NICOLE WHITE
The Miami Herald
In the once-heady world of young adult excess, where happy hour was king, daily trips to Starbucks were a must and dining out was mandatory, a seismic shift has occurred: A growing number in South Florida have turned out of necessity to the frugal habits of their grandparents and others living on a fixed income.
They clip coupons. Organize trips to large discount stores such as Costco and Sam's Club instead of darting to their favorite specialty grocery store. Pack their lunches and consider a $4 cup of designer Joe a luxury to be savored sparingly.
This area's staggering real estate prices and seemingly stagnant income levels -- coupled with debilitating debt from credit cards and college loans -- are causing many young adults, age 25-34, to reassess their lifestyles.
"Going to Starbucks every day is a thing of the past. Now it's a treat," said Paula Nino, 28.
A Web designer for a local trade magazine, Nino has made drastic changes to a once uninhibited lifestyle.
To help pay off $10,000 in credit card debt and other expenses, she routinely empties coins into a small leather-like box to cash in for future splurges. A trip to a furniture store was not an option to furnish her living room. A $60 tweed sofa bed from a thrift shop fit the bill. She packs lunch each day, a savings of at least $35. Cable is gone. So, too, is Internet access. Her most painful trim: abandoning her penchant for fine dining.
"It's expensive. When I was growing up . . . I didn't know a lot about handling money or being frugal at all," said Nino. "I'm still learning."
Indeed, with housing costs statewide rising by 20 percent since 2000 -- while young adults' income has gone up only 10 percent -- they are playing an endless game of catch-up. As it is, most earn less than $30,000 a year in Florida.
Buying a new home isn't even in the equation. Prices of homes for sale in South Florida have more than doubled.
"They're getting crunched," notes Gihan Perera, of the Miami Workers Center, which advocates for affordable housing and economic equity for the working class. "Jobs are further away, child-care costs are high and there's a smaller pool of jobs and housing."
It is a disturbing reality for a group that, years removed from college or technical school, should be at its prime, looking toward settling into marriage and purchasing that first home, Perera and others say. Instead they struggle to pay sizable student loans and credit card debt.
CREDIT CARD DEBT
Between 1992 and 2001, credit card debt among this group nationwide swelled by 55 percent to $4,088, according to a 2004 study dubbed "Generation Broke" by Demos, a research and advocacy group in New York. By comparison, credit card debt among adults age 49 to 55, while slightly higher at $4,861, grew by just 25 percent.
The results, said Tamara Draut, who co-authored the study, is a young generation whose income is swallowed up by paying off debt -- nearly a quarter of every dollar earned by an indebted young adult.
"They're weighed down by student loan debt, with starting salaries that haven't kept up with the cost of healthcare or housing," Draut said. "They never have a chance to catch up and get ahead. This is a generation that finds that it's constantly running to stand still," she added.
Eric Bendross knows this game well.
Bendross, 25, an office clerk for a local government agency, has $20,000 in student loans -- a mammoth price for a culinary degree he may never use.
With an annual salary of roughly $27,000, he says he and his wife, Angela, struggle each month to pay rent, car insurance, utilities, student loan and credit card fees. They have no savings.
"We use coupons, we defer payment on bills, but I'm grateful to have a job, because my benefits there helped pay for surgery," he said.
Like Bendross, more than half the young adults in Florida -- 55 percent -- make less than $30,000 a year, according to figures from the U.S. Census 2004 population survey. With that median income, it means the average young adult is less likely to qualify to buy a single-family home in either Miami-Dade or Broward counties.
Housing prices in Miami-Dade and Broward have more than doubled since 2000, and now average more than $366,000. Rents, too, have seen a significant increase, climbing from $571 for a one-bedroom apartment for fair-market rent in Miami-Dade in 2000 to $775 in 2005, and from $572 to $830 in Fort Lauderdale, according to the U.S. Department of Housing and Urban Development.
"It used to be the case that the people in this bracket is where upward mobility would begin," said Bruce Nissen, director of research at Florida International University's Center for Labor Research. "This is scary because it doesn't bode well for our median young workforce. You expect those numbers for teenagers, but this is the point where they should have established their careers."
Americans as a whole are being forced to cut costs with rising gas prices and utility bills. Floridians are especially squeezed after heavy damage from a busy hurricane season. More and more flock to discount retailers.
Discount websites, such as pinchingyourpennies.com, have seen a swell in members scouring the Internet for coupons and bargain finds, said the site's founder, Shelley Robinson, 33.
For the coveted 25- to-34 age group -- a target for advertisers -- such lifestyle adjustments have become a way of life now, instead of a reality deferred for retirement.
HARSH REALITY
Christine Charles, 33, says she thought life would be a financial breeze when she graduated from college. Her parents had a comfortable lifestyle in Florida; she assumed hers would be the same.
An investigator with the Broward Sheriff's Office, Charles has a salary that is well above the median income, but as a single mother she has been forced to supplement her income by doing other jobs. "Reality slapped me in the face. This is not what I thought it would be," said Charles. "These days, I'm the sale queen. Coupons are my best friend."
At a Miami Beach apartment complex off Lincoln Road, Julienne Gage, 32, and a commune of neighbors share lunches and dinners and scour the clothing racks at thrift shops and discount chains. They load up a van each month to head to Costco.
Gage, who works for a trade magazine and once interned at The Herald, said she has made drastic changes to survive and pay off the $40,000 in student loans from two master's degrees.
"I dropped my gym membership and started swimming at Flamingo Park Pool and going to $5 yoga at the beach on weekends. . . . I cut off my land line and signed up for [cellphone service]. I canceled subscriptions to clothing catalogs so that I wouldn't be tempted to even look at expensive items. I bought a $20 thrift store bike and began using that for all Miami Beach travel."
On a recent Saturday, the group gathered on a balcony to share a meal. "It's cheaper and absolutely much better food than we can get eating out," said Evelyn Posada, 31.
Drastic measures will need to take place at both the state and national levels to help this generation, said Draut, whose book Strapped: Why America's 20 and 30 somethings Can't Get Ahead, will be released in January.
"This is a half of our society where no matter what they do, they can't get ahead," Draut said. "They have debts for diplomas, and that is really stacking things against them."
This is such a depressing article, not only because these facts are so obvious, but because I feel like the 'post-yuppie, post-boomer' generation felt this first. We really incurred the wrath of the so-called 'hippy' generation who went to college for free and did a few years in the peace corps to avoid conscription, because the first group to realize that loan debt would necessarily imperil any altruistic career decisions were referred to as 'whiners' who needed to 'grab a shovel.' Notably, this is when the mainstream and so-called 'alternative' medias exclusively represented the baby-boom perspective. Computer technology has enabled more generations' voices to be heard, but this doesn't resolve the economic issue at hand. Things have gotten much worse since my 'gen' was told to quit whining. I think it's pretty ironic that the baby boomers were the greatest number to benefit from banking policies that indebt the masses for the benefit of the few, but who wants to listen to a whiner?
ReplyDeleteI will say, however, that extravagant lifestyles and buying habits brought some of these people into the place they now occupy. 'Thrifting' as a big sacrifice never really strikes a sympathetic chord with me...... I didn't even start to become acquisitive until I discovered thrift stores. It was never a problem for me to do without.
Your generation did get a major squeeze form the aquisition-fed orgy that was the '80s and '90s. We were somewhat misled as well.
ReplyDeleteI don't blame society for my debts, but I say that the economy based on easy credit that we all were a part of was not a good idea, and the results of the newfound belt tightening that the credit companies are doing to the consumers of this country is going to have some disasterous results.
Gen Xers like the ones in Miami are more common than corporate America would like to belive these days and their collective rejection of excess could send the economy into a tailspin.