We are currently watching The Amazing Race tv show. There are a couple on there who are nurses. They want to win because their combined student loans are $400,000. Gobsmacked. They are in debt that much, so they can work at taking care of people. If they happen to win the Millions bucks, they’ll barely get to keep half of it.
My daughter is a therapist. She had to borrow the money to allow her to help people. Isn't that nuts? We should welcome everyone who wants to be some kind of caregiver!
I will never understand how the cost of necessary education for certain professions was allowed to become so out of proportion with those professions’ salaries.
So much has been made of the great wealth transfer as the Boomer generation leaves this earth but most of what I see is a greater wealth concentration and increased wealth inequality.
Financial advisors often have trouble convincing their clients it is okay to spend or even donate as they age. We spend our whole lives clutching on to money precisely because there is no sense of safety in our governmental system, we are always one medical bill or car accident or job loss away from disaster.
The current administration is actively loosening many of the protections around interest and credit. Unfortunately things could get even worse.
I question this every time I see it! Sandwich generation here. If we’re lucky we’ll finish paying for youngest’s college before our remaining living boomer parent needs $$$ elder housing/care. The other boomer parents left a bit. Not wealth (we used it for a semester of college for another kid, I believe.)
We don’t expect anything and don’t think we’re owed anything but this drumbeat of “Gen X is about to be rich” seems like a setup. Like somebody’s getting ready to pull the rug out.
Exactly, Gen-X won’t be getting rich. The cost of elder care is astronomical and most people don't have long-term care insurance (https://stg-origin.genworth.com/aging-and-you/finances/cost-of-care.html). That leaves us with two options: spend down a parent’s assets on care until they are eligible for Medicaid or take on the care ourselves and damage our own earning capability in the process.
The middle class version of this used to work. Life at 18 or 21 wasn’t easy, but an entry level job would cover rent, a (used) car loan, and fugal living with enough left over to save a little. Pay off the car and buy the next used car for cash. Then save for a 5% down payment on an FHA loan. From there, with some amount of spending discipline, people could live a middle class life and save for retirement. This was of course 50-60 years ago. But we let unions get busted and companies were able to keep wages low. States cut funding for universities and raised tuition instead. Things like governments use to do for everyone now have user fees. The old model of working your way into the middle class has been shut down so we could lower taxes on the rich.
I remember when credit card companies started putting 'payback' charts on bills (maybe they were required to?), showing how many years it would take to pay off 5K or 10K or whatever, if a person just made the minimum payments. I remember the terrible aching feeling, the rising panic, as I looked at those charts and thought, "Is there any way I can gather enough money to pay this off faster?" I remember looking at the balance on my 8.5% interest rate student loans – Sallie Mae-owned – and experiencing the pressure of denial, of pondering a 10-year future of indebtedness. I remember working extra to earn big chunks of money so I could pay down credit cards and student loans. I remember when Sallie Mae sent me a letter: "Sorry! We messed up your repayment schedule and your payment is increasing AND your loan length is increasing too! Sorry!" It's been decades of paying interest for my education and for 'living' (groceries, insurance, a car because I lived in the country, etc.).
I work in higher education. I'm amazed at Al Lord's naivete about the impact of Sallie Mae (in the WSJ article). The trade he made -- make tons of money at Sallie Mae and for Sallie Mae -- worked for him. It enabled him to not only live, but live well, and to save (one million dollars?) to send his four grandkids to colleges of their choice. To then have a 'come to Jesus moment' where he realised how Sallie Mae was implicated in the debt of college students and their families...please.
Another thing is to be very careful about insurance plans. Some are absolutely necessary- homeowners, car, and health. But I’m talking about the extra fee you can choose to insure large purchases like appliances, computers, even furniture. It’s tempting to say yes, because we are conditioned to think “what if?” But all insurance is a gamble. You may pay for months on end and never need it. Or, you might! But think twice before plunking down anywhere from $200 - $500 for a service plan. Better to buy a product with a good warranty in the first place. But then of course we’re back around to the cheaper products with no warranty. 🫤
I'm always shocked - SHOCKED - when I see how much interest we pay over time to banks in mortgages alone. In my county, a regular house (1000 sq ft 3 bed 2 bath 50-60 yrs old, very little updates) averages abt 1 mil. I do the math on an average mortgage with the current rates, and you're paying over a mil in interest - that's with a down payment. To me, it just feels like throwing away money. I know its an asset and all that, but is it really? Our financial system really doesn't benefit most of us
Oh man. Paying interest kills me, and houses are much cheaper where I live. My interest this month was a little over 7 bucks (because I’ve been paying for decades on one house or another). I will feel such relief when it’s done!
My husband was career military (enlisted). You don’t get rich staying in the military, but there are other benefits. The rich tell you if you have debt, pay off the debt with the highest interest first. That’s a luxury we didn’t have. We paid off the bill that had the smallest balance. So then we could apply what we used to pay on the smallest debt onto the nest smallest debt. Husband retired from the military when he was 40 and started over in another job. His military retirement is what gave us room to breathe and be able to own a small home. When we were in our 50s we started feeling that we would be able to afford a larger home and retiring in our mid-60s. The key for us was having lifelong health care because he was retired military. Otherwise we could have been completely screwed. Of course, Republicans would officially classify us as “takers.”
And billionaires are wondering, and complaining, that the birth rates are dropping precipitously. Why? Because people cannot afford to raise children anymore.
All of your advice was good. What I think the working class seriously has to do? Stop supporting billionaire rule. Stop supporting the class and money system. Let's see how far we, the working class, have to be pushed with ever-declining standards of living (in a land of abundant resources for all!) before we collectively say, "We just can't tolerate this any longer."
I feel like I see the advice to put off having kids or not have kids at all mentioned pretty regularly, but I rarely see pets mentioned. A lot of people who are worried about the cost of children decide to have pets “instead.” A lot of people underestimate the day-to-day cost involved in having a pet, even if they had pets growing up. The cost of veterinary care in the US is incredibly expensive. Some people have no choice but to put their sick or injured pet down because they just can’t afford the care.
So true. One of my dogs injured his leg Thursday and the bill was $450! If he needs surgery, it’ll be $4,500-$5,500. We don’t have that kind of money. We hope he will heal without it.
I remember getting my first apartment, a "jr. one bedroom" (like a studio, but with a doorway into the tiny bedroom) in OKC.
The first thing I bought was a nice sofa. My parents always had nice furniture. It was financed, of course, from Levitz or a department store. So I went to Foley's and bought a beautiful sofa. I figured I could swing $85 a month. And I could. But the interest I paid on that thing was criminal, and I took all the time allotted to pay it off. I never bought furniture on credit again; used is fine, and when my husband and I made more money, we saved up for a nice things for our bedroom. That sofa lasted for 12 years, and I sold it to my friend for the price of a beer.
I always bought cheap crap. Sometimes because I was poor (like now), and sometimes because I don't believe the much bigger price is a reflection of much higher quality. It almost always worked out fine. But I do my writing from a co-working space where everybody is in IT - so they make much more money than I make. I can tell you... it's not easy being the poor kid. They always buy expensive everything, and I feel like the black sheep who just doesn't get it.
I have lived all over the spectrum (except for wealthy) of income. I always treated debt like I was allergic to it. It’s basically buying time, economically speaking. Mortgage, car loans, school loans are impossible to avoid but every payment was a needle in my eye. Credit card interest? Not unless I am literally dying, lol. If you have any means at all, there is tremendous peace of mind in living below them.
thank you. While your article is scary in many ways you also give alternatives, buy second hand, roommates, second job.
I am retired now, we are incredibly careful about money. I drive an older car 2009 honda fit. I like to knit so I find cheap yarn, I like to read, watch DVDs, internet, and just hang out. I can do this because I have several friends who trade books, play my dvds over and over again, books are a weakness (Our library is in the middle of a lawsuit and hasn't bought any new materials in 6 years...) but so is food, electricity, dog food, etc. No movie theater local, and they are expensive, closing after COVID, no vacations, stay vacation, and community swimming pool. In my small community second hand furniture and clothing. We can stretch a dollar!
We are currently watching The Amazing Race tv show. There are a couple on there who are nurses. They want to win because their combined student loans are $400,000. Gobsmacked. They are in debt that much, so they can work at taking care of people. If they happen to win the Millions bucks, they’ll barely get to keep half of it.
My daughter is a therapist. She had to borrow the money to allow her to help people. Isn't that nuts? We should welcome everyone who wants to be some kind of caregiver!
I will never understand how the cost of necessary education for certain professions was allowed to become so out of proportion with those professions’ salaries.
For $200,000 I’d want to at least be a dentist or brain surgeon, or someone with a chance at earning it back, which I doubt is what a nurse could do.
So much has been made of the great wealth transfer as the Boomer generation leaves this earth but most of what I see is a greater wealth concentration and increased wealth inequality.
Financial advisors often have trouble convincing their clients it is okay to spend or even donate as they age. We spend our whole lives clutching on to money precisely because there is no sense of safety in our governmental system, we are always one medical bill or car accident or job loss away from disaster.
The current administration is actively loosening many of the protections around interest and credit. Unfortunately things could get even worse.
I question this every time I see it! Sandwich generation here. If we’re lucky we’ll finish paying for youngest’s college before our remaining living boomer parent needs $$$ elder housing/care. The other boomer parents left a bit. Not wealth (we used it for a semester of college for another kid, I believe.)
We don’t expect anything and don’t think we’re owed anything but this drumbeat of “Gen X is about to be rich” seems like a setup. Like somebody’s getting ready to pull the rug out.
Exactly, Gen-X won’t be getting rich. The cost of elder care is astronomical and most people don't have long-term care insurance (https://stg-origin.genworth.com/aging-and-you/finances/cost-of-care.html). That leaves us with two options: spend down a parent’s assets on care until they are eligible for Medicaid or take on the care ourselves and damage our own earning capability in the process.
I don’t think I’ll get a cent. Even a short nursing home stay will wipe everything out for most of us.
The middle class version of this used to work. Life at 18 or 21 wasn’t easy, but an entry level job would cover rent, a (used) car loan, and fugal living with enough left over to save a little. Pay off the car and buy the next used car for cash. Then save for a 5% down payment on an FHA loan. From there, with some amount of spending discipline, people could live a middle class life and save for retirement. This was of course 50-60 years ago. But we let unions get busted and companies were able to keep wages low. States cut funding for universities and raised tuition instead. Things like governments use to do for everyone now have user fees. The old model of working your way into the middle class has been shut down so we could lower taxes on the rich.
Exactly
I remember when credit card companies started putting 'payback' charts on bills (maybe they were required to?), showing how many years it would take to pay off 5K or 10K or whatever, if a person just made the minimum payments. I remember the terrible aching feeling, the rising panic, as I looked at those charts and thought, "Is there any way I can gather enough money to pay this off faster?" I remember looking at the balance on my 8.5% interest rate student loans – Sallie Mae-owned – and experiencing the pressure of denial, of pondering a 10-year future of indebtedness. I remember working extra to earn big chunks of money so I could pay down credit cards and student loans. I remember when Sallie Mae sent me a letter: "Sorry! We messed up your repayment schedule and your payment is increasing AND your loan length is increasing too! Sorry!" It's been decades of paying interest for my education and for 'living' (groceries, insurance, a car because I lived in the country, etc.).
I work in higher education. I'm amazed at Al Lord's naivete about the impact of Sallie Mae (in the WSJ article). The trade he made -- make tons of money at Sallie Mae and for Sallie Mae -- worked for him. It enabled him to not only live, but live well, and to save (one million dollars?) to send his four grandkids to colleges of their choice. To then have a 'come to Jesus moment' where he realised how Sallie Mae was implicated in the debt of college students and their families...please.
Yes, I feel a very strong urge to remove my glove and slap his cheek with it and to tell him, “you, sir, are a scoundrel!”
99% sure that those payback charts are required by law.
Another thing is to be very careful about insurance plans. Some are absolutely necessary- homeowners, car, and health. But I’m talking about the extra fee you can choose to insure large purchases like appliances, computers, even furniture. It’s tempting to say yes, because we are conditioned to think “what if?” But all insurance is a gamble. You may pay for months on end and never need it. Or, you might! But think twice before plunking down anywhere from $200 - $500 for a service plan. Better to buy a product with a good warranty in the first place. But then of course we’re back around to the cheaper products with no warranty. 🫤
I never buy those
I'm always shocked - SHOCKED - when I see how much interest we pay over time to banks in mortgages alone. In my county, a regular house (1000 sq ft 3 bed 2 bath 50-60 yrs old, very little updates) averages abt 1 mil. I do the math on an average mortgage with the current rates, and you're paying over a mil in interest - that's with a down payment. To me, it just feels like throwing away money. I know its an asset and all that, but is it really? Our financial system really doesn't benefit most of us
Oh man. Paying interest kills me, and houses are much cheaper where I live. My interest this month was a little over 7 bucks (because I’ve been paying for decades on one house or another). I will feel such relief when it’s done!
My husband was career military (enlisted). You don’t get rich staying in the military, but there are other benefits. The rich tell you if you have debt, pay off the debt with the highest interest first. That’s a luxury we didn’t have. We paid off the bill that had the smallest balance. So then we could apply what we used to pay on the smallest debt onto the nest smallest debt. Husband retired from the military when he was 40 and started over in another job. His military retirement is what gave us room to breathe and be able to own a small home. When we were in our 50s we started feeling that we would be able to afford a larger home and retiring in our mid-60s. The key for us was having lifelong health care because he was retired military. Otherwise we could have been completely screwed. Of course, Republicans would officially classify us as “takers.”
Excellent, Michelle! And thank you!!
And billionaires are wondering, and complaining, that the birth rates are dropping precipitously. Why? Because people cannot afford to raise children anymore.
All of your advice was good. What I think the working class seriously has to do? Stop supporting billionaire rule. Stop supporting the class and money system. Let's see how far we, the working class, have to be pushed with ever-declining standards of living (in a land of abundant resources for all!) before we collectively say, "We just can't tolerate this any longer."
The super rich are a joyless lot.
I feel like I see the advice to put off having kids or not have kids at all mentioned pretty regularly, but I rarely see pets mentioned. A lot of people who are worried about the cost of children decide to have pets “instead.” A lot of people underestimate the day-to-day cost involved in having a pet, even if they had pets growing up. The cost of veterinary care in the US is incredibly expensive. Some people have no choice but to put their sick or injured pet down because they just can’t afford the care.
So true. One of my dogs injured his leg Thursday and the bill was $450! If he needs surgery, it’ll be $4,500-$5,500. We don’t have that kind of money. We hope he will heal without it.
I’m so sorry. I hope so too!
Vimes Boot Theory. Terry Pratchett.
The poor are kept poor deliberately.
Pratchett was a genius!
This is great; I'm glad I subscribed.
I remember getting my first apartment, a "jr. one bedroom" (like a studio, but with a doorway into the tiny bedroom) in OKC.
The first thing I bought was a nice sofa. My parents always had nice furniture. It was financed, of course, from Levitz or a department store. So I went to Foley's and bought a beautiful sofa. I figured I could swing $85 a month. And I could. But the interest I paid on that thing was criminal, and I took all the time allotted to pay it off. I never bought furniture on credit again; used is fine, and when my husband and I made more money, we saved up for a nice things for our bedroom. That sofa lasted for 12 years, and I sold it to my friend for the price of a beer.
I would love to see that sofa!
The first sofa I bought was ugly as sin. Second-hand — and whoever was crazy enough to buy it the first time is a mystery.
I always bought cheap crap. Sometimes because I was poor (like now), and sometimes because I don't believe the much bigger price is a reflection of much higher quality. It almost always worked out fine. But I do my writing from a co-working space where everybody is in IT - so they make much more money than I make. I can tell you... it's not easy being the poor kid. They always buy expensive everything, and I feel like the black sheep who just doesn't get it.
I have lived all over the spectrum (except for wealthy) of income. I always treated debt like I was allergic to it. It’s basically buying time, economically speaking. Mortgage, car loans, school loans are impossible to avoid but every payment was a needle in my eye. Credit card interest? Not unless I am literally dying, lol. If you have any means at all, there is tremendous peace of mind in living below them.
thank you. While your article is scary in many ways you also give alternatives, buy second hand, roommates, second job.
I am retired now, we are incredibly careful about money. I drive an older car 2009 honda fit. I like to knit so I find cheap yarn, I like to read, watch DVDs, internet, and just hang out. I can do this because I have several friends who trade books, play my dvds over and over again, books are a weakness (Our library is in the middle of a lawsuit and hasn't bought any new materials in 6 years...) but so is food, electricity, dog food, etc. No movie theater local, and they are expensive, closing after COVID, no vacations, stay vacation, and community swimming pool. In my small community second hand furniture and clothing. We can stretch a dollar!
There are so many that want in your pocket and they prey on you. Even when you’re trying to save. So many scams and so we aren’t educated