Very fascinating discussion. I am 26 years old and was completely debt free out of college and then I encountered a little something called my wedding. Add this to the list of things that are plunging my generation into debt. We cut every corner possible and still spent about $25,000. Both of our parents are trying to build up their savings after supporting us during college and, therefore, we only asked for minimal support for our urban wedding.

Currently, my wife and I are on a “conservative” financial budget trying to pay down debt. However, my parents laugh at me when I say this. Our idea of a “conservative” budget is nothing like generations before. Retail shouldn’t worry about this generation’s ability to spend, however all you boomers should worry about selling your houses in 10-15 years. I can tell you that most people my age will struggle to build up their savings and credit ratings to afford housing at current prices.

Every week, my 21-year-old son who lives at home receives 3 or 4 solicitations from credit card companies. This has been going on for several years. If he doesn’t tear them up, then I do.

Unfortunately, too many young people take them up on the offer and end up in such debt that it would take them 20 years to get out of it–if they ever do. Combine this with disastrous federal policies, escalating college loan debit, field hand wages and a general fiscal malaise by many young people and you’re cruising for a bruising.

The first thing is to start teaching money matters to kids at a young age. Don’t let them get caught in a downward spiral if you can help it. As to retailers, the key, as always, is to provide value to customers, whether it’s the legion of baby boomers or twentysomethings trying to get started.

I am a 23 year old new homeowner that has been working for a year in the “real” workforce. Although I paid for college myself, I was fortunate enough to have parents that taught me how to manage my money. I worked through college and saved as much as I could, making mock mortgage payments during my 5th year. Where I live, the cost of living is low, and it is supposedly cheaper to buy a house than to rent. (I say supposedly because of the MAINTENANCE costs!) Through discipline, I have been able to afford a “start-up” multi-level house, a brand new car, etc. However, with paying back my credit card for new living-on-my-own things (such as bare minimum furniture, dishes, and things you don’t think about like rakes, shovels, and ladders), I have found that I can’t afford what used to be normal (i.e. eating out, cable, home telephone, INTERNET!). Why is this? Because I am paid as an entry-level employee in an already low income/cost of living area. To make matters worse,… Read more »

The debts that really worry me are not those of young job seekers, but the federal budget and trade deficits. At some point, the bill is going to come due, and it ain’t going to be pretty. Individuals, especially those with a long time towards retirement, need to be proactive and take responsibility for their own careers and savings, on the presumption that many of the social programs and safety nets will be there in very reduced forms.

Many twenty and thirty somethings grew up in nice homes, in nice neighborhoods, with parents trying to give their children what they could. Many in this age group did have to take out loans for school, are living in expensive urban areas as the population in rural areas decreases, and want to live in a style similar to the one in which they grew up. Their parents couldn’t afford that lifestyle in the 20’s and 30’s. With a need for immediate gratification, they want what they want when they want it.

Now, how different is that from a ballooning federal deficit that pays for what it wants when it wants it without having to figure out how to balance the budget? Many twenty and thirty somethings are in a precarious situation. Getting a handle on the country’s debt is an issue for all adults to address while the twenty and thirty somethings will need to get a handle on their own debt for a more secure future.

I’m very much a bear, and not a bull, on this one. Up here in the wilds of Vermont, many older people are choosing between heating oil, prescription meds, and food. Charities are overwhelmed. I personally know people selling homes because they cannot afford their taxes. By comparison, I’m fine. My oldest is 27, a college grad, good job, and he’s scraping by. I would help him more, but paying for two more college educations right now is eating into savings I had planned for retirement. When my wife and I die, what we have will be split three ways, if late-life medical care doesn’t take it all. I’m diabetic, and Alzheimer’s runs in the family. None of this is “aw, poor me,” because I don’t think I’m that atypical. Over the next generation, I see the middle class continuing to evaporate, and a far bigger chunk of uninsured or underinsured poor. Our fiscal policy has been disastrous. The most dramatic change that could be coming would be a serious collapse in the housing market,… Read more »

Most elderly people I know are financially secure and very well off. Most are not big spenders and never have been. Maybe what we need is another Depression to help create a new generation of financially responsible people. One thing I do know is many of us are paying nearly 50% of our incomes in some sort of taxes — federal, state, FICA, unemployment, property, and sales. This has made it more difficult to finance routine living expenses. I don’t have a crystal ball to know what will happen in the future. However most people in this country enjoy a very nice lifestyle compared to the rest of the world. I’m sure someday we will have to pay the price.

We have now gone from Generation X to Generation Debt. There could be many reasons (excuses) for the tremendous debt in this generation but one glaring reason is the lack of practical money skills. During my high school and college years, classes pertaining to personal finance or managing money were never offered. I do remember credit card reps roaming my college campus, enticing people to sign up for their cards at ridiculous interest rates. Chalk one up to Visa and MasterCard. When I see the debt numbers, I thank God I developed disciplined personal finance skills. Managing income and debt comes down to self-control and education. There was a funny Saturday Night Live skit on a few weeks ago with a personal finance guru explaining how to get out of debt. He wrote a one page book titled “Don’t Buy What You Can’t Pay For” or something along those lines. The joke was that the people reading the book could not comprehend the concept. They just could not get it. People in their twenties and… Read more »

With due deference to poetic Merle Travis … as well as Moderator George (Anderson), Founder Al (McClain), Vermont Woodsman Warren (Thayer) and industry guru David (Livingston), and all other good retail pundits “to whom it may concern” — You spend fifty years working … what do you get? A bunch of kids and Congress in euphoria with debt. We older folks and voters have created a hungry monster, That craves feeding without a constraining sponsor. Americans and our politicians were not born to invent. Why should they keep track of their every red cent? Now “paying the piper” looms up like a party pooper, Thereby jeopardizing retailers’ days of being super. But where there’s an institutionalized spending bent, A great deal of dollars, without sense, will be spent. So St. Peter, don’t call me ’cause I can’t worry no more. I’m going to the emporium and spend like I’m not poor.

If the disparity between the “haves” and the “have-nots” becomes too wide, the table becomes set for a revolution. When the numbers of “have-nots” reaches a tipping point and they revolt against the “haves,” we’ll have one hell of a mess on our hands.

As for retailing, it will need to follow the waves: lots of discount operations on one end to serve those trying to survive, and a handful of boutique-type operations serving the shrinking, but prosperous middle and upper class segment.

Unfortunately, one of the biggest misconceptions about this situation is that it relates to twenty, thirty and even forty-somethings seeking immediate gratification. Seeking higher education, in and of itself, is delayed gratification. Taking time to increase your level of knowledge in an area in the hopes that it will broaden potential job prospects while increasing entry-level pay is the definition of waiting for what you want. As far as the Great Depression, my parents experienced it firsthand. In fact, my father worked at A&P at fourteen years of age to assist his family during this time. Both of my parents were high school educated, and provided their family with a nice home, food, clothing – the necessities of life. Higher education was valued, but not seen as a necessity. Therefore, my husband and I were on our own in regard to funding our bachelor and graduate degrees. We began our married life with the five-figure student loan debt as mentioned in the article. In an effort to pay down that debt, my husband pursued his… Read more »

There is a very similar situation in the UK. I read this week that a record number of young people, in the age group we are discussing, have declared themselves bankrupt or had to sort out Involuntary Credit Agreements (ICA). Universities have recently introduced fees which are nowhere near as high as in the US but students are already building up massive debts with a long term future of repayments. Add to this the same sort of attitude to instant gratification that Americans have and the results are not surprising. As far as retailers are concerned, much as they need to encourage customers in order to pay their own bills, in the longer term they will lose out if their customers go bust so my own personal best advice is, don’t encourage people to borrow or buy on time or spend more than they can afford. I certainly hold the banks and credit card companies responsible to a degree (yes, I know, people could say no…) as they exert so much pressure but it really… Read more »

Retailers need to be thinking very long-term — say 50 years into the future (see The United States of America, by Enrique Manriquez). I’m 43 and I remember all too well how in debt I was in my 20s. What saved me financially was something that devastated me emotionally: the death of my parents, and the inheritance that came from that. I wouldn’t wish that path on anyone, but I can say that, had they not passed away when they did (several years apart, but both by the time I was 31), I would not be where I am financially today (firmly in the middle class — but not “upper”). The current generation of 20- and early 30-somethings — and their younger brothers and sisters — is being ruined by macro forces beyond their control, and is ruining itself (with plenty of individual exceptions) by a lack of self control fed by a deeply ingrained consumerism and a tendency to think only in the present tense. America is today on a path that will end… Read more »

Debt must become the new word of discussion in everyone’s home. What is it, how does it work, and how do I deal with it? Having things is not as much fun when you can’t sleep over the payments.

I think you will see a fundamental change to spending less and having less early in life. This will be the new cool. Retailers have made the internal cost reductions and developed store brand labels to position themselves for new buying patterns. Without this core strength, the hour glass economy could get weak.

What an impassioned discussion! And Hurrah for tpm! Let’s end this thing on a note of optimism, and maybe even a laugh. Every generation has had its own mix of financial challenge and largesse. Sure, today’s twenty somethings (also known as my kids) are facing high education and living costs — but compared to what? At least they are winding up with student loans instead of seven years of indentured service to start their new lives! And let’s not forget that not ALL kids are leaving school with all that debt. Some of them are leaving debt-free, same as I did (at least undergrad) because their parents are committed to making that happen for them. And before you say “rich kids” let me quickly add that my parents didn’t have a high school degree between them and that my “college savings” started when my grandfather gave me my first feeder calf to raise at age 5. Ok, enough of the Horatio Alger story. My point is simply that there are plenty of kids who will… Read more »

The point is made briefly that the “I want it, when I want it” crowd is the twenty and thirty somethings and, for the most part, that could be true. Except for the depression era age groups though, this attitude certainly can apply to all … and that is society’s problem.

I believe everyone is responsible for their choices, no excuses. You reap what you sow, although I agree wholeheartedly that taxes are not doing anybody any good (big government sure worked well with Katrina, Ha!).

Retail, for all its problems, is doing the best it can.

When are we going to acknowledge “responsibility,” or lack of, is the bigger situation here and more ominous than I think anyone wants to admit.

The number one problem for most retailers: how to recruit and keep the best people. Retailers can help address this problem by tuition matching, home loan programs, and other lending assistance. These programs pay for themselves by curtailing the huge cost of employee turnover. Tuition matching can be done at a reasonable cost, and the home loan and other lending assistance can be done by employer-sponsored credit unions. There are thousands of credit unions in this country and most are happy to expand their membership base to new employers whenever they can at NO COST to the employer. Yet many retailing companies have never bothered to ally themselves with any credit union. So their employees overpay for mortgages and credit cards.