Everyone’s in Debt? Really?

Last Wednesday I rode back from the Hockey Game with two co-workers who I used to work in the same department with until I was transferred to Valdosta (I’ll be back working in the same department with them once I move back to Atlanta in April). One, we’ll call Baby Daddy*, is in a comparable position as I am but a few years older, the other, we’ll call Cyclist is a few decades older and is two positions higher than Baby Daddy and myself.

* Just to clarify – I named him Baby Daddy because his wife just gave birth two months ago to a beautiful baby boy. Not because he’s some deadbeat or anything.

So the three of us are riding back together, gossiping about work stuff and catching me up on all the happenings I’ve been missing while working out of town. Somehow we got away from the work gossip and on to the topic of how compared to a lot of people we were all better off – and we weren’t talking about just financially. Cyclist was talking about having an amazing wife, Baby Daddy was talking about the new baby and being a first time Daddy. Eventually we worked our way around to finances – we agreed we were lucky to have good jobs, a stable company, opportunities for advancement, and a good 401k plan. Then Baby Daddy asked if we’d ever seen CNBC’s the Millionaire Inside. Of course I have – I’m really into financial stuff, but Cyclist had not, since he doesn’t have cable so Baby Daddy explained the show to Cyclist – “People who are seriously in debt come on the show and experts try to help them change and become financially successful”. Baby Daddy talked about how seeing these people who are millions of dollars in debt makes him feel better about his lack of substantial savings. We all start going on and on about how horrible it must be to be that far in debt and I talked about how I have a really hard time relating to how you can get to that point of debt problems (in the millions people) and not realize there’s a problem and make a change. Cyclist agreed with me and added that even if you get into a thousand dollars of debt you’ve got to realize there’s a problem and do something to fix it. “So neither one of you is in debt?” Baby Daddy wanted to know. We both said no, I have no debt and Cyclist has none and even has his house paid off. Baby Daddy couldn’t believe this, and said we must be the only two people in the country who’s not in debt. This made me start thinking about if debt was the norm rather than the exception.

I further started thinking about this after a comment my mom made to me. On Saturday we were walking at the park and she was talking about her money woes and how she just can’t seem to make it all work. I love my mama and was sympathetic to her plight but seriously it’s the choices she makes for examples she has a $200 cable bill but claims she can’t find anything on TV to watch – but I digress the post isn’t about her money choices. At the end of her complaints she shrugged her shoulders and said “I guess everyone’s in debt”.

Baby Daddy and my Mom both think everyone’s in debt. Is everyone in debt, are Cyclist and I the only ones not in debt?

I know we hear statistics all of them about the average savings is negative and how the average non-mortgage debt per household is about $14,500 . But does that really reflect the typical lifestyle in America or is this just a perception that helps to promote more debt? I started thinking about what the median debt and savings could be. With an average you’ve got extreme lows and extreme highs, but the median would tell you what most people are doing. I just can’t imagine that more than half of the population is in debt (other than mortgages). I mean how are these people going to retire, how are the current retires living if not off of savings, what’s going to happen to this economy if the majority of people are in debt? It could be my perspective, and its not like people tell you they are in debt but if I quickly count up in my friends circle the couples or individuals (those who are not married) who I think have savings even if its not substantial but at least they are in the black, and that’s about 12 married couples/single people compared to about 3 couples/people that I’m fairly certain do not have any savings. Hmmm…at least in my friend group I’d say that the majority of American’s are not in debt, but then again my little survey was not scientific in the least.

What do you think, do think the majority of Americans are in debt?

Finances and Family

Just read a very interesting post called My mother-in-law thinks we're cheap! and it hit home for me. My grandma used to guilt my mom into buying her expensive presents that my mom could ill afford. And the worst part of the whole situation was my grandmother was not living a life of poverty in fact she could afford a lot more luxuries than my mom, since grandma had my grandfather's extremely large estate, pension, social security while my mom is a single parent school teacher with two children still at home to raise.

Come to think of it none of my family are good with finances. I know I certainly didn't get my financial beliefs - like no debt - from their example. I do think my fear of debt is motivated by my fear of having the financial life they live.

All of the women in my family are poor money managers, which used to scare the living day lights out of me (and still does at times).

My mom's pretty much been in debt her entire adult life. This year for the first time in 30 years she was breifly in the black and not in the red hole known as credit card dept. This brief reprieve from debt was because my grandmother passed away and my mom received some life insurance benefits. My mom and I talked long and hard about her getting out of debt but after only two months my mom was back in debt (granted not as much, yet). My mom realizes she's got a problem with managing her money and that I'm relatively financially adept so she comes to me frequently for help. Several times over the years I help her establish a budget, help her track her finances, help her develop a get out of debt plan but with in a matter of days she gets frustrated at having to keep up with it the plan of action and quits.

My grandma was similarly heavily in credit card debt, however she never fully admitted a problem.

My granny (my dad's mom) is also in debt, but this only came to light about four months ago when my CPA uncle was helping her to consolidate some retirement saving accounts. The embarrassment of this coming out to the family has motivated my granny to get out of debt. She now lives on a strict budget. So I guess there's hope yet for me that I won't turn out financially like my female relatives.

Seeing my loved ones struggle in debt really does motivate me to continue saving, stick to a budget, and always ask myself before purchasing: a) Does this purchase fit in my budget and do I have the money right now to purchase it? b) Do I really need this thing-a-ma-bob and do I have the room for it? c) Will this purchase bring me satisfaction 2 years from now or would knowing I have money in the bank make me happier? If any of my answers to those three question are "no" then its not meant for me to purchase.