mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Monday, January 16, 2006

Am I part of Generation Debt or Generation complainer?

Via Instapundit comes this article about "Generation Debt" from Daniel Gross at Slate.

I find this interesting because I happen to be exactly the generation that's being discussed - 20-somethings.

I think the answer to the question "does it suck more to be a twentysomething now or in the past" is a matter of perspective and timeframe. If you asked me 3 or 4 years ago - when I was an unemployed recent college graduate - where I thought I would be financially at age 25, I would probably peg it for being worse than my current financial situation. But if you asked me 5 or 6 years ago, when I was still in college and the boom was going on, I would probably have much higher expectations than my current situation.

Of course, those expectations were unrealistic and unsustainable, and all things considered I'm doing pretty well. The other comparision question people like to ask is "am I doing better than my parents were at my age?" - and that's a difficult question to answer. When my parents were my age, they were about to buy their first house, and they had much more of the down payment saved than I did. They also didn't have any student loans. But they were also already married, which means they had significantly more income than I did. They also lived at home longer than I did, which meant lower housing expenses and more opportunity to save.

But there are advantages that I have that they don't. I already have started saving for retirement, something they didn't at my age (and I'm lucky enough to have an employer that kicks in generously - I put in 2% and they put in 11%). And the reason they weren't saddled with student loan debt is that neither of my parents went to college, while I have my BBA and am 2/3 of the way to my MBA (and the MBA is paid for by my employer). Plus I have a world of "stuff" that they couldn't dream of, from computers to DVR's to a car with heated seats to cell phones to bagged prewashed salads. That "stuff" is an expense, but it also makes my life easier and more pleasant.

I think the one thing that's a major buzzkill for my generation is high housing prices. As I mentioned, I'm about to buy my first house. When my parents bought theirs back in the 60's, they put 50% down and had the rest paid off in about 10 years. I'm lucky if I can put down 10%, and without a huge change in income can't imagine paying it off in less than 30. But housing prices are a factor of a number of things - location, local building and zoning laws, jobs, return compared to other investments, and a host of other factors. But it is depressing to look at how my life savings - all the overtime I've worked the last 3 years - is going to be going to my down payment - and how I pretty much wont' have any free cash after mortage payments, at least until the 10% second mortgage I will probably have to take out is payed off. I think that's one reason for the malaise that people my age feel - if you already own a house and are looking to trade up, you can probably take advantage of the massive appreciation of your current house, but if you are a first time buyer it's much harder because you aren't.

Gross points to options - saying that if you don't like your pay or the high cost of living in your area, you can always move or switch jobs. Your ability to switch jobs depends on your skills and what's available, in addtion to your personal choices. Moving is tougher - many places that are cheaper to live are cheap because there aren't many jobs around. But in all decisions, people face tradoffs - make more money or do something you enjoy/find rewarding, move to a cheaper place to live or live near your friends and families. This are the choices and tradeoffs that people face - and that they have always faced. It's not specific to my generation.

So in conclusion? Being 25 nowdays can suck, but it could suck a whole lot worse, and as Dan points out, it will probably suck less as we get older.


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