Millenials' Finances - (Grumpy Old Man Takes)

[Joseph]

$250k year as a household really isn't all that much in a HCOL area.

Did Boomers not finance cars, go out to eat, and live in suburban neighborhoods?

"Millionaire" has lost its zing, too. The millionaire next door. Well, yeah, with a median home price in this county of $900k, they better be packing 7 figures, in HCOL areas that's just not impressive. It's almost a requirement.

That’s BS. It’s plenty in 99% of places except maybe midtown manhattan and a few others. if you don’t eat out 10x a month and go on 5 vacations a year, 250k is excellent.

 

[Diogenes]

SOMEBODY is paying the prices. If they didn't, the prices would come down.

In the marquee cities where housing has become truly expensive, we're seeing a combination of:

1. Moderately affluent people are prioritizing buying a house over padding their 401K etc. Their net worth is doing alright, but they're not FIRE types. They stretch to buy a house, to the detriment of saving for retirement. In effect, they're treating their house as replacement for an S&P 500 index fund.

2. Multi-generational wealth. Between outright inheritance and assistance with down-payments etc., elderly (relatively speaking) parents in VHCOL area are helping their 30-something kids to buy a house. Again, the wealth is going into real estate, instead of liquid assets.

3. The ethnic/foreign factor. No, this isn't a conspiracy theory. The area where I've been looking for houses, east of Los Angeles, is popular among folks from a certain part of the world, as a place to park cash, to invest, maybe to collect rent. One sees this from signs on local retail establishments. I had rented an Air-BnB from such folks, discussing the subject (across the language barrier). With so much money interested in the local market, prices will stay elevated, even if "everyone" is leaving town in droves, to escape the high prices.

4. Affluent people from elsewhere in the country are leaving their MCOL areas and moving to VHCOL areas to enjoy the dynamism, cultural opportunities and good weather. This happened to me - not to assert that I'm necessarily notably affluent. I left the Midwest and moved to SoCal, mostly because I couldn't deal with the "Midwestern values" and slow pace of life. So, the high-cost places are sponging-up money from around the country, in particular people who could afford to live anywhere, but who choose to live where life there's no snow, low humidity, nice restaurants, and a beach nearby.

 

[Surewhitey]

I think I described in another thread, my starter home was $450k. It resembled the picture above.

That was more than 20 years ago. I was only about two years out of college.

And so goes the cost of living in a HCOL. VHCOL, actually.

Significantly fewer people can afford to do what we did in the same area with the same house. That house is now worth about a million bucks and it's the same house aged another 20+ years. This scenario repeats over and over and over where the best and highest paying job opportunities exist, although not always on this crazy of a scale. Cities can only expand so much and folks can only move farther out for affordability, to a point: Once a commute hits about 2 hours each way, that's where most people throw in the towel. 4 hours commuting on an 8, 10, 12 hour day at at office or job site leaves little time for anything else, so, what's the point, then?

Nobody is wrong about hard work or saving money or setting goals. But what's happening with pricing and homes and economic opportunity can't be ignored. It's less accessible.

Agreed on the commute. I left the office ~7 years ago and started my small biz just to reduce the time needed to get to w*rk.

I personally believe everyone is not entitled to a house, then renting is an option. If they want one, they are not entitled to an average place unless they can afford it. Most (except maybe VHCOL areas) can get into a real starter home and after more years of saving, can "move up".


Getting a $450k home 20 years ago after only 2 years out of college is exceptional... Probably a very small % of normal people can attain that...

 

[Murdock75]

I’ve been reflecting on how our generation approached financial independence compared with what I see among younger adults today, and I’d be interested in hearing how others here experienced it.

Speaking for myself, the path to FI was pretty traditional: I kept non‑mortgage debt to a minimum, avoided carrying credit card balances, took relatively few overseas vacations, and treated help from my parents as a true last resort rather than a regular part of my budget. My parents’ generation had modest lifestyle expectations, and that rubbed off on me; spending was something to justify, not assume.

What I observe now in younger colleagues and relatives looks very different. There’s more willingness to lean on credit cards, travel frequently, and draw on parental support for day‑to‑day lifestyle, followed by a lot of frustration around student loans, housing, and general financial stress. Of course, they’re operating in a tougher environment in some respects—higher housing costs relative to income, substantial student debt, and different social norms around experiences and travel—but the comfort with ongoing financial help from parents seems like a notable cultural shift from how many of us were raised.

For those of you here who are FI baby boomers, how much of your success do you attribute to disciplined saving and debt avoidance, and how much to the era we came of age in—things like tuition levels, housing affordability, job stability, and the financial habits we learned at home? Did you, like me, rarely if ever ask your parents for money once you were launched, or was family support a bigger part of your story?

I’m not looking to simply bash younger generations, but rather to compare notes on how our attitudes toward independence, debt, and parental help shaped our retirement outcomes, and whether we think those attitudes still make sense in today’s environment.

Our Kids and grandkids are all doing way better than my wife and I did at their ages. True we have done very well and have gifted them money to match what they made working and put into a Roth. The safety net they have had given to them has allowed them to drive new cars and go on vacations even though in Med school and Dental school. We couldn't be happier for them especially when we look back at driving $50 cars and renting in bad neighborhoods.

 

[G-Money]

Reminds me of the Yogi Berra overcrowded restaurant joke "if this place keeps being crowded like this, they're gonna go out of business "

SOMEBODY is paying the prices. If they didn't, the prices would come down.

I know, right?!

People loved to tell us how stupid we were back then buying at a relatively high point in the market. Peers were going to wait until the impending collapse, and then smartly buy a house on the cheap. Prices only receded about 25% but lending requirements also changed dramatically, and housing inventory was weird because a lot of people weren't going to sell during a recession either. There were a lot of distressed sellers, and short sales weren't really a thing yet, not like they were in the later parts of the recession.

Long story short, we got a 7+ year leg up on homeownership and positioning ourselves for our next strategic acquisition. A lot of peers were sidelined and the market didn't implode in the way they were eagerly awaiting. I won't call them stupid, but choices were made.

And now we can only dream of houses so cheap in this area.

 

[G-Money]

Getting a $450k home 20 years ago after only 2 years out of college is exceptional... Probably a very small % of normal people can attain that...

Outsized risk taking, that's how we did it.

80/20. Primary was a 5/1 interest-only ARM for 30 years. Secondary was a HELOC. We put virtually nothing down.

I was entry-career and my spouse had a couple years of working experience, but in a good career, and it ate 30-40% of our household income.

Stupid? Crazy? These are the stories of Millenials living in HCOL areas being priced out of the American Dream, aka what it can cost to chase career opportunities with major companies.

We kept working hard, increasing income, and trading "good" for bigger and better. With regards to the house, we took advantage of interest rates and refi'd into a 30 year fixed and then progressively paid as if it were a 15 year and then started throwing extra money on top of that as we made it. There was an opportunity cost; in the early years of home ownership we weren't contributing much to retirement. It was deep in the recession when we recognized what was about to happen and so we started pouring our extra money into the market. That we invested in at a low point and it helped us recover some lost time. Pure chance. It worked out.

So when Boomers say we have no discipline, I tend to disagree, speaking not just for myself, but for everyone I know who buckled down, worked hard, and did so at a much higher risk than our Boomer parents.

Point is, kids today can't do that. The math doesn't math even if they're willing to over-leverage themselves and play by the bank's own rules. They need exceptionally high income to afford starting prices even if they're willing to take an outsized risk.

A lot of young people have no choice but to become a modern economic migrant and move to more affordable areas. That is opportunity-limiting in and of itself. Do we have it harder? I tend to think in some respects we do, but I'm absolutely certain we have faced different challenges than our parents.

 

[Gumby]

... Cities can only expand so much and folks can only move farther out for affordability, to a point: Once a commute hits about 2 hours each way, that's where most people throw in the towel. 4 hours commuting on an 8, 10, 12 hour day at at office or job site leaves little time for anything else, so, what's the point, then? ....

When I made the most money, working at the big law firm in Manhattan, I commuted a little over two hours each way. That was on top of the grueling hours involved in doing the work. I got home at 9 pm most nights, ate dinner with the young wife, then did a little more work on the computer or phone until about midnight. Then got up at 6 am and did it all again. For many years.

What did I get from it? A chance to make a boatload of money and save most of it for retirement. As I mentioned before, I did what I needed to do to get where I wanted to be. I suppose I could have complained about how hard it was, but I was too busy.

 

[marko]

In the marquee cities where housing has become truly expensive, we're seeing a combination of:

1. Moderately affluent people are prioritizing buying a house over padding their 401K etc. Their net worth is doing alright, but they're not FIRE types. They stretch to buy a house, to the detriment of saving for retirement. In effect, they're treating their house as replacement for an S&P 500 index fund.

2. Multi-generational wealth. Between outright inheritance and assistance with down-payments etc., elderly (relatively speaking) parents in VHCOL area are helping their 30-something kids to buy a house. Again, the wealth is going into real estate, instead of liquid assets.

3. The ethnic/foreign factor. No, this isn't a conspiracy theory. The area where I've been looking for houses, east of Los Angeles, is popular among folks from a certain part of the world, as a place to park cash, to invest, maybe to collect rent. One sees this from signs on local retail establishments. I had rented an Air-BnB from such folks, discussing the subject (across the language barrier). With so much money interested in the local market, prices will stay elevated, even if "everyone" is leaving town in droves, to escape the high prices.

4. Affluent people from elsewhere in the country are leaving their MCOL areas and moving to VHCOL areas to enjoy the dynamism, cultural opportunities and good weather. This happened to me - not to assert that I'm necessarily notably affluent. I left the Midwest and moved to SoCal, mostly because I couldn't deal with the "Midwestern values" and slow pace of life. So, the high-cost places are sponging-up money from around the country, in particular people who could afford to live anywhere, but who choose to live where life there's no snow, low humidity, nice restaurants, and a beach nearby.

Interesting analysis, and I think you're mostly correct.

Certainly a different dynamic than in the past. I wonder if "home ownership" should no longer be the litmus test for affordability as it drifts away from normal people. As someone just mentioned, home ownership is not a right.

Then again, as I noted upthread, homes in my neighborhood start at over $1M yet 80% of the people living here are around 35 years old, SAHM and three kids. #2 in your analysis?

 

[G-Money]

When I made the most money, working at the big law firm in Manhattan, I commuted a little over two hours each way. That was on top of the grueling hours involved in doing the work. I got home at 9 pm most nights, ate dinner with the young wife, then did a little more work on the computer or phone until about midnight. Then got up at 6 am and did it all again. For many years.

What did I get from it? A chance to make a boatload of money and save most of it for retirement. As I mentioned before, I did what I needed to do to get where I wanted to be. I suppose I could have complained about how hard it was, but I was too busy.

I think there's a difference between complaining about doing what's necessary, and talking about the reality of it.

The Millennial generation would seem to value a better work/life balance. Either money or personal meaning/fulfillment (even if just fit-for-purpose in a job) needs to be there in order to commit the best hours and years of our life to a job. Many people are able to achieve this and still make great money.

I'm solidly in the camp that the purpose of life isn't to work. And personally, that's why I'm planning to retire early. But the "how" doesn't necessarily need to be hell.

 

[Gumby]

....
The Millennial generation would seem to value a better work/life balance.
....

Nothing wrong with that, so long as they realize that, of necessity, they will advance more slowly in their career/profession, will make less money and will spend more of it. And yet they want to have the same material outcome as me? It doesn't work that way and never has.

 

[Just_Steve]

When I made the most money, working at the big law firm in Manhattan, I commuted a little over two hours each way. That was on top of the grueling hours involved in doing the work. I got home at 9 pm most nights, ate dinner with the young wife, then did a little more work on the computer or phone until about midnight. Then got up at 6 am and did it all again. For many years.

What did I get from it? A chance to make a boatload of money and save most of it for retirement. As I mentioned before, I did what I needed to do to get where I wanted to be. I suppose I could have complained about how hard it was, but I was too busy.

Metro North?

 

[Gumby]

Metro North?

Yes.

 

[G-Money]

Nothing wrong with that, so long as they realize that, of necessity, they will advance more slowly in their career/profession, will make less money and will spend more of it. And yet they want to have the same material outcome as me? It doesn't work that way and never has.

You're assuming everyone is going to advance slower or not make as much money if they don't spend as much time or have as hard of a time as you did.

I don't think that statement holds universal truth. Perhaps for someone in your same profession doing the same work, with the same skill and ability.

I actually think boomers believe more in the idea that Millennials/Z's feel entitled to more for less than most Millennials and Z's actually do.

Not saying of you, personally, but I feel like there's a lot of resentment from Boomers towards Millennials/Z's and I think it has to do with the fact that a hallmark of M's/Z's are that they are extremely resilient, innovative, and highly savvy. Not everywhere in every way, but you look at strides in business driven by Millennials and they're quite revolutionary. Gen X too, for that matter. Every generation has their touch, but Boomers seems especially resentful.

Millennials were born between 1981 and 1996. Over 55% now own homes and increasing. The top 10% hold 20% more wealth than the wealthiest boomers. So I think whatever it is we're doing in the face of adversity seems to be working?

 

[Flieger]

You're assuming everyone is going to advance slower or not make as much money if they don't spend as much time or have as hard of a time as you did.

I don't think that statement holds universal truth. Perhaps for someone in your same profession doing the same work, with the same skill and ability.

I actually think boomers believe more in the idea that Millennials/Z's feel entitled to more for less than most Millennials and Z's actually do.

Not saying of you, personally, but I feel like there's a lot of resentment from Boomers towards Millennials/Z's and I think it has to do with the fact that a hallmark of M's/Z's are that they are extremely resilient, innovative, and highly savvy. Not everywhere in every way, but you look at strides in business driven by Millennials and they're quite revolutionary. Gen X too, for that matter. Every generation has their touch, but Boomers seems especially resentful.

Millennials were born between 1981 and 1996. Over 55% now own homes and increasing. The top 10% hold 20% more wealth than the wealthiest boomers. So I think whatever it is we're doing in the face of adversity seems to be working?

So why all the bitchin'?

Either being "smarter" and not having to work as long or hard as Boomers did still allows you to achieve similar results and are then doing great with a much better work/life balance, or it is delaying the gratification of having what the Boomers have worked hard 20-30 years to accomplish and acquire....

Which is it?

Flieger

 

[Mr. Tightwad]

I always find one thing interesting.

Not just on this forum, elsewhere as well.

Some people just can't stop talking about millennial this or millennial that, boomers = bad this, boomers = bad that.

My generation is so wonderful (fill in reason why).

It is a never ending focus on generations.

Hardly anybody falls into this behavior, but those that do just never seem to escape the thought process.

 

[G-Money]

So why all the bitchin'?

Either being "smarter" and not having to work as long or hard as Boomers did still allows you to achieve similar results and are then doing great with a much better work/life balance, or it is delaying the gratification of having what the Boomers have worked hard 20-30 years to accomplish and acquire....

Which is it?

Flieger

I'm not sure, perhaps you could ask the OP why he started a negative thread about Millennials, and why you've continually posted to disparage and disprove challenges which are factually true for our generation?

Why so negative?

Additionally, my reply wasn't to you. But somehow it caught your ire.

 

[Flieger]

I'm not sure, perhaps you could ask the OP why he started a negative thread about Millennials, and why you've continually posted to disparage and disprove challenges which are factually true for our generation?

Why so negative?

Additionally, my reply wasn't to you. But somehow it caught your ire.

Your reply is in a thread for all to read. If you don't want others to comment, maybe just send a message to the one person that you want to discuss it with? I'm not sure what you mean by factually true, but ok. A lot of people here, with a lot of real life experience, have commented. Maybe listen to some of it. Or not, up to you.

Flieger

 

[G-Money]

Your reply is in a thread for all to read. If you don't want others to comment, maybe just send a message to the one person that you want to discuss it with? I'm not sure what you mean by factually true, but ok. A lot of people here, with a lot of real life experience, have commented. Maybe listen to some of it. Or not, up to you.

Flieger

Is my "real life" experience being a Millennial not... real?

Seems to be some Manichean Worldview going on. Is it not possible for Millennials to have faced challenges and be successful in ways that didn't follow in the absolute footsteps of our Boomer parents? Why do you appear to leave no room for that possibility?

 

[Flieger]

Is my "real life" experience being a Millennial not... real?

Seems to be some Manichean Worldview going on. Is it not possible for Millennials to have faced challenges and be successful in ways that didn't follow in the absolute footsteps of our Boomer parents? Why do you appear to leave no room for that possibility?

Please show me where I have said that. I'm starting to think you are a troll.

Flieger

 

[G-Money]

Please show me where I have said that. I'm starting to think you are a troll.

Flieger

Apparently another user posing as "Flieger":

Agree with all, but especially bolded. I think someone else mentioned Millennials, etc may be impacted by seeing their Boomer parents. I think that may be true, based on "anecdotal observation" that they seem in many cases not want to buy lower, then work their way up to how the Boomer parents are living, as most likely the Boomer parents did it. There are exceptions with generational "wealth" of course, but it is just that, exceptions.

Flieger

Exactly.... I don't understand when "starter home" ownership and building your way up became such an impediment.

Flieger

So why all the bitchin'?

Either being "smarter" and not having to work as long or hard as Boomers did still allows you to achieve similar results and are then doing great with a much better work/life balance, or it is delaying the gratification of having what the Boomers have worked hard 20-30 years to accomplish and acquire....

Which is it?

Flieger

I'm not a troll I'm just allergic to Boomers with such negative views of younger generations. Who was mean to you?

 

[Flieger]

Apparently another user posing as "Flieger":







I'm not a troll I'm just allergic to Boomers with such negative views of younger generations. Who was mean to you?

None of those say that ALL Millennials think the same. I have actually talked about my DD's, both Millennials, that have a diametrically opposed view to what you espouse here.

Try again.

Flieger

 

[G-Money]

None of those say that ALL Millennials think the same. I have actually talked about my DD's, both Millennials, that have a diametrically opposed view to what you espouse here.

Try again.

Flieger

I have yet to see you post anything positive about Millennials, tbh.

What views am I espousing here other than the date range for the Millennial generation has experienced extreme housing prices and certain other costs that affect opportunity, and that there isn't always linear relationship between time spent working and productivity, or overall financial success?

 

[Flieger]

How old are you Steve?

Oldest DD and her husband are on a faster trajectory, but haven't surpassed the overall number yet. They will. Youngest DD was a late bloomer wrt retirement savings but is working to make it up.

Flieger

But then, maybe this is their way to deal with the current headwinds.... We dealt with different ones and had different approaches/solutions....

Flieger

Here’s a couple. And there are more in other threads but I’m not going to take the time to hunt them down.

Have fun. Moving on.

Flieger