The Debt and Debit Generation

Ashley M. BiggersSeptember 1, 2018
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Millennials face a collision of factors hindering their financial futures.

When Charissa Lucille, age 27, considers the financial advice of previous generations, she doesn’t see much that applies to her life in the Valley. Her grandmother purchased a home for $30,000 in the 1960s and recently sold it for $425,000. “She always told me that buying a home is the single best investment you can make,” Lucille says. “[But] with tremendous debt, medical bills, high rent costs, and health insurance, it seems impossible to put aside money for a home.”

Lucille is a millennial – the generation born between 1981 and 1996, as defined by the Pew Research Center, and one that’s earned various nicknames including the “me, me, me generation” and the “participation trophy generation.” But other monikers may also apply, like the “lost financial generation,” according to a May 2018 study from the Federal Reserve Bank of St. Louis. Having come of age during the Great Recession (December 2007-June 2009), millennials may never fully recover financially from that downturn, the study found. It reported that millennials’ net worth was 34 percent below that of previous generations at the same juncture in their social development, and that the typical millennial family lost ground between 2010 and 2016 – even after the recession ended.

Half of Kelsa Dickey’s financial coaching clients are millennials who struggle to plan their budgets. The founder of Phoenix-based Fiscal Fitness says the generational problems across the United States only compound in the Valley, where there’s a prevailing “vacation mentality.” She says a perpetual spring break mindset means millennials often overspend on clothing, dinners out and personal grooming. Compiling credit card debt may come along with that spending, but, as Dickey observes in her clients, so does avoiding paying off debt or buying a home. “[Arizona] feels like a limbo state,” Dickey says. “A lot of people are coming from other states to work here for a while and move on. It’s hard to make progress.”

Meanwhile, millennials also may have used credit cards to establish a household amid a job market with fewer opportunities and lower wages. In 2017, millennial unemployment in the Valley was 9.4 percent, compared to a national rate of 4.7 percent, according to the U.S. Bureau of Labor Statistics.

Lucille, like many millennials, faces student loan debt. She graduated from high school in 2008 and worked several jobs throughout college, took financial aid and still ended up with more than $20,000 in loans. She’s not alone. Fellow millennial college graduates are saddled with an average of $37,000 in student loans, according to The College Investor, a site devoted to getting millennials out of debt.

“People look at their student loan debt and at buying a home, and they see they have a mortgage amount right there that they already owe,” Dickey says. “Student loan debt has an unfortunate impact, not only on their financial futures but on emotional drive and ambition.”

Debt can also hinder millennials’ credit scores – a particular detriment amid tighter lending standards since the housing crisis – and deter them from saving for a mortgage down payment. The Federal Reserve study found that even as the housing market recovered, by 2016 fewer than 45 percent of millennials had bought homes, below the expected rate based on previous generations’ actions. This may be compounded in the Valley, where the market is overvalued.

Even as Lucille stashes money in a 401(k), she sees retirement – another financial milestone – as a generational relic. “The economy doesn’t seem super stable. We laugh at retirement and these big adult goals that our parents and grandparents achieved – not with ease, but they achieved them.”

Although some of Dickey’s clients seem skeptical of retirement – since they watched the housing crisis kneecap their parents’ plans – she doesn’t find that typical of her clientele. “What I observe most is simply lack of thought toward it at all,” she says. A few, she says, invest heavily to correct that trend to ensure their financial futures amid circumstances heavily stacked against them.

Budget Basics
Kelsa Dickey ( gives these tried-and-true tips to millennials trying to lasso their budgets.

• Separate money into buckets. On payday, take spending money and place it in a separate checking account.

• Open different accounts for expenses, such as car repairs and recreation (travel, clothing, etc.). Transfer the same amount to those accounts each month. Money will be waiting when ready to spend.

• Pick one goal at a time (while still maintaining monthly minimum payments). Pick paying off a credit card or building savings for a down payment. Put all your money toward that goal until it’s accomplished. Too many people try to divide and conquer.

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