in financial education.

My husband and I are well off but we weren’t always; for years we had to budget every cent and I got so I could squeeze a penny so hard it would scream. As he got into his teen years we started showing our son our income, our budget, and where and how we spent our money. He learned well, too, and how that he’s graduated college and has a job, he knows how to handle his money intelligently…

I think society does our children a great disservice by not giving them as much education in personal finance as they do in the other basics of life.

Also–people get into financial trouble through no fault of their own; I really get bothered by the judgemental attitude of too many people who look down their noses as people who are struggling and say, it’s their own fault. Sometimes it’s not; nobody chooses to have natural disasters (a la Katrina), catastrophic illness not covered by insurance, loss of a job–all kinds of things that
can happen that throw the best of plans into a cocked hat.

It’s not as easy to be poor as it used to be.
 
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