Is Generation X Responsible for the Real Estate and Mortgage Problems?

Monopoly Houses I came across an interesting article from ABC News (Australian Broadcasting Corporation) that discusses the current housing crisis and breaks down what type of person or family is affected the most. Their focus is more on the affordability of housing and rent and not so much on the declining real estate prices here in the U.S. Even so, I began to wonder if there was a generational connection to what we’re experiencing here, or if it was just a matter of coincidence.

Generation X’s Place in the Economy

If we look at the position of Generation X in the economy, a noticeable trend emerges. The majority of those in this generation that attended college graduated in the mid- to late-90s. What was the economy doing then? We were in the midst rapid technology growth, and the sky was the limit. The economy was on fire, high-paying jobs were almost being handed out upon graduation, and life couldn’t have been better for this generation.

This generation didn’t physically experience some of the negative economic concerns that were around in the 1970s and 1980s. For the most part they were too young to know what was going on, and it was their parents’ problem. But without being able to experience or understand the effect of inflation rates in the double-digits and what a bear market feels like, this generation had unbridled optimism as they set out on their own.

Education and Family Values

Generation X was fortunate enough to reach adulthood during relatively good economic times. One striking difference about this generation compared to those prior has to do with starting families. Unlike past generations that typically got married and had children at a relatively young age, for the first time, a generation was being pushed to become educated beyond high school in an attempt to take advantage of the shift from an industrial to information and service-based economy.

This push for additional education forced a lot of people to delay marriage or having children until college or beyond. This presented a unique opportunity for people who were finding themselves entering the job market in the 90s. Without a family or children to support, the booming economy presented opportunities that most young adults could only dream of. Unlike their boomer parents who typically worked blue-collar jobs and didn’t venture far from their roots, many Gen Xers saw an opportunity to take dream jobs almost anywhere in the country.

More Income Available for Housing

Since people were not often bound to their hometown by a spouse or young child, this allowed new graduates to pick up and move to the hottest areas in the country. Of course, with the salaries being offered and few financial obligations, this meant many could buy the house of their dreams at a very young age. Hey, it was the 90s, and they were sure to make even more money as their employer grows and the value of their home doubles in a few years, so why not.

Instead of just trying to find a roof to put over their family’s head, manyhad the income and freedom live excessively during this exciting time. This doesn’t mean that everyone bought McMansions, but without the other financial obligations, I think that many still dedicated too much income towards housing and went beyond the basics. Real estate at the time was seen to have almost unlimited upside and virtually no downside.

When Life Changes

As we know, life isn’t static. People get married, have kids, and in the case of the technology bubble, it also meant lost jobs. Suddenly, those living the high-life are faced with increased expenses and potential income loss. This is a bad situation to be in if you were dedicating 30-50% of your income to housing. Now, the generation that has experienced nothing but good times is completely lost.

Of course, this doesn’t apply to everyone, but it illustrates the importance of planning. Young professions who have experienced nothing but prosperous times during their short adult life had little reason to prepare for the bad cards that can be dealt in the game of life, so more attention was spent on the here and now.

Could It Have Happened to Another Generation?

Of course, you can’t completely discount the effect that extremely easy money and loose lending practices had on this situation, but I think this is more of a byproduct of what was happening in the economic climate in the 1990s. Unfortunately, this just made the problem more widespread and severe as consumer greed just drove more corporate greed. When you combine a generation of people who were possibly biting off more than they could chew and leaving themselves unable to cope with economic changes, you find the effect on housing, real estate, and credit to be very significant across the board.

Was the state of the economy, birth of technology, and bubble markets that followed something that would have happened regardless of what generation was behind it? Quite possibly. Was it our generational traits that resulted from being raised by boomer parents, influence from technology and the media, and expectation to obtain further education that set us up to fuel this new consumer-driven economy and overzealous market? Or was it simply a case of bad timing? I don’t know if there is an answer, but I find the possibilities intriguing. What do you think–are we the cause, or just victims of chance?

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

40 comments
Splaim Chulundrk
Splaim Chulundrk

It looks as if the hate-filled, snotty Grungers (Generation-X) are the source of all the world's evil.
Of course its amusing to see how much energy they expend blaming others for the damage they've done while always stealing credit for the good works of others of which they are incapable. As a matter of fact, I don't think amy Gen-X grunger has the ability to be anything but a snarky backstabber.

OliverTwist
OliverTwist

I'd really like to know how Generation X can be blamed for ANYTHING at all. We turned 18 in a world that already completely belonged to someone else, a world in which men like Alan Greenspan were purposefully holding down wages while the housing market was jacking up the rent. We grew up in the "Greed is good" at underfunded schools while both of our parents worked full just to barely pay the rent.
Most of Gen X never had a chance: forced into food service work in return for NOTHING at a young age.

You're going to say, what about Gen X's credit debt?
Well guess what. Those of us who borrowed money we couldn't afford to pay back lived much better lives than those of us who were very responsible and lived on nothing without borrowing money, dreaming of saving up enough to make a difference.
I did not borrow money for college, or take out a mortgage on a house. If i had, I'd have had to leave college anyway when cost of living exceeded my borrowed funds. If I'd gotten a mortgage, when the market crashed I'd have had a house that I couldn't buy yet couldn't sell.

And no, after growing up in poverty I could not work all day in a restaurant and then pass college courses at night-I'd have flunked either when I was too tired to concentrate, or when I genuinely needed some kind of activity in my life outside my responsibilities.

At a young age my capacity for manual labor got used up without giving me anything in return but next month's rent. Now I'm exhausted, and being told that I'm too old to begin my chosen career path.

So what am I supposed to settle for instead of my chosen career? More of same kind of job that used up my one and only lifespan.

Those of us who grew up under Reaganomics don't owe this society anything. We watched our parents get turned into slaves in the modern economy, and then we became slaves ourselves.

Want to know who the smart kids were? The ones who made a few thousand extra dollars dealing drugs and hiding the money away. Those are the ones who were able to maintain a good standard of living while they were in college so they could focus on their classwork. Because they had money and were part of the party culture, they also had their pick of the most attractive mates.

All the most desirable of Gen X are already married now, mostly to those who were in the right place at the right time or had money in their backgrounds to help them become $ecure at a young age.

If I could live my life over again, I would deal enough cocaine in high school to fill the financial gaps when I started college. Then, I wouldn't be burned out from restaurant work as I approach middle age.

Of course, nothing in the world is as abhorrent to me as cocaine, I've never touched the stuff in my whole life. However, the street market for coke was the Gold Rush of my generation. We were in an ecosystem in which going to work just didn't pay off.

I know one thing: the next rich man to tell me I need a better "work ethic" is going to get punched in the nose. They need a "pay ethic", a belief that we need to get paid for going to work rather than just paying our landlords instead of us for housing us workers.

Between "tenant" and "employee", the Citizen has vanished. Caste system relationships have replaced our civilization. It's just a huge debt cage now.

Jane
Jane

I think your definition of Gen X is a few years off.... Most of my peers in their late 30s and early 40s are still renting. Buying to flip? You must be kidding - Try 'still paying off student loans'!

Jacqueline S. Homan
Jacqueline S. Homan

If you want to know where the root of the problem lies, try economic cannibalism in a vulture capitalist society where cheating is considered a sign of "good work ethic" and of "valuing one's education"; where nepotism, not merit, determines who gets the chances for the good jobs and all the money and who doesn't. For clarification, take some time to watch this video clip and the 4 that follow it:

Classism Part 1

Dale
Dale

Let's look at this historically. There's plenty of blame to go around. This all started back in the 1970's with Congress. Certain members felt everyone should own a home no matter their income, etc. They passed the Community Reinvestment Act which was designed to pressure financial institutions into making loans for this purpose. They also pressured Fannie Mae and other central mortgage purchasers to find "ways" to accomplish this mission. Community activists in organizations such as PolicyLink.org (see their website) also pressured banks, etc. to lower underwriting standards to allow more people to buy homes. Since Fannie Mae and others would now purchase these lower underwritten loans, greedy mortgage brokers and bankers jumped in with both feet seeing the opportunity to make a lot of money. Multi-optioned payment mortgages were made with adjustable rates. It was inevitable that this was a house of cards and it started at the top, with Congress. So why are they getting a free pass here while the middle men, the bankers, etc. are the bad guys? They all share in this mess.

Private communities
Private communities

I completely agree with you. It truely depends on the type of the person or family. We are facing crisis now which was not in 90s everything was booming. I admit few people of this generation are very irresponsible.

Chris
Chris

To George:

Ask you yourself which generation has controlled this country politically over the last two decades and look where the country is today. Here's a hint: the Baby B------.

How is Generation X responsible for this mess when we haven't been setting the policy (regulation, spending for wars, growing gov't spending, etc.)?

Molly
Molly

I have to agree with Jim. I am 30 I have been planning on not getting Social Security since college. I learned many of my financial ideals from rich friends in college and my grandparents. I will be supporting my parents(frankly I already am) I have a rainy day fund, already paid off student loans, a funded Roth and a 401k and insisted on a 30yr fixed mortgage. The last few years all of my friends thought I was crazy. Many of the smartest people I know did no down, interest only, adjustable rate loans and no savings. Some walked away from homes. I don't think it is any one generations fault however, it is everyones personal responsibility or lack there of that has caused this. A college graduate knows what they can afford and shouldn't let someone talk them into something they can't afford. We as Americans need to hold ourselves accountable. Frankly, I teach night class at a junior college(in addition to my day job) and the 17-20 crowd looks like they have even less personal responsibility. This is the real crisis.

Splaim Chulundruk
Splaim Chulundruk

A non-scientific Business Week survey found that 42% of speculative (ie. flip) real estate purchases were made by Generation Xers. Again, those doing the loudest and most caustic finger-pointing at Boomers, Yers, the Government, etc., turn out to be the driving force behind the bubble and crash. Another feather in the stellar cap of America's worst generation ever!

George
George

It is truly amazing to see the whining rants that this Generation-X engages in. Blame the Boomers, blame Generation-Y, blame the Jonesers. Look in the mirror.
The VERY EXISTENCE of Generation-X is a crime!

Lisa
Lisa

I know I'm a little late to this discussion, but I couldn't help myself by the time I found it.

The mid to late 1990s weren't wonderful for all of us. After graduating from college with honors, the best job I could find was at a bookstore, which didn't pay me enough to move out of my parents' house. I spent the rest of the 1990s and early 2000s going from AmeriCorps to the Peace Corps to grad school because the job market didn't change for me until I got into education. Now, I'll always have a job.

However, my Boomer parents brought me up believing that a college education and home ownership were the pinnacle of the American Dream. Most of my friends were instilled with similar ideas. With that in mind, is it any surprise that GenXers have gone into debt financing college and homes? I may always have a job as a teacher now, but I'll also always have $20,000 in student loans following me.

I agree that it's unrealistic to lay blame for the current crisis on GenXers. It's not our fault. The fault lies with credit card companies who set up tables on college campuses all across the country as far back as 1994, promising easy money and a fun prize just for applying. It lies with predatory lenders who approved people for home loans with wacko terms which they knew were unaffordable. And it lies with Boomer parents (yes, I'm going there) for not teaching their kids about credit. I was lucky. I had a Boomer mom who grew up poor and knew the value of a dollar. She taught me about credit and taxes when I got my first job at age 16. Thanks to her, I only have that student loan, and not credit or mortgage debt haunting me.

As a generation, I detest the Boomers. They can't die off soon enough.

Ryan
Ryan

Gen X has always faced difficult cultural and economic issues. Culturally we were latch-key kids, left to manage much of our upbringing. Which we accomplished by watching MTV and playing video games. V-Chips hadn't been invented, so many of us learned valuable lessons about relationships watching R rated movies on HBO. We taught ourselves, and our course materials were AWEFUL!

Sometime while I was away at the arcade my parents showed-up with a new sibling and a "baby-on-board" sign for the car.

Gen X = Latch-key Kid
Gen Y = Baby-on-board

Doesn't this seem fitting?

And now, the question is: is this economic situation our fault?

I just think that it unfair to place fault on Gen X. The fact is, I had a credit card at 20 years old--what other generation EVER had such free and easy access to loans?

This free and easy money was reflected in the Web 1.0 boom years when everyone was on the verge of becoming a Dot.com millionare and a sound business plan was anathema to venture capital funding.

But who was giving out this money. It wasn't Gen X.

So, as always, "mom and dad" gave us a house key, but never took the time to teach us how to use it.

Don't blame the bullet, blame the one who pulled the trigger.

Jim
Jim

I'm 40. I graduated college in the mid 90's. Today I own two homes and have low debt. I think the housing bubble final analysis will show BB's and GenY will have greater numbers in defaults. I see lots of GenXers struggling to make ends meet today - especially those who have kids. Both of my boomer parents are poor. I will probably have to take care of them someday. They don't give me too much grief because they probably know it too. I have little patience for rich boomers. Many of them complain about medicine, retirement and boredom. Many don't want to talk about the possibility that GenX may be the first generation to fully pay into Social Security and receive none of it when we need it. Still, they call us ungrateful and selfish. GenX will struggle to remind our children about life before 911. GenX will have to start serious policy for energy and polution reform. That's ok - we can handle hard work. GenX has a good reputation for earning results that matter.

Jen
Jen

I agree with the previous poster ... graduated from college during a recession, lucky to get a job. High school loan debt ... I feel like I'm always one step behind ... Most Gen Xers I know are still struggling - I most definitely can't afford a house. I didn't run up these prices ... I'm stuck renting.

Jacqueline S. Homan
Jacqueline S. Homan

"Unlike their boomer parents who typically worked blue collar jobs and didn't venture far from their roots, many Gen-Xers saw an opportunity to take dream jobs almostanywhere in the country."

You should get your facts straight first. Many more Gen-Xers never got a chance to get a good job, let alone a dream job. The Boomers socially, politically, and economically dominated the scene since before we graduated from high school. Gen-Xers who graduated high school in the mid-80's entered the job market during a bad recession, rife with downsizing. We were crowded out of even just living wage jobs by the Boomers during this same time that overpowering Boomer votes installed a Congress and president that shredded social programs for the poor and slashed student aid when a college education was increasingly vital to getting a job. Most Gen-Xers I knew had few to no opportunities and had no choice but to resign ourselves to relocation for jobs - without any security. Job security was a luxury we didn't have, due to Boomer votes resulting in NAFTA - the greatest American jobs give-away - and evisceration of workers' rights starting with Reagan's firing of the air traffic controllers. Boomers dominated everything. They had the jobs and the houses, we got stuck with sloppy seconds. Those of us who attended college in the late 1990's (as non-traditional aged students) after seeing that our high school diplomas weren't enough to render us qualified for even a job as a secretary, graduated with massive student loan debt into the wonderful George W. Bush job market in 2001. After being crowded out of the jobs by the Boomers, older Gen-Xers like myself found ourselves still crowded out - by Boomer spawn, the Gen-Yers.

As for not experiencing th economic concerns of the 1970's and 1980's, wrong again. We experienced worse: we entered the job market of vanishing jobs and a housing bubble that caused homelessness to skyrocket during the 1980's. Unlike the Boomers who suffered through inflation of the 1970's, my generation suffered through unaffordable housing, a job market with no jobs for us, and no hope of ever getting to be successful after NAFTA. Since Gen-Xers are only 30 million strong, we were vastly outgunned by the influential Boomers and we have not had any political, social, or and cultural influence because that was obscured by the Boomers. We're not acknowledged, and even now as we are entering our 40's - we still don't count. Wiki Generation X if you doubt this. We never got a break or a chance for anything, except to be fodder for the greedy, overindulgent Baby Boomers.

Angela
Angela

What a stupid article, blaming the Generation X on the real estate and mortgage problems? I know where I live it's the baby boomers and the Gen Y's that live beyond there means. They usually end up bankrupt. Most Gen X I come across live productive lives and save wisely. I guess the baby boomers have to blame there kids (Gen X) for screwing up the world. Besides I think this generational is just another way to blame someone else for all the problems of the world. Why not pick on the generation that isn't very populated because of baby boomer abortions in the 1960's and 1970's?

Susan
Susan

Our generation stepped into the housing market at a time when housing prices were monumentally inflated. When we purchased our home, even with less than stellar credit we were offered way more credit than what we could afford based on annual income alone. We went for a house that was on the low end of what the bank would have allowed us to purchase. I imagine many people did not and maxed out. Interesting to note we were also the first generation to deal with realtors who were no longer competing with each other but working together, there was no incentive for anyone to come down on the price of any home because there was no competition. If you were with one realtor, and they weren't offering the home you wanted they merely found the home you wanted and split the profit with the other realty company. No negotiating and very little haggling about price. Very little work involved on behalf of the real estate agent either.
The appraisal process has changed too. Our house was appraised for whatever we willing to pay for it. The man came wrote down the features of the home, and announced that the home was worth exactly the agreed upon purchase price. We thought we had shrewdly gotten a bargain but he told us that whatever we agreed to was the home's value. Virtually no work involved for him either. There's a lot more to the housing crisis than the numbers flashed on a tv screen. From the agents to the bankers, to the appraisers, it crossed generational boundaries and it all boils down to the fact that we are all greedy.
Bottom line we still have our home, but if we had maxed out on what the bank offered us we wouldn't-- not with all the other expenses rising at such a rapid rate.

Jac
Jac

Actually, one of your starting premises is flawed. Generation X is no better educated than their predecessors, so the later settling down can't be explained by 'pressure to go to university'. See this graph (http://blogs.ft.com/crookblog/files/2008/03/kierkegaard.jpg), showing that college education has remained constant at ~40% of Americans over the last few generations.

42
42

Generation Jones? That's a new one... i was born in 1962 and consider myself to be "Generation X" far more than a Boomer, but of all the things I've read on the topic, I'm neither, or both.

But I think the real estate disaster is a product of pure greed that crosses all generational lines from Casey Serin* on up, GenX and Boomers included. when I was hearing bartenders and cabbies in Miami yapping about their multiple flip deals in progress I knew the bubble was about to pop in late 2005.

* http://tinyurl.com/yyhwju

Jen
Jen

Amber - How have we Gen Xers contributed to the way money is spent? Can you give examples? You've piqued my curiosity.

And wouldn't your peers' parents also be Baby Boomers? Or, if they are Gen Xers, they be very close to the border between Boomer and Xer.

Your post seems to imply that we're the parents teaching today's college students irresponsible money habits, and I doubt that. Yes, an 18 year-old today could have been born to a Gen Xer when he or she was 20 (1990). But I imagine that today's college-aged people have a mix of Boomers and older Xers for parents.

And, given that the trend is for people to wait longer to marry and have children, if an Xer born in 1970 had their first child at 25, that child would only be 13 now.

Amber
Amber

As a college junior and a member of the (I think) "Not Me" generation, I feel that the Generation X-ers have definitely contributed to a change in how money is spent.

Many of my peers do not understand the value of money. Their parents pay for their tuition, cars, cell phone bills, or bank overdraft fees. They don't hold jobs, and I know quite a few of my friends expect to find a job directly out of college.

My parents are of the Baby Boomer generation (my father was born in 1945 and my mother in 1956) and have imparted their fiscal knowledge on me the best way they knew how- they are currently making me pay for all of my bills on my own.

As a result, I have a sizeable savings account, the ability to create and stick to a budget, and know when to spend on something I NEED over something I WANT.

I'm a bit nervous about my job prospects, even though I'm earning a business degree.

Jen
Jen

Nah.... They'll just be called Generation AA, or we'll start all over... on the moon! :)

Traciatim
Traciatim

Let's not confuse the major issue here. We are going to run out of letters after this next generation Z . . . the human race is DOOMED!

Beyond Paycheck to Paycheck
Beyond Paycheck to Paycheck

Jeremy, an unanswerable question leading to this fascinating discussion--nicely done.

My two cents: our generation (I'm Gen X by any measure) has certainly benefited and been challenged by market realities far beyond our control. Do we exacerbate some by our behaviors? You bet. Did we cause this real estate bubble? Not by a long shot, unless you can show me a Gen X definition that puts most of our national decision-makers (Fed, Congress, etc.) into Gen X.

As 20-somethings, we wanted it all. But this made us no different than previous generations. However, we could actually get a lot more of it "all" than those who came before us. Due to increased income, lower responsibilities, and looser lending, instant gratification was not just desired but now entirely possible.

I become frustrated when (usually older) people state that Gen X (and subsequent generations) want more than they did. Everyone wants it all when you're in your twenties.

The difference was that they let us get it "all" when we couldn't truly afford it "all." At the same time, we thought if they let us get it "all" we must be able to afford it "all."

Gen X didn't invent credit cards.

Steve Austin
Steve Austin

One more Gen X comment: if Gen X is defined as being children of Silent and Baby Boom, and the last Baby Boomer was born in say '64 or '65, conceivably the last, pure Gen X'er may not have been born yet, if some couple born no later than '64 or '65 intends to have more kids. That would put a woman born in '65 at age 43 this year, quite possible to have more Gen'Xers!

Steve Austin
Steve Austin

Jen, even in the wikipedia entry, there is disagreement. The Generation Jones entry says through '64, the Generation X entry says starting '64, but if you look at the chart in the "List of generations" entry, it shows an unnamed gap '65 to '74 at the tail end of Generation Jones. I guess the chart is wrong. The X split you propose can perhaps be explained by whether your parents were Silent Gen or Baby Boom Gen.

Everyone must like the title of X, kind of like as in Malcolm. When it started, X were the trailing-edge boomers ('58-'66), then advanced another 4 years to include those born up to '71 by Coupland, then Strauss-Howe advanced it another 10 years, to '81 and clipping off the trailing-edge boomers who were the first X. So, X has been anyone born '58-'81, which sort of emphasizes the point that the term X was meant to be a nameless, undefined, nondescript, runt group that followed the Baby Boom.

I think this generations business is all entirely arbitrary, but it's fun to call each other names, isn't it? ;-\

Jen
Jen

Steve Austin: The Jonesers now includes me? A few years ago I read about Generation Jones, and I remember it included my brother ('65), but not me. The description I read included those born at the tail end of the Boomer years and the very beginning of the Xer years.

Heidi: I think the instant gratification is pan-generational. When I was still in retail (early '90's) we had a storewide session on the latest trends. One of the things mentioned was instant gratification - people wanted their stuff NOW. No more scrimping and saving and spending months debating the merits of buying a new refrigerator. Since it was '94, Gen X was still entering the job market, so I think the instant gratification was both us and the Boomers. And now Gen Y seems to be following that path as well.

escapee: That's right - we're the latch key kids of single, divorced parents! I think growing up like that can cause a person to either be conservative financially so they're don't worry about having enough, OR they spend money as soon as they get it to make up for going without for so long. So maybe Gen X is split like that? Some of us are hoarding cash while others are spending it? While the ones who's parents didn't divorce are... more average?

Chris
Chris

You know, when I read articles like this, I think Jim Jones had a good plan for the Boomer generation. The writer fails to mention that before the 'Housing Boom' most of us GenXers lost our nest eggs in the 'Tech Boom'. This is a classic Boomer excuse for their own mess and is another example of how the children of the 'Greatest Generation' have ruined this country by failing to take on any responsibility they have towards our common future. This also includes the brats they have raised who suffer from the worst case of entitlement any of us have seen. Blame who you want for this calamity, but listen up Baby-Boomers, you've known for 40 years your generation was going to bankrupt the Medicare and Social Security system and you have nothing about it. I've got a glass of Kool Aid waiting for anyone of you.

escapee
escapee

What?! We definitely knew hard times- I was born in 1971, right smack int he middle of Gen X. Consider the divorce rate for our generation and the amount of single mothers living in poverty. I was a latch key kid lving with my single mom, barely making ends meet and times were indeed hard in the 1970's and well into the 1980's. I remember it well. I hope to god I never have to live that way again.

Steve Austin
Steve Austin

Jeremy, I'll respond to that with a paraphrasing of the first stanza of the first verse of the Tao Te Ching:

"The X that can be named is not the true X."

;-\

Heidi
Heidi

I teach out of an Organization Management text that puts the beginning of Gen Y at 1977 - making me barely an Xer by one year.

I agree more with the Strauss & Howe definition.

Regardless, I think that Jeremy has a very intersting point here. I remember my parents navigating the 80's farm crisis, but I can't say that it shaped my spending or savings habits. As much as they taught me to be frugal, I became a victim of instant-gratification-syndrome and took on tons of debt.

Is that generational, or is something else at play?

I know a lot of boomers and early Xers that are mortgaging their own futures (homes, 401(k)s, etc are leveraged to the hilt) to provide good lives (college education, etc.) to their kids. How do they fit into the discussion?

Jeremy
Jeremy

Well, I've always used William Strauss and Neil Howe's definition of the generation, which places the birth years at basically 1965-1981, which would place the midpoint at around 1973. The reason I focus on this definition is that they based it on peaks and troughs in cultural trends rather than simply looking at birth rates. I think cultural trends are what really define a generation, so that is more applicable.

I guess my observations somewhat mirror what you have seen with the 65-74 sub-generation found on wikipedia, because I grew up with, and work with, and relate to primarily Xers in the 1975-1980 category.

So in a sense, maybe I have inadvertently disowned some of the late 60s kids ;) But it is quite fitting that a large segment of Generation X has been disowned to the Jones Generation, whatever that is. So, maybe the definition as shifted, although it isn't my area of expertise.

Steve Austin
Steve Austin

Jeremy, I think you may be causing some definitional confusion. You think 1975 is the "midpoint" birth of Gen X? I think it was more in 1971-72. I concur in the main with Jen's comments. I was born in 1969, and did not have Boomer parents, and am ever so grateful for that. I associate the Boomer parents with Gen Y kids, and we Gen X kids are more aligned with the Silent Generation parents (including those born during the Second War, like my parents). I recall that in high school ('85-'88), our generation was the Baby Busters, and there was concern about the future of Social Security even back then.

I gave that background in order to inform what I say here: I was profoundly affected by the economic slump of the mid 70s even though I was a kid -- my parents thankfully kept me in the loop (generally) on how things were in the house economically. What's more, my grandparents were Interbellum/G.I. Generations, which means they endured the brunt of the Depression as young adults. So hard economic times were well-installed in the family DNA, and I think that has contributed to my financial success (very early retirement).

I wonder if the definition of Generation X has drifted. I am certain that in the early 90s as I left college, entered the armed forces, and got on my own financial footing, folks my age as well as those up to 5 yrs younger than me were in Gen X. Now I look at wikipedia:

http://tinyurl.com/24qm9g

and see that '65-'74 births are in an *un-named* sub-generation of Generation Jones. I've never heard of Generation Jones. According to the wikipedia page, Gen X and the Baby Bust now both start in 1974. Have early Gen X'ers been disowned!? ;-\ (I'd like to point out that that is in the true spirit of X...so X that we got disowned and kicked into an unnamed sub-generation. The forgotten slackers, I love it! I have found in life that is is always better to be underestimated in one's capabilities. X has subtle, latent talents just waiting to pounce on opportunity. ;-\ )

To answer Jeremy's question posed in his post: I don't think it's generational. It could and would have happened to whatever generation happened to have been on-hand for the spectacle.

Jeremy
Jeremy

Well, I didn't quite expect the quick response to this topic because I was more or less just kicking around some thoughts, but there are a lot of great points that have been made.

I think location does play an important role as well. As Webomatic pointed out, in more metropolitan areas, you probably see a lot of 30-somethings still renting (of course, rents are still very high as well, which leads to spending more than possibly necessary on housing). But here in the midwest, you just don't rent, you buy a home. So I've seen just the opposite, where people who have been renting their whole lives in college and beyond are anxious to get into their first house no matter the cost. So that is certainly an interesting observation.

And to address Jen's point, I think there are sub-groups within the generation at each extreme. Those born closer to 1970 were teenagers in the mid-80s, so they were more in tune with the economic times as they began to graduate high school. And on the other end, those born closer to 1980 were not entering the workforce until things had blown over.

So, I was more or less trying to address an "average" and go by a birth age of 1975, which puts high school graduation at around 1993, and college graduation somewhere around 1997. Of course, a few years in either direction would have quite an impact.

Jason Unger
Jason Unger

I don't want to get into whose fault it is, but give a perspective on how it affects us "millennials."

Because of the housing bubble and subprime mortgage crisis, it's nearly impossible for us first-time homebuyers to find an affordable home, get a good mortgage, and have the now almost required 20% downpayment.

Prices went up. People got in cheap, putting no money in. Houses flipped, prices went up again. The bubble burst, but housing prices are still unaffordable.

And now, because of all the people who bought more they could afford with the help of the banks, I have to come up with $80k to put 20% down on a $400,000 house.

I'm already saving 10% in my 401(k), have a 3month emergency fund, have Roth IRAs, and automatic savings transfers. So I should stop my retirement savings because someone else screwed up the market?

It sucks. It really does.

Jporter
Jporter

Great post Jeremy. I think it's more cultural than generational. People across generations and economic levels have been caught up in this. As you say, planning is key. When the sun shines for a few days we tend to forget that it rains sometimes.

Jen
Jen

I'm skeptical that we're the cause of the current financial problems. I think it's a provactive question, but I'm doubtful we're the main cause.

First of all, I wonder if there are sub-generational differences. For example, I am definitely Gen X - born in 1971. When I graduated college, we were coming out of a recession, but I still couldn't find a job until nearly a year after college. This was the same case for many of my friends. Further, I remember tough econimic times in the 80's, so during the dot.com boom I didn't get that excited because I kept thinking that at some point we were going to have a downturn.

Having said that, I do remember in '99 that the IT consultants who were 5 years younger than me were spending like crazy - jewelry, expensive trips, etc. the older co-workers, who were either younger Boomers or older Gen Xers, were amazed that these twentysomethings spent money like this.

Fast forward to '02, and a younger Gen Xer who was born in '79 was criticizing her younger sister for not having a job offer before graduating college. My friend had graduated in '00 and had a job secured by March of her senior year. I and an older Gen Xer (2 yrs older than me) had to explain to our co-worker that graduating during a recession is MUCH different and her sister should be cut some slack.

So I think there could be a mix of attitudes about personal finances and the economy within our generation.

I wonder, too, if overall our genertion received the same amount of financial education that our grandparents and parents did. I handle money well in large part because my family was very open about discussing money and what you should do with it. For example, when I finally got my "real" job after college, I immediately signed up for the 401(k) and opened an IRA (I made a low enough amount I could do both). Yet, I had to explain to my friends who were my age why they should join the 401(k) and what an IRA was. None of them knew.

Webomatica
Webomatica

I'll disagree with this one. A lot of boomers bought multiple homes for flipping purposes. And perhaps it's where I live (the bay area) or who I know, but most of my Gen X peers are still renters (including myself).

wayne
wayne

Of course it's our fault. The boomers were hardworking and dependable, Gen Y are the prodigies that will change the world, and we Gen Xers are STILL the slacker, do nothing, problem creaters we've always been labeled as. By sheer numbers we are a vastly smaller group than the boomers or Gen Y, yet we are such collosal screw ups that we are still making a mess of everything. It's funny how the boomers cater/pander to Gen Y when they do the very things we tried to do and got a bad rap for.

rstlne
rstlne

The boom was driven by significant monetary expansion and a fall in interest rates from double digit to single digit levels. Loose money would've affected any generation in the same way. Let's not blame GenXers for being soft.