Debt and the Millenials

"It’s the single greatest problem facing this generation."

-William Strauss, co-author of Millennials Rising, a 2000 book that
identified the generation born from the early 1980s to the early 2000s.


We’ve looked at the increasing pressure on the Middle Class over the past few years. Now, we see where this debt is having a particularly strong impact:  the twentysomethings:

"This generation of twentysomethings is straining under the
weight of college loans and other debt, a crushing load that separates it from
every previous generation.

Nearly two-thirds carry some debt, and those with debt have
taken on more in the past five years, according to an analysis of the credit
records of 3 million twentysomethings that Experian, the credit-reporting
agency, did for USA TODAY. Their late payments are rising, and they’re more
likely to be late than other Americans are.

Nearly half of twentysomethings have stopped paying a debt,
forcing lenders to "charge off" the debt and sell it to a collection agency, or
had cars repossessed or sought bankruptcy protection.

High debt loads are causing anxiety, too. A poll of
twentysomethings by USA TODAY and the National Endowment for Financial Education
(NEFE) found 60% feel they’re facing tougher financial pressures than young
people did in previous generations. And 30% say they worry frequently about
their debt."




There are some people who insist that the lack of domestic savings nationally is no big deal. I suspect the wrongheadness of their arguments will be felt acutely by this generation of debt laden youth . . .

UPDATE: March 12, 2006 1:45pm

Young_in_debt_2I tracked down this other chart I thought was instructive:




Young people struggle to deal with kiss of debt
Mindy Fetterman and Barbara Hansen,
USA TODAY, 11/20/2006 1:49 AM ET 

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  1. Adam commented on Mar 12

    How about the national debt, not just personal?

    As one of those twentysomethings, as much as it pains me to admit it, looking at the huge pile of debt the previous generation/government has left for us to deal with, sometimes I just feel like giving up and leaving the country.

    I don’t know how many young people share my view right now, but I do wonder how many will try to get out once they see the ship is sinking.

  2. D. commented on Mar 12

    But aren’t these young ones supposed to buy the youngest boomers’ homes in a few years so the latter can realize their trillions in wealth?

  3. tootey commented on Mar 12

    That data doesn’t do much for me. Install ment debt up .8% per year over those 5 years. Loan debt up 3% per year over those 5 years. We’re talking inflation sized moves. Show me 1980 and 2006 and we’ll talk.

    Adam, yes I suspect my retirement stash and family will leave the country once the government comes calling for donations.

  4. costa commented on Mar 12

    As a twenty something, I see your view point, maybe not to the point of packing up and leaving. But I think this country is headed for some big troubles. IMO most people my age, just keep spending more and more and not saving. My friends look at my like im crazy for automatically saving 35% of my pay check. Also they think everything will be fine and don’t understand the deterirating economic conditions that we have.

  5. Doug_S commented on Mar 12

    You’re assuming that they will allow your retirement money to leave the Country. Lots of people are thinking that way. Your money is probably electronic digits and even putting cash in your pocket and bordering an airplane is subject to govermental permission.

  6. AndrewBW commented on Mar 12

    “There are some people who insist that the lack of domestic savings nationally is no big deal.”

    One of them being Larry Kudlow.

  7. Nikki commented on Mar 12

    I am 28 and the debt levels of my friends never cease to amaze me. The thing is, they DON’T CARE because they’ll have Mommy and Daddy to back them up in case of an “emergency”. My peer group has such an astounding sense of entitlement it’s unreal, and I’m sure it’s because we’ve grown up in a economically prosperous time. In 1987 I was 9, so I hardly remember that blowup, and in 2000 I was 22, drunk and about to graduate from college, so what did I care?

    What reason has my generation had to save? Returns are low, inflation is rampant despite what the official stats say, so why not spend it, and then spend even more? We’ve never seen a real economic slowdown in our adult life and I think many of my peers think it will never happen.

  8. Nikki commented on Mar 12

    And as an addendum, I’m like costa, saving probably too much of my paycheck. But how the hell else will I ever be able to buy a house? :)

  9. Sam Park commented on Mar 12

    It feels so good to be debt-free. No more school, car and credit loans.

    How’d I do it?

    Hmmm… I didn’t buy things I couldn’t afford.

  10. Idaho_Spud commented on Mar 12

    Inflation-adjusted, I’d guess that twenty-somethings are in less debt now than they were in 2001. That might make for an interesting graph… wish I were technically up to that challenge! Hint hint… ;)

  11. wally commented on Mar 12

    Is this becoming much more of a two-class society – those whose parents had it and those whose parents did not?

    Not many jobs today – out of college or not – will let you pay for the car, the student loan, health care.. and still let you buy a home or start a family.

  12. Adam commented on Mar 12

    I’m also 28 and I agree with Andrew that my age group does have a high sense of entitlement. This has lead several of my friends to high levels of debt. Credit is so easy to obtain that my age group is going through a steep learning curve for money management.

    I have quite a few friends who have already learned to minimize debt, including one friend that only uses cash.

    For me I only maintain a mortgage and a student loan. Each of these have low interest rates (<5.5%) and tax advantages.

  13. David Price commented on Mar 12

    We live in a country in which the economy is based on people continually spending more than they make. We have a financial system which is extending excess credit with severe penalties to those who cannot afford the loans. It is a recipe for both financial and social disaster. Unfortunately it will affect the younger gereration far greater than the generation which has built the system and to a limited sense benefits from it. My congratulations to Barry and others that have opened peoples eyes to the coming crisis.

  14. costa commented on Mar 12

    So how does a twenty something like my self protect himself from this doomsday secenario? Thats my biggest question, should i be buying euros, not investing in the market, etc etc

  15. kckid816 commented on Mar 12

    I can give you a real life example of this.

    I went to a great private school with a scholarship however with bad advisors and a change in what I wanted to do I lost my scholarship. I took out loans to cover the tuition and also had a decent finacial aid grant package (yes I come from the working poor). My mom remarried when I was 20 therefore my financial aid disappeared because my step dad is a work-aholic and earns too much. I refused to ask him to pay my expenses because I wasn’t his child and I was grown. So the loan levels continously went up to try and get me out of school. Eventually I graduate with a good degree from a very respectable school (in the top 50 of business schools in the country) but I can’t find a job that allows me to save. I work for a discount broker that pays very poorly and before you tell me to find another job I have been looking for over a year now and have pretty much given up on finding a job that pays more than 35k a year without being a sales job (but the economy is booming according to the talking heads).

    I put 10% into my 401k, pay $374 a month for health insurance for my child and me, pay $479 a month in minimum student loan payments, no credit card debt (don’t like to buy what I can’t afford), rent is close to $900. Add in utilities,food, and a $235 car payment and you can see how I start to get crunched. So, I have to rely on other odd jobs just to make ends meet.

    All of this has a very real effect on my well being. I have anxiety issues and high blood pressure. Also, it contributes to my view that our society is one of the haves vs the have nots. I have several friends whose parents bought them 60K cars and paid for their education. So now they are buying homes and building towards their retirement whereas I have worked my a** off and I’m no where near being able to buy a home, buy a decent car, pay for child care (so momma stays home), or do additional saving or investing beyond my paltry 401k. But all is fair and equitable in this great country that really rewards hard work and innovation.

  16. Jim commented on Mar 12

    During class registration at the local university, credit card companies set up tables and offer cards to incoming students. The university receives a kickback for every card issued and so permits the solicitation on school property.

    IMO this is very wrong and contributes to the problem by making credit way too easy.

  17. jkw commented on Mar 12

    The real losers are going to be the owners of all that debt. You can’t repossess someone’s vacation. Repossessed items rarely sell for the value of the loan. Even with the new bankruptcy law, it is still possible to declare bankruptcy. You just can’t do it while you have a job. But eventually you get to a point where you are better off going unemployed for a while to discharge all your loans. The baby boomers are going to have a hard time retiring when all the loans start failing. Housing is just the beginning.

    The only way out of this mess is to very delicately manage inflation expectations to prevent hyperinflation while driving inflation as high as possible until the dollar falls enough to balance trade. The Fed is doing a good job so far. But the real test will be when people catch on.

  18. brion commented on Mar 12

    I’ve wondered about the prospects for a generational revolt myself…..

    If i was a 20-something these days, i’d seriously consider chucking all that Boomer gifted debt (thanks BushCo) right back into their wheelchairs as well…..

    talk about flying without a net…..
    global wage deflation-higher tuition-general inflation-national debt servicing-social security & medicaid shortfalls….It’s enough to make you wanna move to a nice Socialist country like the Netherlands.

  19. dg commented on Mar 12

    Idaho_spud, the graph says adjusted for inflation already.

  20. M.Z. Forrest commented on Mar 12

    Another 28-year-old here. Once you take out student loans, the biggest factor seems to be having children. I love of the folks talking about putting 1/3 of their paycheck into savings. If you can do that, you are making close to twice the average salary. It is nice seeing the top 10% of my generation (I thought folks my age were the tail end of gen-x. Oh well.) represented on this blog. Anyhow, try having children, and you will see that income disappear. When 13% of your salary goes to pay for premiums on a $1500 net deductible policy, we’ll talk about saving 35%.

    Secondly, I used to sell cars. I was amazed at the number of boomers who had bankruptcies within the past couple years or were $5K+ upside down on their current loans. There is great bifurcation out there. I think it was Morgan Stanley who did the survey, but fewer than 50% of folks 45-60 have more than $50,000 in a retirement account. Happy retirement.

    One last thing. Keep in mind, that most of us twenty-somethings do not have jobs with real health benefits or a pension. A college degree has become the high school diploma of the seventies. Even a master’s degree won’t get the mileage it used to get. It is one cruel joke.

  21. Jordan commented on Mar 12

    A lot of people cant save because costs are rising faster than inflation adjusted earnings. All of this has occured since we went off the gold standard and onto a fiat monetary system where money and credit can be created out of thin air, thereby reducing the value of both earnings and savings.

    I happen to think that college is not a great investment right now. Its gonna be tough to make that money back in the economy we have right now. All we produce is war and debt, sadly. Everything else we have to import. This country is indeed headed for big problems and a big crisis.

  22. costa commented on Mar 12

    “A college degree has become the high school diploma of the seventies. Even a master’s degree won’t get the mileage it used to get. It is one cruel joke.”

    This is pretty much true. Now everyone goes to college, you are just another dime a dozen. I am thinking about going back to school for my master just so I can possible make more money. And my company will pay for it of course so no Debt

  23. Nikki commented on Mar 12


    My husband and I don’t even know if we’re going to have kids. We have friends who make as much or more then we do, and they are seriously struggling and can’t do ANYTHING for themselves. This, with young (cheaper) kids–I can’t imagine what their finances will look like once the kid get to be school age.

    Maybe I’m just selfish, but I think this is an awful time to be a recent college grad and under 30, whether you have debt or not. I have none, and am in a stable job with great benefits, but am unsure that what I’m being paid and my future raises will be enough to support a family while maintaining a lifestyle that allows me to enjoy what I work for. For me, that’s key, and if that means no kids, well, so be it. I work to live, not live to work.

  24. Bob A commented on Mar 12

    The next big drug blockbuster?
    The “forget your debt” pill.
    Biggest thing since V iagra.

  25. winjr commented on Mar 12

    “I’m also 28 and I agree with Andrew that my age group does have a high sense of entitlement.”

    My daughter and her fiance are both 27, and I can personally attest to this conclusion.

  26. m3 commented on Mar 12

    another 28 year old here.

    not to skirt responsibility, but i believe that our generation learned this behavior from our parents, the boomers.

    debt became a way of life for them, and a necessessity to maintain a standard of living. and for the boomers, and my generation, you would be considered crazy to choose a lower standard of living over avoiding debt.

    for instance, when i got out of school i had people in my family laughing when i told them i didn’t have a cellphone or cable simply b/c i couldn’t afford it. (it made sense to me: can’t afford it? then don’t buy it.) i paid off my credit card and cut it up.

    now these same people are having mini-crises because they are about to retire, and just discovered that they have no cash savings, and will *never* be able to maintain the lifestyle they currently have.

    however, our generation is going down the same path, only without pensions, social security, or medicare.

    like father, like son.

  27. Michael C. commented on Mar 12

    I rest easy every night knowing that our gov’ment will bail us out somewhere, somehow.

    After all, created by the people, for the people, right?


  28. Josh commented on Mar 12

    Good thing you all can just declare bk and wipe everything out….oh wait, the “business-friendly” republicans eliminated that.

    Just move to Canada. I hear they pay people a lot more than $35k (american dollars) just to drive a mine truck.

  29. Anitra commented on Mar 12

    I’m also in the 20-something group. Most of my peers had a sense of entitlement as they left college, but it is disappearing after 2-3 years of being on their own.

    Far too many of us were encouraged to get more college than we could afford. Even the financially-savvy ones often end up with far more student loan debt than they could have predicted.

    A personal example: My husband and I both went to an upper-tier university, and we have high-paying jobs (we’re both computer programmers). Even so, our yearly gross income is just barely more than our student loan debt principal – even though we put 15-20% of our gross income towards our loans last year. The only other debt we have is a car loan, which will be paid off in the next 2 months. If we could keep doing that for the next 6 years, we’d be out of debt; but we’d like to have kids before we both hit 30. Therefore, we’ll be making a lot of financial sacrifices in order to make that happen.

    I have a lot of friends who graduated just after the dot-com crash, and could not find jobs at more than the minimum wage for YEARS. Some of these had the option of moving back in with their parents, but even they had to put their student loans on forbearance. If you’re only taking home $800/month, you can’t afford a $400 loan payment.

  30. Empathetic commented on Mar 12


    I hear you, and it sounds as if you are doing all you can. The only encouragement I can give you is the thought that if you are a 20-something who is putting 10% of your salary into your 401k, you are well ahead of your peers by miles. No, not the ones getting 60K cars dropped on them, but the others in your economic peer group.

    If you start your 401k in your 20s, you’ll be amazed at what it will do in time. Keep doing what you’re doing and you’ll find you’ll be OK in the long run. Just don’t look at your balances for now. Just let it build.

  31. Macro Man commented on Mar 12

    Please. The unemployment rate for workers with a bachelors degree or higher is 1.9%. That’s hardly suggestive of a qualification that’s barely worth the paper it’s printed on.

    And if you choose not to believe that particular piece of data, what makes an infographic from USA Today more trustworthy?

    Not to say that everything is sweetness and light…but then again, it never has been.

  32. sleepless in seattle commented on Mar 12

    Your generation is fighting the wrong war (again). The REAL fight is over the Weapons of Mass PRODUCTION. That’s right, production, not destruction.
    America has de-industrialized itself and now has no decent jobs to offer it’s young. So, it cranks up it’s military, appeals to national pride and presumes you’re stupid. How many politicians are going to get away with saying you “need more education”? The real reason you’re broke is because you’re underemployed. In fact, you’re likely over-educated while Congressman Shithead carries on over your lamentable lack of education. It’s a cruel joke.
    Yes, I paid lower tuition rates as a baby boomer but it’s not like I didn’t need to borrow. I borrowed at 8-9% rates, not the 4-5% of today. Your school sucked up the difference by jacking up tuition. No matter what they say, it’s always about jobs. Always. Get employed and stay employed if you can. That’s my advice.

  33. sleepless in seattle commented on Mar 12

    Your generation is fighting the wrong war (again). The REAL fight is over the Weapons of Mass PRODUCTION. That’s right, production, not destruction.
    America has de-industrialized itself and now has no decent jobs to offer it’s young. So, it cranks up it’s military, appeals to national pride and presumes you’re stupid. How many politicians are going to get away with saying you “need more education”? The real reason you’re broke is because you’re underemployed. In fact, you’re likely over-educated while Congressman Shithead carries on over your lamentable lack of education. It’s a cruel joke.
    Yes, I paid lower tuition rates as a baby boomer but it’s not like I didn’t need to borrow. I borrowed at 8-9% rates, not the 4-5% of today. Your school sucked up the difference by jacking up tuition. No matter what they say, it’s always about jobs. Always. Get employed and stay employed if you can. That’s my advice.

  34. joe commented on Mar 12

    Couple thoughts as a 26 year old…

    In one sense, we can look at 20-somethings piling on debt as rational behavior using the logic of Friedman’s Permanent Income Hypothesis. This group expects that their future earnings will increase enough to cover future consumption, the excess consumption over earnings of today and still have enough left over to save for retirement. I have to say that I strongly doubt this is what’s happening.

    Another way to look at the situation is to say that our generation is entitled, not just in our expectations of what our parents will do for us, but in our expectation of what sort of quality of life we should have. Nowhere does it say that if you’re 27 you should own a home, a car, be able to take 2 vacations a year, eat out every night, and wear nice clothes. Just 25 years ago, all of those things would have been unthinkable for a 20-something, yet today, it’s the de facto expectation.

    I’m fortunate, I graduated with a lot of student loans (4x the average in the stats above), but went to work on Wall St. I have some savings now and earn enough to live a comfortable lifestyle. However, echoing a comment made above, I’m not convinced that a 4 year college degree makes sense for everyone today. Certainly a liberal arts education is not useful for anyone other than those who will pursue advanced degrees in psychology, sociology, etc… My feeling is that we need to move towards vocational/skills training for a large portion of the population. As labor becomes increasingly specialized based upon a country’s / regions comparative advantage, being a jack of all trades, but master of none will not earn an adequate return on the $100K+ investment that college now requires.

  35. M.Z. Forrest commented on Mar 12


    Unemployment is a poor measure in this instance. In days past, one got a high school diploma so one could be employed. A college diploma is little different.

    To control for natural ability – obviously those who are more industrious and intelligent will be degree earners in greater propensity – I think one should compare 10-year cummulative earnings amongst those in a given field. For example, a network admin after 10-years who had a college degree versus the same who didn’t. The difference would be rather insignificant. The difference would be non-existent after removing the cost of the degree. This is not to say that one could just whim themselves into a Network Admin position without a degree. There are folks who have done so though.

  36. Macro Man commented on Mar 12

    MZ Forrest

    As you say, it’s not exactly like a non-degree holder can will themselves into a good job by rubbing a magic lamp. The degree gets you in the door.

    Moreover, there is nothing to suggest that the situation you describe has not always existed- nor that it shouldn’t exist. If two senior employees exhibit an identical skill for the job, why should one guy get paid more because of what he did from 18-21? And how is the current environment any different from what it was 10, 20, or 50 years ago? If anything, I’d imagine that there is a higher correlation between educational status and income now (excepting entertainment industries, naturally) than there has been ever before, because so many firms use the education system as a gatekeeper for executive-track jobs.

    The benefit of higher education is, with a few exceptions, to get you in the door, not to subsidize you once you’re there.

  37. Rugger commented on Mar 12

    I had no idea there were so many people my age (29) attempting to glean wisdom from Barry and others. Just a few observations…Of course our generation has a sense of entitlement; just as there is a widening gap between the haves and have-nots. There are those of us struggling to figure out a way to make it on our own (because we have no other choice) and those of us waiting for our baby-booming parents to kick off and leave us with an inheritance.

    The real depression begins when the inheritances are all spent on elderly care and assisted living and some of the boomers are actually forced to rely on my generation to support them. And yes, college degrees are just pieces of paper. I’ve finally paid off my private $140,000 diploma well after realizing if I was really that smart I would have gone to a State school and bought a house instead.

    Last point…this is still a great time and place to be right now. Sure I have friends who are struggling with student loans living at home on cardboard noodles, but I also have friends who started their own business and are millionaires before 30 with a Ferrari. And that gets back to the sense of entitlement; where’s my Ferrari?? And when do I get to take a vacation on the moon like they talked about in Elementary School?

  38. reality commented on Mar 12

    The only things that get people in the door are nepotism and dumb luck. Degrees have nothing to do with it.

  39. muckdog commented on Mar 12

    The savings rates don’t include retirement pensions and 401k plans, though. My best guess is that where most savings takes place these days. Anything left over gets spent at Starbucks.

    I think there is also an emerging entitlement mentality in the country. Folks forget that to acquire things, somebody must put forth some hard work.

  40. donna commented on Mar 12

    HOnestly, it wasn’t all that easy on us forty somethings, either. I can well remember being 20,000 in credit card debt.

    Of course, we were lucky enough to be able to afford to buy a house in our 20s. I doubt most of the kids can do that now – but they couldn’t then, either.

  41. Eclectic commented on Mar 12

    All you young people… in your 20s and such.

    I just want to say what a pleasure it is to read all you’ve written about your own circumstances, and your careful attention to what your future holds. It’s good to see you becomming alert to reality.

    Just remember – You’re not duty-bound to do things the way they’ve always been done. Set your own course. The journey is most of the fun.

    When I was a bit older than you, my wife and I were driving a 9-year-old Ford Fairmont, and we’ve come home from a short one-day excursion to a popular theme park, with two children asleep in the back, with $1.47 in my pocket and the tank near empty with a long 50 miles yet to go to get home.

    I’ve worked a full- and part-time job at the same time while in graduate school, and we’ve cut our credit cards up because we couldn’t tolerate a rolling bill near just $1,000. We’ve eatin Ramien noodles for many meals and worked hard back then to regain some financial breathing room.

    I never missed a payment, and today things are much, much better.

    You are NOT entitled to anything. You’ve been raised in a society that doesn’t understand it has largely been the beneficiary of the great benevolence of the ones who came before them. I’m not even talking about my generation (age 56), because it’s been comparatively a bed of roses for us Boomers, and that’s why some of those Boomers passed down that sense of entitlement to you, because they’d themselves grown up assuming it was a birthright.

    Be smart… Be patient… Be committed. Have some fun and enjoy the adventure, because adverture you will surely have before you’re 56.

  42. philip commented on Mar 12

    I’m 31 but, since I took my sweet time in college, I got my Bachelor’s with those who are 27. I went to a private university for the first few years and rolled up ~$30k in debt. I got thrown out, went to a public university, paid in cash with my full-time job. Got my engineering degree and went on my way. The people who can’t get jobs are NOT the engineers. They are my friends who got history degrees and English literature degrees at $30k/yr. This is because schools don’t really teach the cost tradeoff. Even $30k/yr for a tech degree is really pushing it, since you can get hired with the same degree from a state school at $5k/yr (that is what I paid in 1999-2000, my last year). I was lucky to have gotten the boot and missed my last two $30k/yr debt installments. I only have $1200 total debt left, live in Silicon Valley so I rent instead of own, I paid $4k for my used Subaru Legacy, and I save like a fiend.

    Also, usefully educated people (NOT lit degrees) are a resource, and one we are short of in the states. We don’t need more manufacturing degrees in the U.S., we need more design and business degrees. But what we turn out of the schools are history and literature degrees. Not useful.

    (Of course we need some lit degrees also, but so very few compared to how many choose it)

  43. Tim S commented on Mar 12

    Nice post. I’m 28, and reading these stats makes me feel a lot better about my personal situation (no CC debt or car loan, modest student loans that are less than the emergency cash I keep on hand in an online savings account).

    I think there’s a few factors that are encouraging this, which have been listed by others here. Sense of entitlement, lack of good spending habits, the soaring cost of college and housing, somewhat meager returns relative to inflation.

    I do think a few too many people are getting college degrees, or at least non-practical ones. Technical college and trade schools tend to be unfairly looked down upon. As a society we can probably never have too many engineers, and it’s doubtful we’d ever have too many (qualified) Medical Doctors. But I know a couple college grads in odd fields that ended up in office jobs that don’t require a degree (although it probably helps). I’m not sure their $60-$80K of debt was worth it.

  44. bob commented on Mar 12

    I think by the time my 4 children, ages 4-11 go to a university I will ship them off to China or India at a reduced cost for a degree of equal or greater value. The higher education system is ripping off our young generation and has been for years due to govt loans and alumni giving. Lets outsource our education since we like outsourcing our jobs so much. If we truely are a global village what difference does it make where you get your education. And to all you 20 somethings keep plugging away, even us 40 something worry about our future.

  45. dead at 22 years commented on Mar 12

    We’re fucked.

    I’m firmly convinced that the trillions of dollars spent by our “conservative” government over the past 7 years are a guise to exsanguinate “the beast” of social spending. Bush II has built us a bridge to the 19th century, a land without the “Great Society,” “New Deal” and the regulatory agencies our parents and grandparents fought for. The great unraveling is in progress.

    While I find it distasteful, I don’t slight my generation for their propensity to overconsume. Gen Y have been nurtured by the rapacious forces of late capitalism–the Madison Ave. hucksters understand us far better than our parents, it seems. We’ve been aggressively and seamlessly marketed to since birth. Consumption is one of the few avenues of instrumental activity we have left–everything in life, save for Coke vs. Pepsi, has been pre-determined.

    Thomas Pynchon put it best:

    “A screaming comes across the sky. It has happened before, but there is nothing to compare it to now.

    It is too late. The Evacuation still proceeds, but it’s all theatre.”

    The social/economic/geopolitical/environmental trends are in brenschluss, and we’ve got nothing to cushion the blow. Global warming, peak oil, hyperinflation, bird flu, war across the Shi’a Crescent… and that’s just off the top of my head.

    I’m afraid of the future, and especially afraid of the fact that I seem to be the one of the few people that are afraid of their future… and in this case, being proved correct isn’t much cause for consolation.

  46. Lone commented on Mar 12

    Yes, a degree is only to get you in the door. I got have a professional degree and many of the students were there as an extention of undergrad on mommy or daddy’s dollar and had no plans after gradution or even seemed that concerned about a job. They just thought they’d continue to float by in life.

    As GG said: Give me guys who are poor smart and HUNGRY.

  47. Dan commented on Mar 13

    This string and the one on the DOW vs gold are two of the best post strings I’ve ever seen. Never thought I’d see Pynchon quoted here. The only thing I can add is a quote from Consolidated: “Art, religion, advertising and education are one and no longer distinguishable.” Pretty prescient considering it was written in 1989.

  48. DavidB commented on Mar 13

    Hold on young ones. I was your age in the 80’s and I had to compete with dug in and well established boomers when I didn’t have a college education. If you want to know what survival is and digging for scraps then try that. I’ve made a lot of sacrifices over the years and learned a lot, both about myself and the way the world and human nature works. I would like to think I could probably survive anywhere in any situation now except a war torn third world

    I would counsel you to pay attention and wait. We are about to see one of the biggest retirement pushes in the history of America. Once all those boomers start moving into the easy chairs over the next decade or so the jobs in the upper levels will start opening up and things will start to shift throughout entire organizations as companies scramble to fill spaces. It is happening in Canada now. I think the only reason it is not happening in the US yet is because of all the people flooding over the southern borders. Because most of you have degrees though I think that will give you the greatest advantage in the great shift. Just look around at your office. How much gray hair do you see. That gray hair either won’t be around or wont be as productive pretty soon. That will create opportunity for the likes of you who already have their foot in the door

    Patience grasshoppers. You time to rule is coming soon

  49. DJ commented on Mar 13

    “The savings rates don’t include retirement pensions and 401k plans, though”

    Don’t know about pensions, but they do include 401k’s

  50. DJ commented on Mar 13

    This trend of excessive debt and crappy jobs really began with Generation X and has been building for a few decades now. Honestly, kids, imagine being a parent and sleeping in a house that is mortgaged to the hilt with an interest rate about to reset upwards and you’re worried your job may disappear. Thousands and thousands of 30 & 40-somethings are about to get hit with that anvil.

    Not saying those folks made great decisions. Just saying that is where they find themselves and society encouraged them all the way.

  51. iy commented on Mar 13

    Am almost a twenty-something. My examples are mostly anecdotal, but might have some worth.

    I see a lot of kids in college getting degrees in lit and history because there is less work involved (and you get to party more…). Pretty useless if you ask me, as there really aren’t any jobs in those fields. But, in their defense, colleges don’t really talk about life after college. If they made it very clear that yes, in fact, you will be making MUCH less money, likely for the next ~10 years, more people might reconsider. But they don’t mention that. Also, there is a huge entitlement mentality. Some of my friends are graduating with degrees in lit and econ. I asked them about their post-college plans, and they all pretty much said, “grad school.” In a way, I think that school has become an escape from the real world – instead of preparing you for functioning in society, it lets you put that off for 4, 5, 6, or even 10 years (yikes!). Worse, I know at least a few people who have dropped out of college and are doing NOTHING while living off their parent’s income. The fact that the parents just accept this is fascinating to me. My dad made it clear to me that he was willing to “loan” me money for college but would never pay for me to sit around doing nothing. Word, I guess some parents are different.

    Another sad fact about college is that, at least today, it doesn’t really seem to be able to keep up with the industry. I’m doing a computer engineering degree at UCSD and, while I suppose it gives you a good base in mathematics and computer theory, I find that I can learn things much faster studying on my own with just a textbook. Doubly so if it is a subject for work – I have no trouble systematizing information and learning a new technology quickly. Professors, on the other hand, don’t really seem to do this. I’m wondering if it was ever different, but it certainly doesn’t seem to be effective now.

    Also, the article in USA Today mention that you can’t work your way through college. BS. I’m doing that right now, and making plenty of money on top of paying for tuition and housing. If you budget well, it’s not hard at all. On the other hand, I know college kids who get $3,000 A MONTH allowance and still manage to go broke. How do you do THAT?

    Sometimes, I wonder if the huge post-war economic boom was the cause of much of this excess in the US, and if we are just gradually reverting back to the mean.

  52. Anonymous Coward commented on Mar 13

    Why did Rome fall? So shall we. Would Benjamin Franklin, Thomas Jefferson, George Washington be proud of us now? I like the 20 something speaking of revolt – it is needed. Simply attend a protest, nothing drastic, it’s that simple… And don’t raise your children to be sheeple.

  53. my1ambition commented on Mar 13

    “I had no idea there were so many people my age (29) attempting to glean wisdom from Barry and others”

    And what’s wrong? You know that the Chairman of BRK only speaks to people our age. He says older people (the “Boomers”) will never change.

    Eclectic, thanks for the kind words. (I still remember your “lecture” on wealth).

    I know that of all those on this blog I probably have the best chance.

    I’m 21, with no debt (never used my credit card) , frugal and love saving today for a better tomorrow. I’m a buy-and-never-sell value investor. I’m learning all about stocks for the next few years so that when they’re cheap again (and O’ they will be) I’ll know exactly what to buy. I plan on starting my own business – making myself employed – aiming for financial independence by 30.

    Sounds pretty ambitious, I know. But what can I do I’m a debt-free kid (who’s already read both Graham’s books well) and I attempt to stay that way!

  54. brion commented on Mar 13

    Dead at 22 yearses have a way of turning into alive at 45ses….
    Hang in there kids and quote your Dickens as well,
    “it was the best of times-it was the worst of times”…
    Oh hell yes.

  55. Bruno D. commented on Mar 13

    I think like others mentioned the real crunch will come when Boomers really start to retire. The weight of all these factors on an already financially tight generation is going to be staggering. That is the real tragedy and people today are so complacent about it (obviously the older ones who had it easy back when things were still rosy). Thanks for leaving us with a mess!

    Personally, I’m 31, have a decent university degree and average middle-class pay and I can barely afford any luxury items (still drive a used car that’s like 12 years old). I’m saving like crazy and living like a monk. My take on it is that as sad as it is, I have no choice. I do not have the career ambition to sacrifice my time and personal life just to make more money to “enjoy life” (what can you enjoy anyways when all you want to do once you’re home is sleep?). Rather, I’ve learned to lower my expectations and spend very little, obviously it’s very boring at times though. And I’m investing this money in hopes of a better future, hopefully not too far away…

    I’m 200% sure things weren’t like that for my parents, heck my father was providing all the family on one salary and had enough money for some luxuries. Definitely not the same today.

    Those figures highlighted above are a tragedy and a failure of society over individualism. I hope my generation will do better. Every generation should leave things in a better shape than it was before they arrived.

  56. Eclectic commented on Mar 13

    A couple of notes of thanks:

    To my1ambition,

    Thanks for the words. I should have my Nobel in economics about the time you’re financially independent (and that means you’re under the gun… not me!).

    And, don’t forget to read and re-read Eclectic often. I drive nails straight, true, and with one hammer blow after another.

    To Mister “N-Mt” (and various others) who sent me email,

    Thanks. I don’t respond directly to round-routed email, but I appreciate your sentiment.

  57. jkw commented on Mar 13

    The problems are deep and structural. We are quickly approaching the limits of capitalism. The fundamental problem is that as productivity goes up, you need to increase standards of living at least as quickly as productivity. As manufacturing becomes more automated, it becomes impossible to keep up. How many hours of labor do you think it would take now to produce everything that an average person born in 1950 will consume over the course of their lives? How much will that decrease in the next 10 years? How much can we increase our consumption to keep up with production before we have to start accepting large structural unemployment? How will we as a society manage structural unemployment rates of 20-30%?

    The current solution has been to add inefficiency to the system. The government bureaucracy is good for giving jobs to people who aren’t doing anything. We can add layers and layers of finance and management to companies so that more people are employed for the same total output. We can add more marketing, which creates more jobs and convinces people to increase their consumption (a double benefit).

    But the real solution is to accept the structural unemployment. We need to lower retirement ages and reduce the workweek. Give people more time to spend with their families. Stop trying to convince people that they need to buy a new car every other year and other wasteful excesses.

    Phase 2 of the Great Depression is coming. If we try to get out of it with a major war again, we will probably destroy the world this time. The only other way out will be converting to a more socialist-style economy.

  58. Shrek commented on Mar 13

    I’ve been reading this thread for two days and am fascinated by the responses.

    Barry could we please have your take on the situation?

  59. M1EK commented on Mar 13

    Agree with a lot of this, but having grown up in South Florida around retirees, it really grates to hear people say that the so-called Greatest Generation paid so many bills.

    Folks, that batch of retirees took out 10 or 20 times as much as they ever paid in to Social Security & Medicare, even if we were to assume a very generous rate of return on their money – and many of them were living well enough that they truly didn’t need the money, at least, tax-free as it was back then.

    The one good thing Ross Perot did in 1992 (and why I voted for the lovable kook) was in answering a retiree who called in complaining about having to live on a $50K fixed income and then having her social security taxed. (For those too young; $50K was about twice the income of a new college grad at the time) – he flat-out told her that she wasn’t poor; and she ought to have her benefits taxed.

  60. s0mebody commented on Mar 13

    The one thing I would like to emphasize is that a large number of boomers won’t be able to retire, forcing old and young to compete for the same jobs. If boomers houses and stocks depreciate and they only have on average $50,000 set aside for retirement, how can they retire?

  61. Steve C commented on Mar 13

    Exactly, M1EK
    I remember a lot of older relatives of mine, 10 to 15 yrs ago who were very well off financially and had Social Security payments that they certainly didn’t need. I guess they deserved these payments, since they paid into the system, but they certainly should be taxed on those amounts.

    The only financial advice I can give the younger folks that have written in is to live below your income level and invest regularly in appropriate stock market instruments. In that regard, I would strongly recommend you subscribe to NoLoad FundX for about $120/yr and invest only in their recommended conservative ETFs. Learn how their system works. It’s not hard. This is the greatest system of wealth creation for the average investor that I have come across in my 65+ yrs – and believe me, I have looked long and hard at many systems, programs, and techniques.

  62. brion commented on Mar 13

    Thanks Steve C.
    When 65+yrs speaks who are we to not listen?
    It looks good.

  63. js commented on Mar 13

    To those who have been saving and living within their means, did not speculate in 2nd, 3rd, 4th houses/condos and did not take out a mortgage line of credit to buy a Lexus – watch the whole mess land up in Uncle Sam’s lap and therefore on your tax bill. Who is going to end up paying for this. Us. Those who sweated and saved.

  64. Si commented on Mar 13

    Isn’t all this all partly due to governments that simply will not admit inflation exists and hence take no real steps to fight it.
    They seem absolutely terrified of a recession and the traditional business cycle. I have a feeling recessions are a necessary part of healthy capitalism, gets rid of all kinds of excess and allows a certain amount of re-cycling of money, instead of the rich just constantly gettin richer.
    The higher interest rates involved also make it worthwhile to save instead of all this constant speculation.
    Its not spectacular but its whats allowed Western Capitalism to thrive and move foreward for centuries. What we have now feels more like an experiment by academics who are seriously short in the common sense dept and would rather just keep adding balls to all those they are trying to keep in the air than face a little reality.

  65. Martin commented on Mar 13

    What are you talking about?? Many jobs will allow you to have all that after college.. I graduated with a Biology degree (stupid.. science doesn’t pay til PhD level).. Was earning $28K.. Bought myself a $5K car in cash.. $100/month in health care.. I lived off $12K (Rent $400 with roommate + $400 groceries/month + $200 spending cash)
    I ended up saving $20K over two years.. enough for a downpayment for a house in the midwest.. If you live somewhere you can’t afford.. That’s just as stupid as buying shit you can’t afford..

  66. bellaissa commented on Mar 15

    I am a little disturbed by some of the messages here. Being the product of a baby boomer does not automatically make you a trustfund baby. I have never expected to rely on mommy and daddy (and they would never pay a dime for me if I asked anyways). Yet after getting out of college, I met an economy with almost no jobs. My friends and I were all working part-time retail, because that was all that there was. I went back to school and the economy has improved, but now I have accumulated major student loan debt. I have no credit card debt, still drive the used car I bought in high school, do not buy things that I cannot afford, and rarely go out because it costs so much. But still, at 26 I have major debt, no retirement savings, and only about $400 in my emergency account. Does this make me entitled?

    I fully realize the situation that I am in, and am not happy with it. There are many factors involved in it, and it does not fall completely on us 20 somethings. Paying $40 – 50K a year for post-graduate degrees is insane, especially compared to every other developed country in the world. My sense of entitlement comes from the fact that I do not believe that education and health care are privileges…so sue me. Our parents for the most part have not planned well for retirement, buried us in further national debt, robbed our social security while refusing to find a solution, and have let health care costs skyrocket.

    In essence, we have inherited hell and are doing the best that we can with this giant weight on our shoulders. That is not entitlement…it is the reality we live in.

  67. entrophize commented on May 17

    To the poster who said that liberal arts degrees are worthless:

    You’re clueless.

    I received my undergrad in Philosophy and have been making $45k+ year after year since graduation.

    I have yet to return to school and honestly, my job prospects just get better and better with each additional year of professional experience I accrue.

    Life is what you make it. I get so sick of people whining about the economy and how the chips are stacked against them but folks, there are literally MILLIONS of ways to make a buck out there and most of those ways don’t require an advanced degree.

    I’m only 28 but I’ve learned this and learned it well.

    1. Work hard
    2. BUY what you NEED, SAVE for what you WANT
    3. Blame yourself for your financial situation, not the government or CC companies

    …and you will do fine.

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