Young Adults In Trouble

[NWstubble]

It's all in the eye of the beholder...

http://finance.fortune.cnn.com/2013/02/25/debt-young-adults/?hpt=hp_t3

[marty998]

And the winner of the stupidest line is:

"And young people are less willing to take on credit card debt and auto loans, suggesting they aren't in financial positions to commit to monthly payments."

Ever heard of a debit card? Cash? Sounds like the writer is trying to fit a set of good facts about GenY to a preconceived stereotype of irresponsibility.

[Rollin]

Maybe they don't have as much debt because they are smart - or they aren't making much money - or they need 20% down to buy a house.  Regardless, it is an interesting trend.  It may be by choice and it may be forced, but if I had to conclude anything I'd say less debt is a good thing, especially at such a young age (although $15k of debt is nothing to sneeze at).

I agree that the article writer took some interesting slants as well.

[venkol]

Boomers need to downsize their homes, need to get kids out of the house, need to sell their stocks and buy bonds.  If the next generation isn't buying the starter home, they won't buy the upgraded home for anything near what the boomers want.  If the Boomers were responsible and had a paid of home on the day they wanted to retire, this wouldn't be an "issue", but since so many of them took money out or played the home upgrade game constantly before the crash, young people not buying durable goods is a big problem for them.

Basically, irresponsible boomers are screwed by this which is really the point of the article.  Young people are completely fine without the debt and will continue renting and saving potentially forever. 

[SMMcP]

Whoa there venkol.  You make it sound like all boomers are irresponsible.  I'm a boomer (61 years old) and I have a mortgage free home, absolutely no debt of anykind, money in the bank and am continuing to save even in semi-retirement.  The last thing I would want is for anyone, young or old, to acquire consumer debt.  I consider it a form of slavery and encourage my 3 adult sons to avoid it like the plague.

[amustache]

The elephant in the room is that the economy runs, as has always run, on credit. So, philsophically speaking, this may be a long-term issue.

How will we continue to get 7% annual returns (a lofty number going forward imo) if less and less people max out their credit cards? But I digress.

[venkol]

Whoa there venkol.  You make it sound like all boomers are irresponsible.  I'm a boomer (61 years old) and I have a mortgage free home, absolutely no debt of anykind, money in the bank and am continuing to save even in semi-retirement.  The last thing I would want is for anyone, young or old, to acquire consumer debt.  I consider it a form of slavery and encourage my 3 adult sons to avoid it like the plague.

No, not all, but enough that it will cause serious issues in our economies.  Plenty of people have paid off homes and have save responsibly, and those people will be fine.

[Left]

hm... I'm probably not very mustachian... I have the "young" (well I'm 27 so I am fairly young lol) mentality of "spend". I'm just "mustachian" about saving too. It isn't that I don't spend at all, I just pick what I want to spend, and don't rack up a debt doing so, I don't buy on credit. I just don't keep working at it to save something, I'll do repair work as much as it functions like it should, but if it is dead, I buy a new one. Namely if my car needs more repairs than maintenance work or minor fixes, I'll do that. But if it needs more and I could get it "running" by duct taping it together, I'll just buy a new car. Sure, I could "save" some money by duct taping a car together, but I rather just buy one, is this bad? Probably, but I feel like it's an investment for future uses, so I'll buy it. I won't buy a new car (but I'm eyeballing some used subaru's around $20k and I just can't bite to buy :( even though I know I can technically afford it,  I just really want to buy one at or under $15k).

Anyways, I feel like we can "spend" in an economy without buying on credit. There's no reason why I can't shop everyday without spending more than $40 per day. If I don't spend more than that, I save it $15k/year budget... but if I look at it as $40/day for everything (with a $600/month rent + utilities) that still leaves me with half the year to spend on whatever I want.

At least that's how I live, I spend around $20/day (the other $20 goes to rent/utilities). If I decide to spend half the day's money ($10) on food, that still leaves me $10 so I can watch a movie every day if I want, or go to a nice restaurant once a week for $70 meals. Of course, I make more than that with my job so I can actually afford more, but I end up saving/investing the rest. I just made $40/day my personal goal. I started at $50 and worked my way down, I just don't see myself going even lower right now.

I know my budget is a little over minimum wage, but I really don't think it's that bad. And I live pretty well, at least not paycheck to paycheck. Yes I know I don't really live paycheck to paycheck because I save 75% of my paycheck each month... But because I set my goal to $40/day, I'm able to get by at $15k/year. With big costs to car/house/items (I just pull from savings, nothing I can do about it, it's a "rainy day")

edit: just adding that my clothes/shoes/personal items/insurance/etc, come out of my savings, so that fudges my $40/day goal too, I just don't consider things that I don't have to pay daily for as part of the $40. Since those are either monthly/semi-annual/rare occasion, I throw them into the rainy day fund too lol. Yeah clothes shopping=rainy day

[randymarsh]

The economy may be in trouble, but I'm not sure I buy that young adults are. It's not our fault the economy runs on consumer spending and large scale purchases. Most of us are just trying to pay down our student loans. The economy will have to adapt to a generation that values different things.

Many of us would rather live in our parents' nice homes, stay on their health insurance, and still be able to afford going out and maybe a small car payment (I know, I know, car payments).

I have an older friend who graduated in 2010 and now works full time, probably earning 30-35K. Sure, he could find a place to rent and be out on his own, but who wants the stress of a rent payment or god forbid a mortgage plus that huge student loan every month? Just to be able to say you moved out...not appealing to many of us. We're making big moves very carefully.

[Left]

I don't mind owning a nice house instead of staying with parents. But I prefer to own a house that I can afford, it might not as "nice" since I haven't worked the 30+ years yet to pay it off... But you know, I don't really have to give up on owning a nice home, just make it something that comes with time. I just know better than to have a mortgage that takes the entire paycheck to pay

[YAR]

The economy may be in trouble, but I'm not sure I buy that young adults are. It's not our fault the economy runs on consumer spending and large scale purchases. Most of us are just trying to pay down our student loans. The economy will have to adapt to a generation that values different things.

Many of us would rather live in our parents' nice homes, stay on their health insurance, and still be able to afford going out and maybe a small car payment (I know, I know, car payments).

I have an older friend who graduated in 2010 and now works full time, probably earning 30-35K. Sure, he could find a place to rent and be out on his own, but who wants the stress of a rent payment or god forbid a mortgage plus that huge student loan every month? Just to be able to say you moved out...not appealing to many of us. We're making big moves very carefully.

I really Really REALLY hope you are trolling or trying to be ironic.

[GuitarStv]

The economy may be in trouble, but I'm not sure I buy that young adults are. It's not our fault the economy runs on consumer spending and large scale purchases. Most of us are just trying to pay down our student loans. The economy will have to adapt to a generation that values different things.

Many of us would rather live in our parents' nice homes, stay on their health insurance, and still be able to afford going out and maybe a small car payment (I know, I know, car payments).

I have an older friend who graduated in 2010 and now works full time, probably earning 30-35K. Sure, he could find a place to rent and be out on his own, but who wants the stress of a rent payment or god forbid a mortgage plus that huge student loan every month? Just to be able to say you moved out...not appealing to many of us. We're making big moves very carefully.

When I came back from university my parents introduced me to the guest room.  I was free to stay there for a few weeks, but longer than that and I would be required to pay rent and my share of food costs.  The funny thing is, the guest room looked a lot like my old room.  It had the same dimensions, the same colour of paint, and the same furniture in the same places.

I suspect that few parents will be OK with their kids sponging off of them forever.

[sherr]

The economy may be in trouble, but I'm not sure I buy that young adults are. It's not our fault the economy runs on consumer spending and large scale purchases. Most of us are just trying to pay down our student loans. The economy will have to adapt to a generation that values different things.

Many of us would rather live in our parents' nice homes, stay on their health insurance, and still be able to afford going out and maybe a small car payment (I know, I know, car payments).

I have an older friend who graduated in 2010 and now works full time, probably earning 30-35K. Sure, he could find a place to rent and be out on his own, but who wants the stress of a rent payment or god forbid a mortgage plus that huge student loan every month? Just to be able to say you moved out...not appealing to many of us. We're making big moves very carefully.

When I came back from university my parents introduced me to the guest room.  I was free to stay there for a few weeks, but longer than that and I would be required to pay rent and my share of food costs.  The funny thing is, the guest room looked a lot like my old room.  It had the same dimensions, the same colour of paint, and the same furniture in the same places.

I suspect that few parents will be OK with their kids sponging off of them forever.

Even if the parents in question are okay with it I'm not sure why anyone would want to sponge off their parents forever. As a member of the "young adults" generation, I have no desire to move back in with my parents or continue to be dependent on them for healthcare.

I am an an adult. I am independent. I can take care of myself and my family. I require charity from no one, parents included.

Part of my mindset may stem from the fact that I make significantly more money than my parents do, but I can't help but see that kind of behavior as more than a little selfish and short sighted. Your parents should be free to think only of their own retirement and personal needs, not also of supporting their adult children. Giving up your independence for a little extra spending cash does not seem worth it to me, regardless of the impact it has on your parents.

[Jill the Pill]

   

I have an older friend who graduated in 2010 and now works full time, probably earning 30-35K. Sure, he could find a place to rent and be out on his own, but who wants the stress of a rent payment or god forbid a mortgage plus that huge student loan every month? Just to be able to say you moved out...not appealing to many of us. We're making big moves very carefully.

I really Really REALLY hope you are trolling or trying to be ironic.

Perhaps ironic, but cast another way, it's worth considering.  In certain immigrant families, grown children live at home, often with their new spouses and children.  Payment of property tax/utilities is gradually transferred to the younger generation, and the burden of housework/yardwork/care is gradually lifted from the old folks.  Grandparent daycare is built right in, free and loving.  It really is not a bad family arrangement, not a "sponge" or "charity" situation, though some privacy/individuality is sacrificed for all. 

It's also environmentally friendly, as one furnace, one lawnmower, one fridge, etc. serves many. 

[randymarsh]

I didn't mean to suggest that we're planning to stay with our parents forever! Just maybe not move out as quick as earlier generations did. People want to save up some cash & pay down a decent chunk of their student loans before moving out.

As Jill mentioned, young adults in the US have typically had a desire to leave their parents that is completely alien to many Asian cultures. I don't see the harm in staying at home for a couple years after graduation if it means a better financial foundation and the parents don't mind or experience a hardship because of it.

[mm31]

Not being from the US, I thought it was weird how most people here had this sudden desire to live on their own, often regardless of their financial situation. It's mostly a cultural thing, I guess. I was glad I got to spend 3 years living with my parents while starting out, because of the advice and support I got from them while transitioning from the classroom to the workplace.

[Jamesqf]

Not being from the US, I thought it was weird how most people here had this sudden desire to live on their own, often regardless of their financial situation. It's mostly a cultural thing, I guess.

It's really all about one simple thing: sex.  Unfortunately in this culture most parents pretend that their little darlings aren't sexually active, and shouldn't want to be even if they're in their mid-20s.  So it can get pretty awkward when you want to bring that hot person of the opposite persuasion home for the night...