From a twenty-something..

[Anonymous]

“I’m not so sure this hasn’t always been the case with 20-somethings.”

I agree with this statement.

The most important things you can do financially in your 20s are first, get out of debt and stay out and second, develop financial habits that will serve you well for the rest of your life.

I wasn’t out of debt myself until right before my 26th birthday. But I did attack my debt with vigor, working two jobs for awhile and being very careful with expenses. I kept working at the second job a few years to work up some savings, only quitting it once I started doing well enough in my primary job that the secondary income wasn’t worth the effort.

At that point I was around 29-30, and bumped up my lifestyle a little, but not to the extent of the entire extra income I was making.

That was all in the 1990s, and I doubt things have changed much since then. If you’re 26 now I presume you’re three or four years out of college, and that must seem like a long time, but eventually you’ll learn it’s not. You have 40 years of your working life left, if not more.

It’s unreasonable to get rich overnight, but quite easy to get rich slowly. To use Millionaire Next Door terms, not everyone can play great “offense” all the time, especially in one’s 20s, but you can always play good “defense”.

BTW, there are lots of places all around the country where 20somethings with decent jobs have no problem affording starter homes. A two-earner couple making $70-80K can EASILY buy a starter home with a traditional mortgage in most of the country. Now if it’s beneath you to live in Michigan or North Carolina or Colorado…. well, that’s your choice.

[powayseller]

I agree that overscheduling children has reshaped childhood from riding bikes, playing sports pickup games in the park, playing with your siblings, and sitting down to a home cooked meal made with fresh vegetables, to being driven around to activities commandeered by adults and catching a restaurant meal on the way home. This is a huge social experiment. After 10 years of somewhat participating in this lifestyle, I am out! No longer do I have to deal with the uppity parents who couldn’t figure out that I didn’t watch the 2-hr baseball game because someone had to be home to cook dinner. After all, to most people the family home-cooked sit-down dinner is as unimportant as the stay-at-home mom or the downpayment on a house idea. Our life is better without all that excess.

One thing I didn’t like about living on the 5 acres was the remoteness to friends, parks, school. It was too isolated, and the neighbors didn’t interact because they were too far apart. It’s not a good life for kids to be isolated on their 5 acres.

[anxvariety]

Poway,

I don’t see being isolated and 5 acres as synonymous.. like I said, my parents only had one acre, but it was backed up to a hundred acre park.. There are quite a few of places like that. I do realize that buying 5 acres in a city area is cost prohibitive.. but I think it’s possible to find areas that are somewhere in between(See: Guajome Park in Oceanside)..

I understand what you’re saying abuot remoteness though powayseller.. Fallbrook is a place like that where you can get lots of land, but it’s a very kid boring place.. most of the people that are the age for kids live in neighboring Oceanside and Vista.

Hopefully I haven’t hijacked my own thread! Sad! 🙂

[dukes]

20 somethings have FAR, FAR more debt than they ever had before, this is a readily available fact.

Average college grads come out with over 20K in debt. Tack onto this the high cost of living, especially in San Diego and I would say that this crop of young men and women have it much tougher than the ones that came before them.

[KingKong]

Do you know how they calculated this:

“The average 401K has $50K in it and about 33% of them have less than $35K.”

Did they consider the situations that people change their jobs and leave the 401K account behind with their previous employer? I have four accounts with my previous employers and the total is about $100K. If they did not do it correctly, the average will be $25K and 100% of them have less than $35K.

[KingKong]

I think the new 20ers are mostly well educated like you and holds more professional jobs than previous generations. Look at yourself, with just four, five years out of college, you are making more money than most of the people in San Diego. I am not sure of the percentage but you are at least in the top 5% of all SanDiegans. With you are so young and early in your career, you have better days ahead of you. I think this new generation are more confident with themselves and will have a bright future.

[Lickitysplit]

Ah… so this is the thread where we flush out all the 20-something wetbacks and get them to spill their guts on their personal finances. Okay, I’m game.

27, college educated, decent office job at a great local medical technology company. It took me a while to get here. Unmarried. Traditional midwestern upbringing via two fantastic upper middle class parents. Summer jobs in college included factory job, home builder, then financial planning.

Me: Currently investing equivalent to 20% of my base salary through company-matching 401k, company-sponsored stock plans, and a Roth IRA. Will be upping initial investment to about 30% in July to maximize company stock plan offerings, but will likely have to cash in some of the stock after discounted purchase (but hey, where else can you get a guarenteed 15%+ return in 6 months? Say SD RE and I’ll tar & feather you, lol). Currently share rental of a 2-bd condo in Crown Point to the tune of ~$1600. I hate renting, and want to own so badly I’m addicted to this site, Zillow, ziprealty, realtor.com. I have a nice place with nice stuff, but I have a good eye for bargin hunting and know how to fix things and minimize extra associated costs. Seriously thought about overextending on a crown point “starter home” a few months ago (read: 50 yr old 800sqft 3bd/1ba on 1/10acre, 0 ga, 0 storage, 0 space, asked $700k, sold for $630k). Bubble primer lent backing to my fears and talked me out of it (thanks Rich!).

My brother: 25, very laid back, not-a-ton-of-direction type. Just graduated from college, got engaged to a great girl with a fun job that doesn’t pay very well. While he was working a retail job and applying to fire depts they were able to buy a nice 2bd house, recently nicely renovated, full semifinished basement, semifinished attic, 2ga, ~1/4 acre yard, quiet street, good neighborhood, easy freeway/city access (Milwaukee, WI). I think it cost them about $175k. Their morgage is less than my rent. I’m green with jealousy, lol.

My friends: Tend to be mid 20’s-early 30’s. Two early 30’s are homeowners, one in Mission Beach (he rents out the summers) and one couple bought recently in Encinitas and had a baby. We all like playing hard, traveling, etc. One of my typically month-to-month friends is thinking about buying a Caddy CTS with cash soon. He’s learning about debt, but he hasn’t picked up on the saving bit. I’d agree that many aren’t saving… but some of us are, and with as much gusto as we can manage while not having the social life of a hermit.

I am very concerned about the entitement culture mentioned previosly, and its present effect on my generation and its future effect on my pocketbook. It is much more noticable to me here in SD than it was in WI… I do not know if this is due to geopolitical differences, increased personal awareness, a growing trend, or some combination there of. The idea that the American Dream is a gov’t guarenteed entitlement to everyone with their feet on US soil is one to which my work ethic takes large exception.

I’m a firm (albiet novice) believer in free market and supply-side economics, and fully approve of sellers continuing to seek top dollar for their RE. I, however, will never make a first home purchase here unless things change drastically. This is a great town, but it isn’t perfect, and there are pleanty of other great places that are also quite affordable. Personally I hope for a hard crash with no gov’t bailout. Personal accountability (on both buyer and lender sides) is a wonderful thing and would, I hope, help prevent this massive overvaluation from replicating itself elsewhere or in the future.

[powayseller]

Thanks for posting. Keep saving – it gets harder after you own a house and have kids.

My biggest regret is that I delayed working until age 27, so I had only 3 years to earn money before having my first child. So those of you saving, keep it up. Once kids come along, and you lose that second income and have more expenses, you can’t save as much.

And before you say women can keep working after baby, the most lucky babies are the ones who fall asleep nursing in their mommy’s arms and wake up in a quiet room; no comparison to getting a bottle, Gerber baby food, and a noisy daycare center with the typical 2-month staff turnover. Older kids still need an encouraging word, a loving touch, a snack prepared. I’ll never leave my kids with daycare or home alone after school as long as we can afford to be there. Husbands benefit when kids and the wife are happy, dinner is made, the house is clean and humming. These choices cost money, and we made the decision early on to get a mortgage reliant on only 1 income.

Homeownership is very expensive too. Just ask your homeowning friends how much they spend at Home Depot, and on other remodeling and repairs.

[JES]

Great post and I feel the need to chime in as well. I would like to think I am still a 20 something, but I am actually 31, but at least I have recent memories of that decade! Anyway, I am married with two kids and make over 80k a year in sales, and as you may have guessed, I STILL cannot afford a house in San Diego. We currently live with relatives and are trying to determine our next move. For anyone out there who is worrying about the next generation of buyers, you should worry about people like myself and anxvariety. My wife and I are both college educated, and I am also a former military officer who wants desperately to buy a home in a decent community with good schools where I can play an active role in the community, assume leadership positions etc. We live in an area that fits the bill right now, but prices are an insane 800k-1Mil, and you wont be surprised to hear that there are only families with children aged 12+ here because they all bought when prices were cheap. People should be worried about families like ours not being able, or willing to afford their homes and condos being flipped for insane prices, but they should have a more urgent concern as well. Increasingly, the most logical choice for families like ours is to simply leave town! We recently flew to Colorado for this very reason – to check out jobs and housing, and at the airport happened to sit next to another young couple from San Diego. They were both consultants and had just purchased a home in Colorado Springs. They couldn’t deal with housing prices in SD anymore, and felt no hope of ever being able to afford, so they moved. Before you stop reading, consider this…ALL of our friends are seriously considering moving away from San Diego, save a few who happen to be wealthy enough to have mommy or daddy buy them a house!

[lostkitty]

I’m back! Been busy – end of school year mayhem.

PSeller – How do you send your address to Rich? Is there a link on here somewhere I am have not had time to find???

Anyhow, had to chime in here and reiterate that my family is one such as you mention. We make a very good living, but giving it all to a house was not what we wanted. Living in upstate NY has changed everything for us. I do miss those beaches – but for a few thousand, we spend our entire summer in San Diego with family.

Literally 95% of my friends that stayed in San Diego had their parents pay for all or most of their home. Either outright, or by giving them a significant downpayment amount to make the payment affordable given their income (which is really not much for average 30 somethings)…

OT – My littlest son has discovered the magical world of underarm farts (taught by his best friend). I told him it was rude and he asked if it was okay if he does them in his bedroom with the door closed. I said sure. Now as I am trying to type, all I can hear is hysterical laughter and the occasional “OH, escuuse me! I couldnt contwol that!” more laughing… and “Pardon me! Dat was a gwoss one!” laugh laugh laugh… It is the little things in life….glad I am home to hear it because if we had moved back to San Diego – I wouldnt be – I’d be working to pay for the nieghborhood/schools we desire.

[powayseller]

Hi lostkitty. Rich’s e-mail is [email protected]. I already e-mailed my address to him.

[powayseller]

JES, there is an exodus of people leaving SD. The Census Bureau said 44,000 in the year ending June 2005. If this trend continues, perhaps we’ve lost 60,000 more. This will continue until housing prices come down.

JES, are you willing to wait for prices to come down? Would you rent until they do?

[privatebanker]

You’re right ZK. When people involve emotion in to the thought process of their investments, whether it be real estate, stocks, etc. they tend to make irrational decisions. The past few years have provided homeowners’ a windfall of money that they most likely would never have realized by just saving by doing nothing more than just owning a home.

But just remember, as the saying goes: “easy come, easy go”. Everything is cyclical and all assets eventually return to a mean.

[JES]

Isn’t that amazing that so many people left last year? I am considering waiting a few years to see what happens with prices, but I don’t want to wait forever. I’m thinking that if I give it a year or two I will be able to see if my predictions of a market crash come true. If prices are going to dive we should at least start to see the beginnings of it in the next year don’t you think? Problem is that they have to dive so far for me to consider them attractive and I don’t know if they will ever get that low. EG: It doesn’t do me much good if homes in Carlsbad go from 900k to 775k. Have you considered relocating, or are you going to wait it out?

[JES]

Isn’t that amazing that so many people left last year? I am considering waiting a few years to see what happens with prices, but I don’t want to wait forever. I’m thinking that if I give it a year or two I will be able to see if my predictions of a market crash come true. If prices are going to dive we should at least start to see the beginnings of it in the next year don’t you think? Problem is that they have to dive so far for me to consider them attractive and I don’t know if they will ever get that low. EG: It doesn’t do me much good if homes in Carlsbad go from 900k to 775k. Have you considered relocating, or are you going to wait it out?

[Author]

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