‘Generation Debt’

March 9th, 2006 Stewart Posted in Uncategorized |

‘Generation Debt’ is going deep into the red - Personal Finance - MSNBC.com: 25-year-old office clerk for a local government agency in Sacramento, Beeler has $20,000 in student loans for a psychology degree he may never use. With an annual salary of roughly $27,000, he and his wife Kelly struggle each month to pay rent, car insurance, utilities, student loan and credit card fees. They have no savings and they just had a baby, which now increases their household spending even more.

There are a lot of stories like this these days, including one I blogged myself a few weeks ago. There are damned few stories about how many Xers are actually doing quite well financially.

And, unfortunately, there’s a ring of truth to both kinds of stories. Depending on how you read the statistics, you can decide that Gen Xers are the new consumer target demographic, new homeowners with disposable income. Or you can determine that Xers are heavily indebted, cash poor, and living at home with the ‘rents.

I’m beginning to suspect, given the quote at the top, that both perspectives might be true, depending on what birthyears you assign to Gen X. A 25-year old office clerk would have been born in 1981; Gen X birthyears are defined by Howe & Strauss as 1965 to 1981, which is a bit of a cheat since it’s such a short time frame compared with either Boomers or Mils. Personally, I’ve settled on 1963 to 1982 as a more inclusive and logical year set. To simplify matters, I would say that anyone under 24 is a Mil, and anyone 25 or up is Gen X.

I believe that older Mils in their early twenties are having significant financial troubles. I think that younger Xers and “cuspers” in their mid-twenties are feeling a pinch. But older Xers (like myself and my wife) seem to be a different lot, with jobs, kids, homes, money for the things they want, and a survivor mentality to hold on to what they have.

Regardless of where we place the cutoff dates, I don’t hear many people arguing with me when I talk about the harsh job market that the debt-burdened Mils will face when they graduate from college. We’re seeing the beginnings of this now as young Xers and older Mils struggle with their finances. What might differentiate the two groups is how they respond to financial crisis, but precious little is being written about that.