No matter the ‘gen,’ debt is a burden
Replies to column show our common struggle
OK, Boomer. I hear you.
Of course, I’m one of you, so that’s easy, but my recent column on financial scars and lessons from inflation of the ’70s and ’80s prompted a burst of messages from people roughly my age.
They wanted to tell me how hard they worked to fight through those scary times when we felt like economic forces were conspiring against us and we’d never get our heads above water, let alone get ahead.
One reader wrote: “We mowed yards, worked at Tastee Freeze, painted houses, begged for odd jobs. Struggled to financially make it through college. My wife and I cleaned toilets at a factory at midnight to save for a house. We ate a lot of bologna sandwiches and had no money.”
The couple did buy a house in 1993, lived frugally and are comfortable today. Like me, many of these readers said they minimized debt, my lifelong takeaway from those times.
Millennials, GenX, GenZ suffer too
I heard, too, from a few younger folks.
This one was particularly sharp: “Many of us who hit the workforce during the Great Recession had to take on minimum wage jobs regardless of our degrees. I worked my way up through these absurdly stagnant ‘front-line’ jobs to make $12.50 in 2020, which comes out to $29K when I worked overtime every single week. Forty years after your first newspaper job, I, a college graduate, was still making less than you were in equivalent wages. …” (I’d written that my first newspaper job in 1980, when inflation hit an annual rate of 13.55%, paid $10,000, equal to $35,000 today.)
My correspondent continued: “My fiancé, despite having a master’s de
gree, spent the pandemic starving and eating just peanut butter and jelly sandwiches for all of 2020. Many people do not live in cities with reliable, widespread public transportation. What we might save on car ownership is readily eaten up by housing costs.
“Tell me, how exactly was I or any of my peers supposed to benefit from your article?”
I hear that too. Boomers’ stories, such as my selling blood plasma to buy ramen when I was literally down to my last dollar, sound like an iteration of walking to school uphill in the snow.
What sounds the same among the generations is the real fear and frustration many boomers felt 40 years ago and what people feel today as they try to get a foothold.
Student loan burden, skyrocketing housing costs
Beyond question, conditions are different today and challenges are daunting, and our national policies could stand some empathy and real solutions to modern issues, including 30 years of higher education inflation and skyrocketing housing costs.
Good God, the house my ex and I bought in Boise, Idaho, for $68,000 in 1987 is estimated to have a market value of about $520,000 today, roughly three times beyond normal inflationary growth.
My son and his fiance, living in Orange County, California, face eye-popping rent and transportation costs made more dismaying by our current round of inflation. Since the dot-com crash in his adolescence, I’ve pondered the prospect that his will be the first generation of Americans whose standard of living falls short of that of their parents.
That carries frightening implications, and it should be a national priority to fix. Perhaps we need incentives for decent starter homes – policies tailored to today’s problems.
A recent New York Times essay argued that change won’t come while boomers are in charge – and the president, Senate majority leader and House speaker all are older than boomers.
Debt is still robbing us
But individuals do have some power over shaping their financial future without policy change. The central point of my recent column was how inflation made me deeply averse to debt. While credit is necessary to buy a home and can be used wisely when interest rates are low, a key difference since I was in my 20s is the ready availability of credit.
In 1980, banks and states joined forces to work around laws capping interest rates. Over the next decade, the number of credit cards in the U.S. exploded, a trend that only continues. Home equity loans became common. We can borrow against our 401(k)s, though we do pay that interest back to ourselves.
The average household credit card balance, $518 in 1980 – roughly equal to $1,800 in 2022 dollars – is more than $6,000 today. With minimum payments as low as 2% of a credit card balance, interest payments have soared.
Credit has fueled statistical economic growth through consumer spending. But it’s also transferred hard-earned middle-class income to the wealthy over the years through many sophisticated, insidious ways. And it goes beyond plastic cards.
Now, buy-now, pay-later apps offer quick ways for consumers to add to their obligations, even if they don’t charge interest. Consumers must understand that lending in any form is not for our benefit. It’s to make money off of us.
Our ritual acceptance of debt robs us, regardless of our generation.