I‘ve been watching the program “Til debt do us part“, the series on TV where couples apply to get a money makeover from Gail Vaz-Oxlade. It is incredible to me how seemingly intelligent people can be so incredibly stupid about money. It’s really quite simple. If you make $4000 net a month and you spend $6000 a month, remarkably you will be in debt for $2000 a month. If you do this for 12 months, you’ll be $24K in the hole. Why this is so complicated to people is the topic of this week’s blog. You eat what you kill. In caveman days if you didn’t go out to hunt, you didn’t eat and you didn’t survive. It was that simple. Life is a little more complex now but if you have a job that pays minimum wage, you will never be able to afford a house, car, vacations and plasma TV’s. Nevertheless this same person often believes they are somehow “entitled” to live with the same lifestyle their parents had.
Unfortunately the credit card companies, banks and the big box stores are more than happy to advance you money you haven’t earned. People are so shocked that the “buy now pay later” scam where if you don’t pay when you are supposed to the 30% interest is retroactive to the day you got the merchandise. At 30% interest per year, a $1500 TV paid over 3 years will cost you $1360 in interest alone for a total of $2860. Does it still sound like a good deal? People don’t want to wait to save up and buy it. They want it right now, everything now!
I have a friend who laments against the evils of the workaday life but let me ask a question. Will your children get braces if they need them? Will they be supported to go to higher education or will they be saddled with loans well into adulthood? Will they have a yard to play in? All these things take money. The generation X and Y are disgusted by what they saw their parents go through to support their families - and with good reason. With companies laying people off, recession taking a big bite out of retirement savings and companies closing resulting in the loss of pensions they worked all their lives for. It is normal that they would look at this and say, “No way. Not for me!”. That’s fine but they don’t have an alternative to get all that cool stuff they want. They just know they don’t want to work like their parents did. Meanwhile they want to be able to go out to restaurants, take a taxi because public transit is such a drag, have designer clothes and go on holidays they finance on credit cards - not to mention all the electronic goodies like plasma TV’s, cell phones, computers, video games and stereos.
I remember when my generation was in university and so many majored in teaching. When they came out there were no jobs. Imagine working for 4 years and having to work at McDonalds. That’s because they didn’t do their research to know that it would be years before there were sufficient retirements to accommodate new teachers. It’s supply and demand. You need to find something that interests you and something an organization will be willing to pay you for.
Please don’t think that I want people to work at jobs that they hate because can be soul-destroying, but you have to be practical. Decide what is important to you. What lifestyle fits your dreams? Do you want a house, kids and a car? If these things are not important, it will be much easier for you to reach your financial goals. My middle son wants none of those things so his requirements are easily fulfilled. But if you do; you’ll need to think ahead about how you’re going to get there and let me tell you it’s going to take sacrifice and a lot of work.
If generation X and Y don’t want to go down the corporate highway that’s fine with me but they will have to reduce their expectations. Did you know that 58% of baby boomers are still partially or completely supporting their adult children? What I find is that people of this generation want to be paid to pursue their hobbies. Guess what folks; hobbies are for after work and the weekends. For those who can make their hobbies become a sustainable means of income, that’s fabulous; more power to you. For the rest of you, grow up get a job. And if you want a better job, go back to school at night and get the skills you need to get a better job. One area we baby boomers failed miserably was to prepare our children for the rigors of adult life, me included.
It would be nice if you would take a moment to thank your parents for what they sacrificed to provide for you if indeed they did. It will make them feel better because they will probably have to work into their 80’s.
P.S. besides… we need you to be financially secure so you can care for us in our golden years - diapers are very expensive.
Thanks Jason for the inspiration for this post.
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