By JLP | October 16, 2009
Here are the opening paragraphs to an article I saw on MSN today:
A new survey conducted for the AFL-CIO suggests many American workers under 35 can’t manage the basic financial building blocks of an adult life. The union calls the past 10 years a “lost decade” for these young people, during which many fell short on getting their own places, finding stable jobs and saving money for emergencies.
About 31% of survey respondents said they made enough money to pay their bills and set some money aside, but 70% said they did not have enough money saved to cover two months’ worth of living expenses. Parents of these young workers know how far they are from making it on their own; one-third are living with their folks.
I thought this quote was kind of funny:
…Jannon says the results should not be interpreted as laziness. “Young people are really yearning to move out on their own to start their adult lives,” she says. “(But) they can’t find the type of work that supports an adult life.”
I think part of the problem is that we often look at luxuries as necessities and don’t want to make the tough choices of prioritizing our needs and wants.
Lest you think I’m full of hot air, let me give you some examples of what my wife and I did in order to get ahead.
1. We bought a house we could AFFORD! We were told by the mortgage broker that we could “afford” a lot bigger note than what we wanted. But, we knew the math and how the note would affect our finances. We also knew that the mortgage broker’s commission was based on the size of our loan. We went with what we could afford.
2. We went YEARS without fixing up our house. We did little things along the way, but for the most part, we only spent money on things that HAD to be fixed like a new roof and plumbing. It was a couple of years before we even had money to start painting and stuff like that. We could have painted but we wanted to do more than that so we held off until we could afford to do what we wanted to do. We have been in our house ten years now and still aren’t completely finished making it the house we want. We’ll get there though.
3. We went without cable for years. We did have internet service but it was years before we decided to get cable.
4. We had barebones cellphone service for years. Just within the last year or so have we upgraded our cellphone service and plan.
5. We didn’t spend a lot on furniture until we made sure we could afford it.
6. We put away the maximum amount we could afford to put into the 401(k). When my wife first became eligible for the 401(k), we put in the maximum amount. We weren’t able to keep up that pace when our family started growing but we always put in enough to at least get the full match from her employer.
7. We didn’t buy fancy cars. We did buy a new Civic, a one-year old new Ford Contour, and a new Buick Rendezvous (in 2002 and I’m still driving it today). I see young people driving around in BMWs and big trucks and think about all that money they are just throwing away.
8. We racked up some stupid debt but we made an effort to pay it off as soon as possible. We sacrificed to get our credit cards and student loans paid off. Our only debt right now is our house and a Honda Civic note that will pay off in May.
9. We didn’t spend lots of money on clothes. We bought cheap stuff or we shopped end-of-season clearances.
10. We didn’t spend a lot on trips and stuff like that.
Now we are in a pretty good spot. Our monthly cashflow is nice and we are finding ourselves able to pay cash for nearly all of our purchases unless we take advantage of a 0% offer or something like that.
I think young people need to realize that they shouldn’t expect to have it all as soon as they graduate from college. Sure, we all want things, but that doesn’t mean we deserve them or should go out and get them even though we can’t afford them.
I’m not trying to preach. I’m just stating things as I see them.