I'm probably younger than some of you (27) because my experience is a little different. I got loans to go to school and I worked hard in the summers so I had money the first 2 years of college (I graduated in 3). The 3rd year I just focused on graduating early and lived on my credit card. I didn't go on shopping sprees but put groceries and gas on it - after all I'd just pay it when I graduated, right? Our parents didn't instill that "don't borrow money" value in us apparently - we had to learn that on our own. My husband had a car loan on a car that was far too expensive for us (his dad co-signed) and right before we got married it started to have mechanical problems we couldn't afford to fix so we traded it (stupid) for a more expensive car (5 year loan, but it's no interest and a lower payment so that's OK right? duh) Then we bought a house 5% down and could only barely afford it so we ended up with up more medical debt and credit card debt.
A few years ago we decided we couldn't go on like that, so we committed to paying off the debt. It is almost all paid off but the last little bit is hard because we have been doing it for so long we feel so drained. We make a decent income NOW, but we haven't ever been on a real vacation and my husband now drives a 15 year old car while we pay off debt. I feel "poorer" now that I can't rely on a $17,000 credit limit, which is really hard because with our income we should be OK. But we have to pay double - for our current expenses and those we charged years ago. We have totally outgrown our townhouse and we want to buy a house, but the Chicago suburbs are so expensive that buying even a modest house will put us back where we started. We are seriously considering relocating to another state just so that we have some room to breathe. The people with the single family houses in our neighborhood either bought their houses after a windfall from their last house or they have 2 mortgages. We bought at the top of the market. People my parent's age got to experience those years of the insane real estate market where a house like my parent's house doubled in value in 20 years while people's incomes did not double. Want to buy a new car? Cash-out re-fi. Want to send a kid to college? Cash-out re-fi. People are going to have to return to reality now and live within their means. We are struggling to live on what we make, but at least we are realistic about it. Our neighbors are still in denial. It seems no one around here knows the word "no" and turning to credit is always the answer. If everyone had to put 20% down on a house they would not ALL cost $300,000+
My grandparents would have never thought of buying something they didn't have cash for. Financing is part of why the market/economy is crashing right now (I'm not touching the political reasons
). IMO the crash is going to hit this area hard because we had such a bubble. People can't afford to buy these huge houses now that they need *gasp* a down payment! 5 years ago a down payment was unheard of here! Everyone did 0% down. Now they are upside down on their mortgages and cars. No one told us we couldn't spend 40% of our monthly income on housing. Someone should have told us to keep renting. But everyone said we were "throwing our money away" on rent. You know what? The difference between rent and our mortgage/taxes/etc. is so much that we could have saved $28000 in 4 years by renting. Instead, our house has gone DOWN in value. What a lesson to learn.
We will be OK but it will take a long time and it's not going to be easy. I know it's not supposed to be, but it's just not what we expected growing up in the tech boom. I probably sound like I'm whining to some of you, but I really do think we will be better off now that we understand how to live within our means. I just wish it wasn't such a hard lesson.