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...does it concern you that the economy will continue to struggle severely in the coming years?
As a Millennial, I am concerned about the economy that is left for my generation and future generations. I make around $50k/year. Nothing to boast about, but it's a solid income for a single person in their 20s. However, I don't know if or when I will ever be buying some of the big item purchases that help sustain our economy (new house, new car, etc.). Even though I make a decent enough income to afford a modest house, the problem for me is not believing that the environment is stable enough.
We live in a world now that, at least to some of us, is more volatile and dynamic than ever before. The things around us shift so frequently and quickly that it's difficult to know when it's safe to come out from hiding and live. In a time of right-to-work jobs, mass layoffs for short-term profits, and slow job growth (that doesn't consist largely of low-wage service jobs), I don't believe that I will ever have a stable enough gig to finance something for more than a year. Therefore, I won't be financing a house anytime soon. I won't be buying major appliances for my house that doesn't exist. I won't be financing a car. I won't be returning to school to further my education. Essentially, my purchases for the foreseeable future will consist of groceries, fuel, some entertainment, student loan repayment and savings.
Maybe it's just me and I'm living in a bubble. But the more and more I hear about kids going back to live with their parents after college because of the shoddy job market, I can't help to think that my situation might be more representative for people in my age group than not. If that is the case, how will our economy ever recover? We rely on future generations to pick up where previous generations left off. But it seems that this is taking a sharp turn for the worse. My generation isn't buying up the houses of our elders, thus leaving a scenario for a stagnant housing market. My generation is finding it more difficult to find jobs or employers that will hire and train us at their expense. So does that mean there will be a looming skills gap in the not so distant future once the Boomers start retiring and dying off?
I'm doing the best to live my life as wisely and frugally as I can, but I can't help to worry that the worst is yet to come for us and there's little we can do about it at this point.
...does it concern you that the economy will continue to struggle severely in the coming years?
...
I'm doing the best to live my life as wisely and frugally as I can, but I can't help to worry that the worst is yet to come for us and there's little we can do about it at this point.
With the high level of government involvement in monetary policy, increasing high regulation, and poor fiscal management from government at all levels, you can be sure there will be many bumps in the road and a negative outlook.
All you can do is roll with the punches... I would say we could vote for responsible leadership but there are few options.
I have lost all confidence that our economy will do well as we have overwhelming government interference creating and growing problems.
It's good that you are being frugal. Too many people live paycheck-to-paycheck and then find themselves in a crisis when they lose their job. It's always good to live well within your means. No sense in being materialistic if it doesn't appeal to you.
If you don't think you will need a house soon, don't buy one. However if you will need one, now is the time to buy. House prices will continue to increase and I wouldn't be surprised if we have another bubble. But I can't imagine housing prices ever being as cheap as they have been.
I don't think the economy is going to get much worse. Things have already been gradually improving over the past few years. It is inevitable; the economy goes in cycles. But there is no denying that over the long term the economy moves on an upward trend. There was a lot of uncertainty concerning Obamacare, but I think steps will be taken to minimize/reverse some of its negative impact.
As you have said, as a single person in their 20s there is no reason for you to make big purchases if you don't have to. Might as well accumulate some capital. But that will change if you get married and have kids, if you go that route. If not, you might end up like me, continuing to live frugally with a healthy investment portfolio. I'm not doing it out of fear of the economy but out of fear of losing my job or not being able to work for health reasons, and because I want to have a comfortable retirement.
... Therefore, I won't be financing a house anytime soon. I won't be buying major appliances for my house that doesn't exist. I won't be financing a car. I won't be returning to school to further my education. Essentially, my purchases for the foreseeable future will consist of groceries, fuel, some entertainment, student loan repayment and savings.
Welcome to the world of 7 billion.
The restricted world of several hundred million North American, western European, and Japanese wide-moat "middle class" is over.
I was in your shoes in my 20s. Made $40-50K/yr and didn't get a career position that paid double that until literally my 30th birthday. My 20s were pretty spartan. Most people in their late 20s bemoan such a condition. Our parents had it better for sure. In the meantime I lived very frugally and got divorced due to her dislike of our economic limitations. A blessing in disguise that was, but that's for another thread.
The bottom line is you need to make more money. Otherwise you'll always feel gun shy about major financial commitments, regardless of the supposed state of the economy any given year. There is no way I would have been able to escape my monastic work-go-home-save-work-go-home lifestyle without doubling my income.
Now, in practicality, most people take the path of least resistance and get on the dual income household bandwagon in order to bridge that deficit TODAY. The problem with that is that it mortgages your human relationships for money. Bad idea. If the odds of losing one's income is X and you have 2 jobs of equal volatility in the house, but you need BOTH incomes to make the black line, then you just doubled your chances of failing. You would have been better off if your spouse just sat his/her on her butt at home and baked cookies and y'all just lived on one income. Talk about false economy. The only setup in which dual income household works is if you bank the second income. That's not why people in present times do dual income though; they do it because they need both incomes to attain the material security you speak of. For my exwife, it was imperative we ramp up our consumption standards, utilizing the premise of both our meager incomes to support the behavior. I disagreed. Unless I was in a position to hold the household with one income I wasn't about to start re-enacting a Roscoe Dash's Good good night video, like she thought we were totally capable of doing. The rest is history. She'll end up living the rest of her days on some man's remaining SS benefit when he dies and she survives him, as statistically most women do. That's not exactly retirement planning. But that's where millenials are going.
The good news is that you have a keen awareness of the dynamics AND you don't seem swayed by the social pressure to get in over your head just because of some simpleton proffering of a "necessary life stage" or some such non-sense. Keep hacking at it. Considering my aversion to debt and aggressive savings attitudes before I consume on a discretionary basis, I'd say if you can attain an 80K/yr income and keep your savings at 20% net, you'd be fairly well insulated even with a family of three, to weather the storms of life. I wouldn't do it on 50K though. On 50K you're stuck on exactly what you're doing. 50K is called "responsible paycheck to paycheck". Which is to say, paycheck to paycheck after you fund emergency savings and underfund retirement. I agree, it's no way to live for someone with a sense of self-awareness of his condition.
Just get some skills that are universal and be prepared to move to another country if things go bad here. Stupid people permeate this country and it is reflected in the laws and lack of action therein. You can always hedge on moving elsewhere. You can also find jobs that pay more than $50k / year and get one of those.
...does it concern you that the economy will continue to struggle severely in the coming years?
...
We live in a world now that, at least to some of us, is more volatile and dynamic than ever before. The things around us shift so frequently and quickly that it's difficult to know when it's safe to come out from hiding and live. In a time of right-to-work jobs, mass layoffs for short-term profits, and slow job growth (that doesn't consist largely of low-wage service jobs), I don't believe that I will ever have a stable enough gig to finance something for more than a year. Therefore, I won't be financing a house anytime soon. I won't be buying major appliances for my house that doesn't exist. I won't be financing a car. I won't be returning to school to further my education. Essentially, my purchases for the foreseeable future will consist of groceries, fuel, some entertainment, student loan repayment and savings.
...
This is a huge problem! If young folks are afraid to finance a car or commit to a mortgage that bodes very badly for everyone.
The biggest predictor of how things will go for you is your expectations.
I would say yes, you were sheltered. We all were growing up. The first time we get out there it's like a punch in the gut how life is. It also seems like there is some depression involved with speaking about how you are hiding out till it's safe and stable. Safe to say nothing is a sure thing in life, the seas are never completely placid. You need to get out there and start living instead of hiding away in fear. Then your projections of internal fear and hopelessness on the world will go away.
It will be tough for a bit longer, but the economy will recover just fine. The world recovered from much worse events than this. Similar events happened like this in the past of housing booms and busts, they happen on average about every 13 years. The best thing is to set yourself up for when times will be tough, which is helped by being frugal.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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It must depend on where you are, I am seeing the economy recovering nicely here. One of my employees age 26 just bought a nice older triplex in a great area of Seattle, and the rent from the two other units cover over half of the mortgage payment. He makes about the same as you. We have friends that had their 20s kids move back home in 2008-2009 and they are now working good enough jobs that they have moved back out on their own. Another friend graduated from college last year and moved home, but just moved back out now that he has a good job. If you feel uncertain about your economic future then it's probably best to just save, and have a larger down payment when you are ready. Meanwhile you are paying income tax on about $15,000/year more than you would with a mortgage/property tax deduction.
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