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: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.