Young people and debt

[kaudrey]

I believe the baby boomers (most of our FIRE on these forums) watched and heard from their parents about the depression, they learned to save, invest and live frugally; this is why many now have FIRE.

Unfortunately, my generation X, didn’t get all of this great advice and many are simply trying to keep up with the Jones. With all the latest gadgets and new technology, new cars in stead of 2-3 year old cars, a new cell phone every 6 months, etc.

My parents are pre-boomers, they are 69 now. They remember growing up poor in the late 30s and 40s. I grew up in a middle class house with parents who never had any debt, kept cars for 10-12 years, didn't buy us designer clothes or expensive toys we didn't need. They lived in my childhood house for 25 years and never thought about moving to a more expensive one. I saw them buy land on the lake in NH where we vacationed every summer for their retirement - 20 years before they retired.

They retired 12 years ago at the age of 57, built a nice house on their NH land, and have been loving life ever since.

Because of their lifelong examples, I save about 30% of my income, have only a mortgage, am only on my 3rd car at 37 (would have still been on my second if I didn't have an accident 2 years ago and totalled one), and plan to retire at 52. I travel and spend money on things, but I live way LBYM. My sister and her husband are what I consider frugal and also don't spend anything near what they earn (I think I'm more "sensible", than "frugal).

I am an "older" Gen X-er, and having a lot of older Gen X-er friends, I know that this is not typical of this generation. I thank my parents very often for teaching us financial responsiblity.

 

[accountingsucks]

200k for trades? Do you have any links to show that? Admittedly, I know only a handful of canadians, but none of those I've met in trades make anywhere near that amount.

Heck, for 200k I would take a couple years off my desk job and do a trade

Sorry no links, but I know of people who are in the trades (welders, electricians, tiling) and operate as independent contractors. Many of them have just purchased $600,000+ homes and this is what I hear they are making and I believe it. There are huge shortages for skilled laborers and they get paid double time and a half for any Overtime so at 50-60 per hour at regular time it adds up.

The thing is that this will not be a temporary boom. There are massive oilsands projects in the billions just starting that will take 10 years to build and then of course massive workforces to maintain. It is a much different story than the boom/bust era of the 70's and 80's. My father is a retired welder and we went through the peaks and valleys back then.

 

[accountingsucks]

I did a quick Google search and found this posting on some kind of welding forum

http://www.aws.org/cgi-bin/mwf/topic_show.pl?tid=8502

quote......

I am a beginning (1st year apprentice) welder in alberta, canada. my current pay rate is $17/hr (about $15.50 US). at our shop, second year apprentices make about $21-22.50/hr ($19-20.50 US), third years make about $25-26.50/hr ($22.50-24 US), and journeyman welders make $29-35/hr ($26-31.50 US). These are all Dayshift wages, and nightshift workers make $3.00/hour more. These are about average wages for welders in Calgary, although I know basic welders in northern alberta are making about 2-3 times this amount, and welders with their own rig in northern alberta are making at LEAST $1000.00 per day ($900 US).

......

90 bucks an hour (using the rate of about 30 per hour he states X 3 times that in Northern Alberta) for 2000 hours a year gets you to about $200,000

Now, finding housing in Fort McMurray is another story......

 

[REWahoo]

The thing is that this will not be a temporary boom.

So you're saying "this time it's different"? Guess there isn't any possibility that hundreds or thousands of tradespersons will migrate to the area and supply will begin to meet demand causing these nosebleed high wages to drop?

 

[accountingsucks]

So you're saying "this time it's different"? Guess there isn't any possibility that hundreds or thousands of tradespersons will migrate to the area and supply will begin to meet demand causing these nosebleed high wages to drop?

Well it has not happened yet. There is such a shortage that the government is trying to bring in foreign workers but this has not been very successful in part due to union opposition

 

[canent]

Well my take is that it looks like there's steam left in the boom that might take us forward several more years.

The boom is being driven by global uncertainty and high oil prices. Extraction of the oil from the sand is expensive but today's high prices make it worthwhile to do so. If global prices drop then so will interest in Alberta's oil and gas.

However, one factor that can't go unnoticed is that we have the world's first or second largest petroleum reserves (yes - even larger than Saudi Arabia), and we are politically stable country sitting next door to the US. In an age of unrest that makes Canada's resources very attractive.

Of course it won't last forever, nothing does. Every boom "is different this time", but the tricky part is guessing when it will end - which is impossible. That's why I worry when I see people spending their (high) wages so quickly...will they be able to survive the bust? dunno....

 

[VoyT]

I too live in Alberta and am regretting ever going to University.  I am an accounting manager and make a little under 75,000 a year and I know that many of the trades people are making close to $200,000 per year because of the boom and shortage of skilled laborers. 

Perhaps you should consider getting into a trade program

 

[Brat]

Accountants can make very good money too.  The pay for jobs available in the oil sands project represent a small fraction of similar work across the country.  Similarly, a small fraction of accountants (CPAs) make VERY good money. 

If you think you can do the highly paid crafts and operatives jobs put your other profession on hold and go for it.  Set aside enough money to update your skills when you are ready to come in from the cold.  You never know, you could end up as an operating manager - many companies would kill for a manager who knows the work from the dirt up and who understands the financial side.

If you don't think you could do their jobs then do what you do best.  Max your opportunities as they become available.

 

[Calgary_Girl]

Guess there isn't any possibility that hundreds or thousands of tradespersons will migrate to the area and supply will begin to meet demand causing these nosebleed high wages to drop?

Part of the problem now is finding affordable housing. Some people are refusing to move here due to the lack of affordable housing (even with the astronomical wages) and others come, land a job on their first day here, but have to live in campers and trailers on the outskirts of the city. There are more coming though than NOT coming (especially from Ontario)....

 

[Leonidas]

A contractor did some work at my house a few years ago. Friendly guy, he stopped by often to check on the crew doing the work and we hit it off pretty well and talked about myriad subjects. The local economy was finally coming back after a long lull and he was comparing the current business boom to that of the 80's which was driven by rising oil prices. He was involved in a family business back then and said that they had all pissed away every dollar they made in the last boom.

Man, I just hope I can hang on to some of it this time. But I'm riding high while it lasts.

I looked at his gold Rolex, his $50,000 SUV, and his $300 sunglasses and quietly estimated the odds of him hanging on to much of his cash at about zero. Some people can live through a bust and still not learn.

 

[mosaic]

when I first began to save money at 19 i found it boring and tedious. Some how felt was depriving myself. At 29 with close to 400 k in savings and watchin freinds work there asses off I have to smile and save the conspicuous consumption for my retirement yrs( 35 on) People dont really need half the crap they buy to feel more adequate or reach social status.

 

[CCdaCE]

when I first began to save money at 19 i found it boring and tedious. Some how felt was depriving myself. At 29 with close to 400 k in savings and watchin freinds work there asses off I have to smile and save the conspicuous consumption for my retirement yrs( 35 on) People dont really need half the crap they buy to feel more adequate or reach social status.

Thanks mosaic. That's exactly what I needed to hear. A few years of hard savin' equates to earlier freedom or "better" retirement.

-CC

 

[mosaic]

it still blows my mind how people work so hard for there dollars yet will spend it in a few hrs at the mall. I fully believe in enjoying life to the fullest yet buying tastless status symbols dont fill the void for me.

 

[astromeria]

It's possible to have nice things (and expensive experiences like travel) while saving plenty for retirement. Just pick which nice things/experiences are most valuable to you, and savor them for a long time. For example, we love a good TV and stereo and computer, so we buy highish-end ones, but keep them for a long time before replacing--typically 15-20 years for a TV or stereo system, 4-8 years for a computer, major travel every 2-3 years when still working (but every year now that I'm ER and DH is ESR and we're concerned about not being healthy enough for serious travel in another 10 years).

 

[Scrooge]

For example, we love a good TV and stereo and computer, so we buy highish-end ones, but keep them for a long time before replacing--typically 15-20 years for a TV or stereo system, 4-8 years for a computer.

I suppose it depends on how you use it, but there aren't that many new applications left that will run well on a Pentium II 

 

[Nords]

I suppose it depends on how you use it, but there aren't that many new applications left that will run well on a Pentium II 

Yes, but my FIL hasn't run any new applications since he bought his Win98 machine. He didn't even install his MS Works CD, let alone an Office suite. The power switch to his 15" CRT monitor is broken in the "ON" position so he keeps it locked with a piece of duct tape. The box's motherboard & RAM are so brittle that I'm afraid to touch them anymore.

He's irate that Bill Gates has the chutzpah to abandon 70 million faithful users.

 

[astromeria]

That's why we use Macs

DH got a new top-o-the-line 17" PowerBook when I retired last summer, and I inherited his now-4-year-old PowerBook. Does more than I need it to, and nothing's broken even though I use it for hours a day, most days.

 

[Nords]

That's why we use Macs

Don't get me wrong, I can see using a Mac as our next machine.

But it won't be nearly as much fun as sending FIL into one of the Apple stores to price their hardware...

 

[Scrooge]

That's why we use Macs

Eek!  Let's stick to something less controversial -- like religion 

Actually, I am sort of the same way in that I concentrate on my preferred hobbies and then minimax spending. Of course, it helps that I can build my own PCs  

 

[astromeria]

I like your typo: minimax spending. Maybe it means good stuff cheap. Or good stuff occasionally.

 

[Scrooge]

I like your typo: minimax spending. Maybe it means good stuff cheap. Or good stuff occasionally. 

Actually, "minimax" is a legit word. Gamers often use it to describe approaches that minimize all negatives and maximize all positives in a game. Some consider the practice borderline cheating questionable, but that topic is even more controversial in certain circles than Mac-vs.-Windows  8)

 

[astromeria]

Actually, "minimax" is a legit word.

d'oh! I relied on my reptilian brain experience as an editor rather than creative thinking or researching skills.