I was recently turned on to a site that has a slew of metrics for 20 somethings. I have been searching for some time for data like this so I can compare our household finances to that of our peers. In turn I hope to find out that we are doing better or worse.
The metrics I found were located here.
All the data for these stats came from the Survey of Consumer Finances, Federal Reserve 2007. This data is interesting as you can separate the numbers by income further breaking down the measurements for a more meaningful interpretation. So the data might be a bit dated and will not include any changes from the “Great Recession.”
My next several posts will be looking at different metrics and comparing my wife’s and my personal finances to these benchmarks.
The first subsection I will explore is Debt.
According to the stats:
80% of 20 somethings have debt
94.4% of 20 somethings in our income range have debt ($40,000-$60,000)
I am not sure if it is comforting to know that we fall within 94.4% of our peers, but I guess company is company.
45.4% of 20 somethings have credit card debt
61.6% of 20 somethings in our income range have credit card debt ($40,000-$60,000)
Now this stat is comforting. My wife and I have temporary credit card debt weekly which we in turn pay off before any interest is accumulated. We have stocked up 25,000 world points (which I discussed earlier is only a 1% earning) through this process. So not only have we beaten the majority of our peers, but we have made a bit of change in the process!
34.7% of 20 somethings have student loan debt
40.9% of 20 somethings in our income range have student loan debt ($40,000-$60,000)
Now I am unsure how to interpret this data. There could be several things going on. First, one would assume that the majority of college students are people in their 20s. Maybe this assumption is wrong, but as you go through the 30s, 40s, 50s+ the % of people with student loan falls, so this assumption is probably correct. That argument does little to explain why such a small % of 20 somethings have student loan debt. If anything one would assume it would be higher.
A second assumption is that maybe many college students are graduating with no student loans. Maybe parents are paying 100% of peoples rides. Maybe more students are working their way through school with no debt. I find this theory also unlikely as the majority of podcast, problems, and other financial blogs out there concern student loans. These could be the vocal minority through.
The final assumption, and the one that may be impacting this study is a failure on my part to realize how many people do not attend college. I am not attempting to be elitist, but rather after spending the last 6 years of my life on a college campus involved in that life you just come to assume that college people are everywhere as that is primarily the only people you interact with.
Now that I am outside of the “college bubble” I start to hear more and more about the growing high school drop out rates, teen pregnancies, and other issues impacting today’s grade and high school youth.
The assumption that the majority of Americans in their 20s carry no student loan debt is, in my guess, two-fold. There is a minority of students (say 10-20%) who are lucky and have a full ride through school through work or parents’ generosity, and a much larger majority of students (40-50%) fail to make it to college and in turn do not incur any debt.
In these paragraphs I am looking purely at a population that would attend college. I know there are thousands of jobs in the American economy that require no college education and can pay very well. I am not an advocate that college is for everyone and on the contrary believe that there should be a greater emphasis in American high schools on placing kids into the right programs (technical schools, programs, and job placement) and less emphasis on every kid in college.
63.4% of 20 somethings have installment loan debt
74.3% of 20 somethings in our income range have installment loan debt ($40,000-$60,000)
I am making an assumption here believing installment loans to be primarily auto though it surely contains other sources of monthly payments outside of the other major categories (student, mortgage, credit card) loans.
Again my wife and I have beat the odds and ended up being on the good side. We currently have no auto loans or other installment plans and in turn have that much less pressure on our financial peace.
24.0% of 20 somethings have a mortgage
33.2% of 20 somethings in our income range have a mortgage ($40,000-$60,000)
Now this is a tricky one to analysis. Yes, my wife and I do not currently have a mortgage. So we are in the majority of people in our age group who are most likely renting or living with our parents.
I find unnerving the number, and acceptance, of “boomerang” kids (kids who go to college, graduate, and return home to live with their parents) have today. When is a kid expected to grow up, take responsibility, and learn to live on their own? While there are uncontrollable circumstances in the world that can force a kid to temporarily live with their parents (1-2 months) the number of kids living with their parents 1-5 years is insane. Growing up it was a fact that at 18 I was an adult. My mother wished me the best in my endeavors, sent me to college, and proceeded to redecorate my room even before I left. Growing up with that expectation of being required to fend for myself at 18 forced me to confront my future adulthood and be a stronger adult for it. I can now live in the current world, pay my bills, and support my family… I believe many of those skills are inhibited from being fully developed by parents wanting to give their kids some more time to “grow up”.
Now even though today, at age 25, we do not have a mortgage it is a goal of my wife and I to purchase a home in the next 2-3 years. So, we may still fall into this minority of 20 something home owners in the not-too-distant future.
In conclusion, in relation to debt I feel my wife and I stood up pretty good against the national averages of our peers. We tended to be on the right side of the various debt ratios and appear to be on track to go into our 30s financially successful.
How did your own personal finances measure up?