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article imageNew Generation facing steep financial issues

By Michael Bearak     Apr 26, 2010 in Business
The current day teens and twenty-something year olds currently form a new generation of America's workers and they are facing a number of economic hardships past generations haven't faced.
There were the 'Baby Boomers,' 'Generation Xers', and now 'Generation Y', the teens and twenty-something year-olds hitting the workforce today.
'Generation Y' are considered as having coddled upbringings, they are opinionated, free-spending and have an openness to change and they are made up of over 50 million young men and women.
This generation has been stereotyped for wanting things immediately but then paying for it later. They have embraced gadgets, then added credit card debt on top of their student loans. iPhones, iPads, gaming systems, mini-laptops, e-readers and other gadgets are all things that this generation has craved and have identified with.
The sudden fallout of the economy, the loss of jobs, employer health care benefits, debt on top of debt and almost no savings have created a formula for a very insecure economic future. This according to Demos, a public policy research and advocacy think tank.
According to Jose Garcia of Demos, "The recession has hit them hard. It affects their income potential, their saving potential and their career-ladder potential.
According to USA Today, about 37 percent of 18 to 29-year-olds have been underemployed or unemployed during this current recession. That same USA Today article reported that 60 percent of the workers 20 to 29 have also cashed in their 401(k) plans.
That means that they have not only squandered any retirement savings, they look the early exit penalties and paid the penalty tax when they took the early withdrawals.
It was also discovered that 43 percent are amassing too much credit card debt as well. Meaning that almost half of this generation are spending more than they make and are relying on credit cards to maintain a certain level of lifestyle.
Still, it is a trait of the 'Generation Y' folks that they are optimistic. A NFCC survey reported that 25 percent of Gen Y folks are spending more in 2010 than they did in 2009 and that is compared to just 18 percent of all adults.
All of this while the unemployment is setting back their careers, while they have exhausted their retirement and with each passing day are that much closer to retiring.
Frank Lennon, 27, acknowledged that he spent more than he was bringing in while in college and shortly thereafter. "I was greedy," Lennon siad, "I made a lot of poor financial decisions without thinking about the big picture."
Now Lennon is married and on his wedding night he and his wife, Erin, realized that they were $104,000 in debt. On their wedding night they had to make a credit card payment. now the Lennon's keep a dry erase board on their refrigerator showing their running debt. They have a car loan with Toyota, a bank loan with Fifth-Third Bank, Sallie Mae, and $48,000 in college debt for Erin.
Reality for the Gen-Y folks is all too real sometimes. Nationally unemployment rate in March was 9.7 percent, but for this younger than 25 it was almost double that at 19.8 percent. People are faced with decisions that seem drastically different anytime they have a little extra money. Do they put it towards an extra mortgage payment, towards credit cards, towards retirement or just having a bit of a cash cushion in the event of a rainy day. In the past adults have seemed to have better options and less of them. They had cash reserves, they didn't have the huge mounting credit card debt or worse yet, a mortgage they couldn't afford.
It seems that there is nothing for this generation to fall back on. Their parents had G.I. bills, pension plans and other options, all things that this newest generation doesn't have at their disposal. Frank Lennon had to stop making contributions to his 401(k) for awhile to pay down debt and make ends meet.
In the end this Gen-Y that is unlikely to end up better off financially than their parents. In the end it is only money, you can't take it to the grave with you, the only thing is that these people might not see the retirement their parents are looking at now.
More about Generation, Unemployment, Financial hardship, Economy, Economic issues
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