Dec 8, 2007

First Generation with Fiscal Suckage?

Frugal Zeigeist has a great post today about whether we're the "first generation to be worse off than our parents." She writes:

...I'd say that I'm way behind because of the way the work world has changed. My dad worked for a single employer in Canada and a single employer in the US; although he went through reorganizations, I don't think he ever worried about layoffs or downsizing the way I do. He also has traditional pensions both from his years of work in Canada and from working in the US. Between that and Social Security, my parents have never had to touch their retirement savings. -- Frugal Zeitgeist
At my age (24), my parents were living in New York City, renting an apartment. In a couple of years their apartment would go 'co-op,' and they'd buy and sell their place within a few years for enough profit to put a down payment on the house in New Jersey where I grew up.

My mom was a fashion designer, working for fairly low wages, and my father was... well, I think he was a grad student when he was 24. He was going to grad school for physics but dropped out and ended up working as an actuary (pension planner). He stayed with the same company UNTIL HE RETIRED. He obviously had a good pension plan in place as well. My mom... she stopped working as a fashion designer 10 years into her career to have children (waves).

I'm not sure where they were financially at 24. Were they struggling? Possibly. I assume that if my father had started his job as an actuary, his entry-level salary was probably pretty high. And back then it wasn't so painfully expensive to live in a city like New York. Then they got lucky with buying their condo and selling it, and the rest is history.

Looking at where I'm at now, I don't see myself buying a condo anytime soon. It's not that it would be entirely impossible to make enough money to buy a small studio apartment, but I'd have to live extremely frugally and, even more so, I'd have to be sure I want to stay in this area for the foreseeable future. And I'm just not ready to make that kind of commitment.

Then again, the housing market seems to be pretty attractive right now. I don't know a lot about it other than the fact that lots of people are losing their houses because they can't afford their mortgages. That's sad for them, but good for potential buyers.

I don't want to just sit back and watch another housing boom happen without having the opportunity to partake. Still, I don't think I'm ready to buy a condo.

So, instead, I spend $12,600 a year on rent. Ouch.

My 25-year-old boyfriend... he lives at home and works part time. I don't think he's ready to make that commitment either. :X

I wonder how much monthly payment on a studio condo would be. Would that help me be as successful as my parents were at my age?

In any case, Frugal makes this important point:
They key point that this thought exercise brought out for me is this: The rules of the game have changed big-time. In the modern economy, the cards are stacked in such a way that if I'm ever going to be better off than my parents, I can't rely on employers or government to lend a helping hand as a reward for loyalty or years of service. It's definitely possible to end up being better off than my parents ever were, but I have to make it happen on my own. -- Frugal Zeitgeist

Personally I think the opportunity to switch employers and make oneself more of a commodity is to the advantage of the employee. It might hurt when it comes to long-term savings, but salaries (and benefits) are higher if the employee has well-sought skills.

Here's to hoping that my skills will develop into ones that people want to pay me for!


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3 comments:

SJean said...

Do you have roommates or do you have your own place? I'm looking at apts in LA and can't find ANYTHING for the price i want to pay!

Anonymous said...

One thing's for sure, we're the
first generation to try and
outsmart the markets so much....
and the first to get so much
advice (I'm not being critical of
those giving the advice). Keep
saving, keep dollar cost averaging
whatever your housing situation,
and don't obsess over catching
the next real estate boom....
Good luck.

frugal zeitgeist said...

Thank you for your thoughts on my post. I really enjoyed reading your reply. I think you're quite right about sharpening your skills and keeping them that way. Wish I had been that smart when I was your age!

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