Generation Wrecked

Ryosen writes "Fortune magazine has an interesting article discussing how members of Generation X (those born between 1966 and 1975) have been damaged by the fall of the economy and the life-long ramifications of the dot.com boom-bust, stating 'No generation since the Depression has been set up for failure like this.' Particularly disturbing is the statement 'Worse yet, for some Gen Xers, their peak earning years are behind them. Buried in college and credit card debt, a lot of them won't be able to catch up as they approach their prime spending years.' Are the best years of our lives truly behind us?"

Comments

Re:Thank GOD I was born in 1976!

[Rev Snow]

Strauss and Howe's Generations dubbed the current youth generation (born 1982 or later) as the Millennials.

See their web site for more.

Re:Over for you maybe.

[Artifex]

He's not going to buy a house with his 8 months' saved salary, because that's his cushion against unemployment.
What happens if he buys a house, spends that savings on a big down payment, and then 3 months down the road he gets laid off? If he can no longer make his house payment, he's out on the street, having lost his capital investment. If he's renting, on the other hand, he's not used that capital yet, and retains the flexibility to move to a cheaper place, as well.

Now, if he wants to start saving up separately from that 8 months' salary, then using that other saved amount to buy into a house, that would be a great idea. But it would be foolish for him to give up his position of security by using his major savings up and going into a position of debt if he doesn't have to.

house != investment

[mekkab]

Yes the bubble will burst in the housing market.
However in the mean time, my monthly payment GOES somewhere (part to interest (which is TAX free!) and part to equity) AND my rent doesn't raise every year.

And if you aren't going to be in a house for 5 years, DO NOT BUY! I REPEAT, DO NOT BUY!

I have a fixed cost per month. Also, I have a town house well situated close to schools in a pretty good neighborhood. When I go to sell in a few years I will have no problems.

So lets see, instead of paying 1200 for a 1 bdroom apt, I pay 1000 for a 3 level town house.
Hmmmm, do the math. Never mind equity and investment... I get more space for less money. Plus my income keeps rising while my mortgage stays fixed. Sounds like a great deal to me!

Oh, and the reason why I am not paying extra money to bring down the principal: This is the starter home. In 4-5 years when the market drops I will be in a prime position to buy a fat lot of land. All the money that I could have put towards principal will instead be in a REAL investment vehicle (short term, we're talking about 5 years here) which I will then use towards downpayment of the house- getting me a teensy-weensy mortgage.

Learn how to budget and do it early

[Arcturax]

In my case, my parents basically made sure I had a job since I was 11, starting with a paper route. I had to learn in that time, how to budget my money and not to overspend or I had to wait until it was time to go collecting and then I had to figure out what I owed back to the newspaper and what I got to keep. While they helped a lot with the accounting, it did teach me early on how things work and how if you want something (Back then it was a Super Nintendo), you have to save for it and only buy it when you have enough money saved up so that you can buy it and still have a bit left over in case of a crisis.

In high school I got a job at a grocery store and also got a bank account. Now I had a little more spending power but by this time, I knew how to be conservative with my money and to keep a close eye on my accounts, using software to track my spending and keep track of checks I had written.

By the time I got a credit card, I knew well how to live within my means. I made sure to ALWAYS pay off the card in full each month unless it was an absolute emergency expenditure that I couldn't cover with one months pay. I also make sure not to have more than 2 credit cards and to try to never use more than one each month. I also make sure I can pay them in full each time unless its an extreme situation.

On top of that, I also set a "Paranoia level" on my Savings account. What that means is I choose an amount, in my case $5000 (started at $500 when I first got my bank account all those years ago) and I go VERY conservative on spending if I go below that until I've built it back up to above that level. So far that has saved me from every major disaster (car breaking down expensively, sudden big bill or need to buy something expensive like furniture) I've had in the 10 years I've had a bank account. It also reduces the need to use the credit card to cover sudden needs, as I do not like spending money I don't have at all.

Because of that, and driving a modest car ('95 Grand AM) and eeking out the most time I can from my computer (using a 5 year old Mac G3) rather than blowing it all on the latest and greatest every 6-12 months, I have managed to get a $120K home just this June and maintain over 5k in savings since then. I am going to try to raise that up to 10K soon as well as start cautiously getting into investing (maybe should have sooner but after the latest rounds of disasters in the financial world, glad I waited).

The main thing is to learn how to budget, keep a paranoia level of cash in the bank and don't spend money you don't have when you can avoid it (i.e. no credit card debt or loans unless necessary).

If you do that, you should be able to weather all but armageddon or the next great plague.

Re:US stats even worse

[BitGeek]

In order to reasonably support the people expected to make social security claims over the next thirty years, taxes would have to be doubled at a minimum.

Nevermind that the social security tax rate has already gone up %700!

Assuming you're talking about just doubling your social security taxes (Rather than all taxes) then that would mean social security alone would be taking %30 of your income!
(Right now it takes %15. Though only half of that is reported on your paychecks.)

http://www.ssa.gov/OACT/COLA/taxRates.html

If a private pension plan were administered in this way the perpetrators would be in jail the money returned and everyone would be really angry.

And nobody would be joining the scheme-- its reputation would be ruined.

Yet why are people paying social security now? Cause they get shot by thugs with guns if they don't.

Aint it great to be the government? You can commit widespread fraud on the people and they don't have a choice-- they HAVE to pay!

THIS is what everyone is talking about when they say the government should take care of something-- they are talking about tyranny and oppression the government will take care of it by using lethal force to coerce compliance with whatever scheme it comes up with.

Liberals are just fascists who want someone else to hold the gun for them because it scares them.

The Myth of the Spoiled "Boomer"

[Baldrson]

First of all, "Boomer" is a bad category if one is looking for demographic blame. "Early boomer" is more like it -- and I don't mean those born before 1957 but those born before 1950. Even then we can't really include Viet Nam era vets who more closely resembled those born after 1950 than they did Bill Clinton or George Bush Jr. -- both born before 1950 and neither Viet Nam era vets. This is simply due to the fact that real estate speculation, as well as a large number of other positions of authority and even sexual advantage, were absorbed by the earliest boomers. This is what "the Savings and Loan" crisis was all about, for example. We're still reeling from the effects. You look at our "boomer" presidents for instance and you don't see anyone born after 1950. Same is generally true of old-line businesses. The exceptions are where one would most expect them if the post-1950 boomers were driven to open up new territory for themselves at the frontiers because the existing niches were all occupied: Founders of Microsoft, Apple, Sun, etc.

But for every Gates, Jobs and McNealy, there are millions who never found a good niche.

Look at the following quote from the Fortune article for a blatent lie in this regard:

A 30-year-old today is 50% more likely to have a bachelor's degree than his counterpart in 1974 and earns $5,000 more a year, adjusted for inflation. But that's where the good news stops. He also has more in student loans and credit card debt, is less likely to own a home, and is just as likely to be unemployed. His salary probably topped out during the boom, whereas his predecessor's rose throughout his career. Social Security will start to evaporate as he turns 50--or before, if the lockbox gets raided--so he'll have to depend almost completely on his own savings for retirement. The comparison with a 30-year-old in 1984 isn't any rosier.

Oh really? Let's look at these graphs.

Notice that age of first marriage of baby boomer females as given in http://aspe.hhs.gov/hsp/trends/change.pdf matches closely the peak cohort for 1980 as well as the peak in crude oil prices in constant (1996) dollars near 1980. Onset and drop-offs of these variables also match.

Also notice that mortgage rates, crucial for nesting and reproduction at first marriage, accurately match these same trends. Finally note the radically different way government policy affected WW II GI's seeking their first mortgages compared to the treatment of their children at the same phase of life. Those who were 30 in 1984 were subject to delayed marriages from a variety of factors, not the least of which was the 1970s "stagflation" under which early boomers and GI generation bosses applied mandated "wage and price controls" preferentially to wages but not to prices -- which hit those just entering the job market the hardest. That's when people started jumping jobs to get better pay, but even that wasn't enough given the explosion of prices in real estate, energy and interest rates toward the late 1970s.

You know "boomer" programmers born after 1950? I know quite a few and there aren't many who are looking any better than Gen-X'ers. Look around and see if they're really as good off compared to Gen-X programmers as you would think given the article in Fortune and the comments on "boomers" here at ./ -- then report here.

PS: I was born in 1954 and the only ways I feel even remotely more advantaged by my birth year over Gen-Xers are due to the fact that microprocessors may have been more "real" as a frontier opportunity than the Internet -- and herpes was merely incurable while AIDS kills you. However even that last advantage (Herpes vs AIDS) evaporates when you consider that the disco studs were far lower in number than disco whores. "She can wait if she wants... blame it a all on yourself cuz she's always a woman to me..." -- Billy Joel

Re:Some comments

[BitGeek]

I would have to save 1/4 of my earnings for 10 years. Now, explain to me how you are supposed to: buy a house, pay for your car, keep out of debt, and still fucking have 100k saved by the time you are 30s?

Easy. Follow simple rules that have worked for me:

1) Never drive a car that is worth more than two months gross pay. Only drive affordable reliable cars-- the insurance is much lower the taxes are lower, and obviously the payments are lower. Early to mid 80s Toyotas run like champs and can be had for cheap.

2) DON'T BUY A HOUSE! Even when you factor in the tax savings, the costs of owning a house for most people do not make sense. It is not a wise investment for anyone who's being reasonably prudent with their money. Yes, a small apartment is chepaer. Not on a per-square feet basis, but people buy houses bigger than they need.

YES IF YOU INVEST THE DIFFERENCE you make a lot more money living in an apartment than buying a house. BTW- there are alternatives. You could buy 2 acres about 30 miles out of town for $10,000 and put a mobile home on it (you can build a house on it later)... and have a place to live that cost little and will see appreciation AND the tax advantages of owning where you live.

3) Get out of debt. Well, you shouldn't be in debt in the first place. First off, for most careers if you get a years worth of apprenticeship and a job right afterwards, you can be productive at an entry level without going to college. 8 years later you will have 8 years of experience and people your same age will only have four. But if you're in a profession where you have to go to college then work your way thru it. Don't go into debt. The best option is to work your way doing the same job you're training for.

Basically, don't spend money. If you are wise with your money, you may well be retired by the time you're 40. Otherwise, when are you going to retire? 65? Never?

I don't know your living situation but if you had a roomate and weren't able to make ends meet then you were spending too much money (by definition, actually.) Where was your money going?