Debt, Milennials and me

I recently read an essay by a woman whom I assume is in her thirties. She had burnt out, saved money to move back to the city where she had been happiest, and spent several months to recover at leisure, pursuing her creative writing, sleeping, and hanging out with the friends she had missed.

She is funding this hiatus primarily by credit card debt, and lives frugally. She feels much better, deeply enjoys her freedom, and wonders how long she can continue this R&R. ("To the moment when you ask yourself that", I thought.) 


This is the first time in her life that she has lived beyond her means, and she asserts it is necessary.


She received affirmation from commenters. One wrote, "Part of being 'good with money' means knowing the difference between 'I am using my credit card to buy things that don’t really matter to me and don’t improve my life' and 'it is worth paying $X in interest charges if it means I get to spend time with someone who is important to me.'” 


That logic made me feel every year of my age. 
I'm on the other side of a Great Divide; reared by Depression-era parents, I was taught that only a dire circumstance would justify debt for a visit. I thought, What about Skype? Or waiting to visit until you've saved enough? 

I agree it's important to know your priorities: if you know what you value, you make better decisions about money. But just because you value something doesn't mean "'it is worth paying $X in interest charges...'". It sure does help you rationalize the expenditure, though.

Both writer and commenters distinguished between buying things and buying experiences, and expressed a preference for the latter. That is where their generation has been snookered. Whether you spent $3,000 to go to Coachella or buy a Prada coat, if when the bill comes you can't pay it, you are burdened.


I thought back to that age; I was hardly the model of responsible spending. My head was easily turned by 'things'; I remain grateful to the boyfriend who talked me out of buying a rattletrap sports car on my Visa. I also bought 'experiences'. After one girlfriend getaway, I tacked the bill on my fridge door (fortunately the folks were not around to see it), chipped away at the balance for months and never went the fly now/pay later route again.


Two factors contribute to the debt-accepting attitude of such commenters: if, like many Milennials, a recent university graduate carries a five-figure student loan debt, the thinking goes, what's another six grand?  


The second factor is that some regard banks as capitalist standard-bearers for greed. However, if you signed a credit card, you made the deal: I go to Becky and Pete's wedding in Baja on the plastic, and Chase gets to charge me nearly 20% interest—whatever, you bastards.

I saw I was about three thousand times more debt-averse than the commenters, most of whom are of my sons' generation. I hope my boys have inherited my deep suspicion of easy credit. I know one has kept his card frozen in a hunk of ice. 

During the morning rush hour on the métro, I heard a woman in her early thirties on her phone. "I mean", she said indignantly, "why am I working my butt off now, so that when I'm old I can do stuff? What's the point of that?"


Oh, the elder next to her yearned to pluck her sleeve and say, Hi, can I buy you a coffee? I wanted to tell her that she would still want to "do stuff" at seventy. Would there be money for that? Would there be money for even the necessities? I would hope to not sound like a scold when I asked whether she was saving anything now.


You will not, I would have said, lose your wanderlust and curiosity; the door to discovery doesn't slam shut. Art, ancient temples and soaring hawks will still move you, seeing those friends will mean ever more.


With some basic budgeting and a bit of luck, she could "do stuff" at thirty and at seventy, but there will be choices, limits. Debt for her generation is too often presented as an undesirable but necessary tool for personal freedom, when it is actually slavery. 


But I just boarded the train with my thoughts, and she went to her job.






20 comments

Paula said...

Agree, 100 per cent! So glad I learned how to save.

LauraH said...

As a saver by choice, training and inclination I'm baffled by these attitudes and practices. Knowing how to manage your money and avoid unnecessary fees and charges is a life skill. You used the word "slavery' and I will add "victim". Our banking/investing system will make as much money from you as they can so you need to be able to defend yourself. Why isn't this stuff taught in school? It should start in grade school and continue on to high school. Starting to rant so I'll end here.

Ros said...

So, I'm gonna be the millennial chiming in (because yes, you have millennial readers, hi! :) )

That attitude towards debt? Is ridiculous. And is not specifically age-restricted (dear lord, just thinking about the state of my dad's retirement fund gives me vapors).

I think theres a profound disconnect between debt you can "afford" and it's impact on necessary cash flow. For example: I have a mortgage, no other debt (car bought cash, credit cards paid in full every month, etc). If I were to say "I can afford 20k of debt, I'll pay it off this year", yes, I can do that, but it means 1.5ishk/month extra that NEEDS to come in. At which point... what if I'm offered the job of my dreams with afford pay cut? What if I lost my job? What if... ? You're just boxing yourself into a tighter situation. And I say this as someone who is currently on maternity leave (55% salary), and whose husband got laid off at 8.5 months of pregnancy (55% salary...): not NEEDING the extra cash flow is what keeps you afloat sometimes, 'cause we're doing fine.

There are times where I'll argue that debt is preferable to the alternative. I'm thinking, for example, of a time when I was trying to establish my career and super underpaid an and living as cheap as I could and still couldn't make ends meet, and my parents (who have a habit of using money as emotional reins to tug on for control for the next 20 years... I'm still hearing about summer camp expenses from when I was 10...), who weren't aware, said that if I needed money they could look my budget over with me and lend me some... I lived on 25$/week of groceries for 4 months, put it on credit, paid it off as soon as I got a different job, and accepted the interest payments GLADLY, compared to the alternative options. But a) I went in with eyes wide open, b) I put as little as humanly possible on credit, and c) food is a necessity, concert tickets and restaurants are not.

Lynn L said...

My two millennial sons do not share this way of thinking -- both are good savers and careful with their money. Interestingly, both have had issues with their female significant others, neither of whom were raised to budget by parents who have no savings.

While many of us have always been careful with money, I'm not sure all elders are setting much of an example. What about the old neighborhoods with relatively small houses that are being razed to build mc-mansions by boomers who want to live close to work? The insistence by parents that all weddings have to have a seated dinner and band? The push to send children to the most prestigious schools regardless of debt? I'm beginning to rant so I will also stop.

Josephine Chicatanyage said...

Luckily both of my children are very responsible with money. My daughter never uses a credit card. They were both lucky that they missed the large university debt and have paid off the small amount they had. I have never had debt, I never even liked a small mortgage. If I use a credit card I always pay the full amount at the end of the month. I sometimes wonder if I have swung too much to the saving mode. I may well end up eventually paying a large amount to the government in tax! Perhaps I should start spending and enjoying a bit more.

Beth said...

Oh, boy, that young woman's attitude made every grey hair on my head stand on end! But so does a friend, older than I am, who has never learned to budget or save and regularly uses her credit card to spend beyond her means, or "borrows" capital from her already-dwindling retirement account. It may well be a more typical millennial attitude but it's certainly not confined to that generation. You've made an excellent point about student debt. It's also true that society has become MUCH more consumerist and celebrity-focused since I was young, with everyone constantly bombarded with ads that create lust for luxury goods and a lifestyle to match. With all that hunger instilled, and not much solidity to replace it, is it any wonder that people feel they "deserve" everything "now", and go into debt as a result? Maybe you'll write something about what's happened to wedding expenditures!

Raised by Depression-era parents, I had financial responsibility drummed into me from an early age, and as a self-employed person in the U.S. with no outside pension prospects or benefits, I had to save for my own later years, as well as ongoing expenses like health care insurance with high deductibles. My husband (and business partner) and I fortunately saw eye-to-eye on this; we never borrowed money, and always paid off our credit card in full each month; we lived frugally and saved - like many of your commenters - for later, which is now. As a result we've had options that more profligate friends now lack. Some might say that we didn't enjoy ourselves through spending as much as we should have, but frankly, there is a lot of pleasure in learning to do things yourself -- cooking, sewing, gardening, working on your own house, making music with friends -- that are experiences just as rewarding, and far longer-lasting, than fancy restaurants, luxury spending, and far-flung destinations. I love to travel, and I appreciate having a good car and the occasional special meal. But in the end, you need to learn to be happy with yourself, wherever you are -- money has its uses, but it can't buy true happiness.

Eleanorjane said...

I think that there's a lot of personal variation (not just generational variation) in attitudes to money. My husband and I are both quite laissez-faire with money and very lucky that we've got well paid jobs and generous parents. When I was younger and poorer I did pay closer attention to the weekly (or daily) bank balance. We are putting away a fair bit on our pensions but we really should make sure we've got wills and that we've sorted out some investments. At least our similar attitudes mean we never argue about money!

Sharon said...

While I mostly agree, here I am at 72 with a crippling disease and in treatment for my second cancer. I'm glad I took that hot air balloon ride and that trip to Italy while I was healthy, even though some of the cost went on a very low interest credit card. Now that I have the savings I can no longer do many of those bucket list trips.

Dulce Young said...

I am always plagued by thoughts of the future, especially the what ifs - because of that, i have learned to save. Although i can be swayed to spend from time to time on 'things', but i am glad to say, i am debt free. I am in my 50's, by the way, not very far from retirement. Thanks Duchesse, i not only enjoy reading this article but it propels me to be more aware and also learn from the thoughts of others.

Noelle said...

Clearly the young women you overheard are not related to any of the frugal and responsible older commentators here. Wish I could say the same about my 30ish daughter raised to be both, but who is neither. She does seem to be having fun though !

hostess of the humble bungalow said...

Oh I could not sleep at night if I had to fund everything on my VISA!
Debt scares me...fortunately we have been good savers and paid off our mortgage as soon as possible...we "did without" something that many younger people do not want to do these days...it is rather daunting thinking of that youn woman who is funding her respite with the Visa card.
There is a balance though...
being miserly and NEVER spending on things that one has worked hard to earn
like a trip you have dreamed about is like a bitter punishment...

Another thought provoking post!
Thank you

Kai Jones said...

My mother died of cancer at 63; she hadn't even retired yet to enjoy a "later." One can choose a middle course, enjoying some pleasures now and paying for them later, even at the risk of forgoing other pleasures while doing the paying. And like another commenter, I am now (at age 55) too debilitated by chronic illness to enjoy many of the things I put off too long, and the chronic illness also limits my ability to pay for some of the remaining desires.

Sometimes spending money can be an investment in yourself. It's hard to judge, and especially hard to justify to people who aren't standing in your shoes.

Jill said...

Growing up in the 50s with a very frugal mother and begrudgingly frugal father, I learned to pick and choose what to spend my money on. Remember though, those were the days of taking the bus or walking, eating all meals at home and having your winter coat last for years! Interestingly though, I don't regret spending money on things or as the younger set likes to say "making memories". My fondest memories of my life have been, and still are, moments and experiences spent with friends and family. One of my dearest friends loves to muse on just how lucky we are to be able to spend time with each other. Sure we vacationed at Lake Como together, but our own backyards provide just as much enjoyment when we are together. I think the live for today mentality is fine as long as it doesn't mean spending tons of money with little or no thought to the future. Case in point...my godson's extravigant wedding in Costa Rica. Sure a lovely setting ( we declined knowing there would be another reception back home) but the final tab was staggering. Every guest who chose to fly down there still attended the 2nd party. My husband is still shaking his head over it two years later. But then again our small little wedding and 4 day honeymoon road trip to Vermont are soooo passé!
All of the comments here are very interesting. I guess ultimately each person has to decide for themselves. Regret is always a sad proposition whether it is for not following ones desires no matter the cost, or simply being a senior citizen with not much saved for a solid retirement.

Duchesse said...

Paula: Yes, saving is something you learn, but some seem genetically inclined and others seem to never quite master it. Also, spending fills various holes that have nothing to do with what is bought, and that is what I learned during my sole foray into credit card debt.

LauraH: I didn't use "victim" by choice: as long as a person can read and understand the fine print on the cardholder agreement, he or she is not a victim, as far as I am concerned- rather, a willing participant. Let's talk about it. Since our day, some high schools do offer courses on personal financial management, but it should be required!

Ros: Thanks for jumping in, great points and a thoughtful description of when debt is a wise route. (I see that scenario as akin to an entrepreneur's assessment of risk.) And yep, the Boomers racked up their share of debt and bankruptcies. They were the first generation to get those credit cards, usually with extremely minimal qualifications. Many friends went berserk with them and only 'planned' to the extent that they could cover the monthly interest.

Lynn L: I agree there are many responsible Millenials and Gen X-ers, and plenty of spendthrift Boomers. In Canada, which historically has had a high personal savings rate, the levels have eroded, and in the US, eroded even more. So, we somehow seem to be transmitting an ethos of consumption. I am very happy that your children aren't literally buying it.

Beth: "With all that hunger instilled": a vivid phrase. I too remember pining for things, when I had my first summer job, paging through Glamour magazine and SO wanting something I saw. But now, offers flood social media and one's girlfriend posts her new bag on Instagram- there is a tsunami now, where we only had some rollers.

For me money can buy only a certain "lite" version of happiness if a) I •have• the money. b) determine I'm not overpaying, and c) the goodie is occasional. it is actually pleasure or ease that I am buying, rather than the life-enriching happiness of which you speak.

Duchesse said...

Eleanorjane: When you two become parents you might revisit some of your financial habits :) There is nothing like looking up the sobering data on the cost of child rearing (for 20+ years) to lead to making some concrete plans.

Sharon: Ultimately, every person who has control over his or her financial affairs must make that decision. Some treats-whether others think them frivolous or not-are deeply enjoyable and even life-changing. But, I am careful about the "you can't take it with you" rationale. Before he died, my father said to my mother, "You can do a lot of good for a lot of people with this money." He was not advising her to deny herself, just wishing for her to look at the big picture. Each person will choose the ratio. I hope that you will avail yourself of the options that you will enjoy.

Dulce Young: Though you do not say, it sounds as if you have been thinking about these matters for a good while. I was shocked to hear the young woman in the metro; it sounded as if she were utterly clueless about the lifelong implications of her attitude. But, if I were reminded of the things I said at that point in life---!

Noelle: Thanks for the candid assessment of someone you love. It's fun, all right, and financial institutions make sure young adults are told that. One of my friends is a very senior retail banker; his bank's slogan is "You're Richer Than You Think". Le Duc told him this slogan was morally reprehensible; he agreed.

hostess: You hit it: balance. I did not really have a well-developed sense of balance till maybe my late 30s. But I did live from paycheque to paycheque for years. Never laid off or fired, whew- lucky.

I recently met a woman who had dreamed for decades about a particular trip and finally took it. During that, her husband fell ill with food poisoning and was miserable, and she was overwhelmed by the locale; she had difficulty coping even though the trip was guided. Sometimes dreams exceed one's hopes and sometimes not. As I recall you had a fabulous experience!

Kai Jones: I was aware that I wrote a post wreathed in judgement; I do find that many young adults are conscientious about money. Marketers of debt instruments (cards, lines of credit) pitch to both the young: "You Only Live Once (YOLO)" and the old: "You worked hard for this/deserve it", in order to justify debt. No debt? If it blows your hair back, go ahead, whether it's a trip to the Greek Islands or a massage every day. There are plenty of ways to spend the money one has, it's spending what one does not that scares the bejazus out of me.

Jill: Oh, don't get me started on destination weddings, which have occurred in my family. I love these kids,but this branch of the family have not been willing to spend our limited budget on a big trip (distant venue, luxury accommodations). We send a nice gift and our love.

As for being a senior without enough saved: Some friends have had the stuffings knocked out of their formerly secure retirement as a result of the 2008-2009 crisis. They will not recover this during their lifetimes. Financial problems do not necessarily come from overspending, so it is good to be careful without being stingy.

Mardel said...

Spending what one does not have, without any immediate prospect of recovery scares me. I won't say it is a generational thing entirely though. I'm sure we all know exceptions.

I've always been a person who saved, and yet I frittered away large amounts of money in my youth that might have been better saved. I'm not convinced that either the things, or the experiences brought me greater happiness, but I was convinced at the time they would. That's the part we all have to learn, at our own pace. I can say that now, comfortably retired, although a little nervous that I just traded a debt-free existence for a mortgage to pursue a dream. I did it being very aware of all the costs and consequences however, and grateful that my years of saving have allowed me the opportunity.

Still I worry about my step-children, who seem to have absorbed little of their father's frugality, and who also seem to have fallen for the "experiences" trap. They feel they are teaching their children, well, to value experiences and not things, whereas I see debt as debt. But, although I can be a bit of a curmudgeon, I have learned to keep my mouth shut.

une femme said...

I can't say I've always been frugal, but I've never racked up a substantial amount of debt. I had a few years when I was younger where I'd rely on a little bit of credit to get me over a hump (an unexpected car repair, a suit for an interview) but I never let those balances ride for long.

Still, I also am put off by people (not you or other commenters, am thinking more of personal finance "experts") who advocate for what I've dubbed "fiscal anorexia." We all need a little pleasure now and then...it's a question of balance. I understand how much more younger people are squeezed...often lower salaries and higher rents demanding an even bigger portion of paychecks, and I can understand where some of the fly now/pay later attitude comes from. Not to the point of living unemployed by choice for several months on credit, but the occasional dinner out, yes.

Julie said...

Once again you written a thought provoking piece.

I'm comfortable in my retirement but still am cautious in my weekly spending. I always was a saver until my first husband ran up bills buying everything he wanted. It took me a long time to build myself back up again.

I couldn't enjoy going on a vacation that was based on a loan. Most of the time there's was something I could give up to get something else. Balance. It's hard to get it perfect. Now that we can afford it, it's difficult to get medical travel insurance.

After big extravagant weddings, there are many who wish they had that money instead for the home or car or kids.

Sammye Broline said...

I worry that we older ones have lived through an entirely different economic period. Like some others here, I am comfortable enough, but is that because I was lucky or because I was careful? We did live on savings & cc & beans for a year midlife while we started a business...which turned out to be very successful. Of course we worked very hard (too much so!) and that year followed 15 years of being very careful, but was that the determinant? Or was our success mostly luck and a very favorable economy? Would I advise my 40'ish kids today to do that? NO! My college-age grandkids, maybe. I would tell them that freedom is the ability to chuck a bad job or survive a divorce or illness. For some of our generation, the lucky ones, we achieved that by making choices....investments, sometimes on credit, or extravagance. I fear that my kids and grandkids aren't likely to have nearly so much leeway.

lagatta à montréal said...

My family background was much poorer than some of those here.

I did make some stupid purchases as a young person; don't we all? None were major; I never had that kind of money. The only thing I regret about that is cutting up all my credit cards after I'd repaid them; harder to get other ones later on. I always bought only in cash or cheque, but now that is difficult for some things, no matter how "alternative" we are.

Surviving an illness whatever your income means fighting for universal healthcare, as is the norm in most industrialised countries.

Most of the younger people I know are not remotely into extravagant purchases and think those who are into that are tacky, but that reflects the younger people I know, who are more into NGOs and social movements, or the arts.

I do overhear the buy buy buy types, but they can be boomers, GenX or millennials. Buy some lovely things, and treasure them.