Tag Archives: Debt

Generation Y

There has been a lot of articles in the press recently about the latest generation who are coming of age and entering the workforce at this point in time.  Most of the comments being made are negative in nature and are composed of stereotyped statements such as:

They are entitled to it all
They expect to have their cake and eat it
They want less hours and more pay
Lots of leisure time (or at least a balance)
They reject overtime
They are clock watchers
Work is just a way to get money to pay the bills with
They believe high salary and status is important
They don’t wish to dress smartly
They lack discipline in all aspects of their life
The desire to do meaningful work is not important

These things I have picked out from an article from the UK’s notorious Daily Mail: http://www.dailymail.co.uk/news/article-1257083/Hard-work-No-thanks-Meet-Generation-Y.html

It’s an interesting list to review.  As someone who works in education I am one of the many who have experienced the change in attitudes first hand.  When I started teaching I found that students would bring a folder, paper, pens and everything they might need.  Some still do.  But the majority do not.  Even in classes where most things are learnt digitally, expecting a student to bring their USB drive is a high expectation.  Expecting students to take handouts away with them or even take their own notes with them is a simple expectation that has fallen by the wayside.  Yet the students want the highest grades for the smallest amount of work done in the poorest quality.  Tardiness is standard too.  

My personal concern is that if you mix just a few of these suggested traits together and think about this generation financially then storm clouds appear on the horizon. What happens when someone who has a poor work ethic gets a job where they feel they can afford a mortgage – a house is a strong status symbol in many countries. They are likely to be high users of credit because they will feel entitled to use it because they have a job.  They are likely to rack up their debts quickly as they enjoy a comfortable lifestyle that they knew all along they should have.  Unfortunately their employer sees them as expendable Human Resources rather than people, isn’t this true of all generations now, and at some point they will lose their job.  They might be able to quickly gain new employment.  They may not.  But fret they won’t! Bankruptcy is there to save them.  Mum and Dad are there to save them.

I know that these are very sweeping statements that won’t apply to everyone, hopefully very few.  But isn’t this a time bomb waiting to go off?  The economy is already struggling under the weight of the mismanagement of debt by the banking system.  Maybe this generation has witnessed this and realised that integrity and personal responsibility mean nothing as there is always someone there to bail them out?

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Three Years Credit Card Debt Free

This post is to acknowledge that I have managed to remain out of Credit Card debt for three years now.  More recently I have used the card that I have, but I have used it for it’s insurance features rather than the carrying a debt over several months feature.  I made sure that I had money in the bank prior to using it.  I remember paying it off about two days after I charged it to the account.  The online statement system couldn’t handle it.  It said I had to pay a minimum payment but I had no balance.  I have absolutely no intention of carrying a debt now – it becomes just another bill to pay!

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Debt Free In Ten%

I have known about this method of becoming debt free for a while now, its pretty simple and although people have shown interest in it when I have told them about it they haven’t asked for details.  Here is a pretty good place for purging and sharing.

Here’s what you do.

  1. Make a list of all your debts and list them from the smallest to the largest.
  2. Keep paying the minimum on all of your debts through out your time trying this.
  3. While doing this find a way to reduce your outgoings by around 10% of your net monthly income. (turn the heating down a notch, eat less takeaway, drive more sensibly, stop going to starbucks catch a bus, walk to the corner shop – however you do it, make a plan to scrape this together)
  4. Now pay the 10% you have scraped together in addition to the normal minimum payment on your smallest debt (the first on your list from step one).
  5. Keep this going until you have paid this off completely.
  6. Now the fun starts.  Now take your 10% you will have got used to scraping together each and every month AND what was the minimum payment of the first debt (now cleared) and use both of these to start paying off the next debt on the list.
  7. As you clear this debt, add the minimum payment of this second debt on your list to the minimum payment of the first debt and your 10% that you have scraped together and start paying the third debt on your list. … etc.

By the time you clear two to three credit cards and a loan you will have a huge amount to use against your MORTGAGE (oh yeah!).  When you get to this stage you will find that you can reduce a 25 year repayment mortgage to between 7 to 13 years depending on how much debt you were in in the first place.  The funny thing is that as long as you can actually afford to run this system at the beginning, ie pay the minimum each month and find your 10% you will find that the more debt you had at the start the more you will have to pay towards your mortgage in the last stage – and the quicker you can be debt free.  (and thats TOTALLY debt free!)

I can’t pretend that I invented this, I didn’t.  It’s called many things on the web but “Debt Snowballing” is the most popular name.

I have been meaning to share this here for a while.  If this helps someone then mission accomplished.

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Cleared my credit card debt

As of today I have no credit card debt again.  I managed to pay off the last £350.00 worth.  I had been paying around £160 each month on it for the last few months after moving my savings of £1600 onto it last december.  It wasn’t draining my finances completely but it really was an extra heavy weight to carry each payday.

Of course its all my fault, I signed up for the thing in the first place.  What did I buy?  I can’t actually remember which is probably pretty typical of a credit card user.  One thing for sure is that I didn’t use it for everyday spending like food and mortgage.  However I did find myself in what felt like an endless cycle of  “emergency=credit card use”.  I managed to stop this by starting an emergency fund and by being extremely stringent with my spending for a couple of months.  I managed to put £200 by for the servicing of my car (which turned out to be an MOT and new radiator! instead) so that I didn’t use my credit card – I used cash instead.

Car Insurance.
Books from Amazon.
A meal out.
A new computer.
A shirt.
New Car Tyres (pair).
Car repair (door window issues).
The odd ebay purchase.
Tickets to see Steely Dan in concert.
Vet bills.

This is what my statements say that I use my Credit Card for.  Most of these are now budgeted for but the Vet bills are a surprise.  I’m going to have to add that to the list of expenses.

Damn I really hate credit cards.  Things are just going to have to WAIT!  I’m not going back to that kind of suffering again.

Right now I feel like I need to keep it just in case I need it.  Looking at the statements the most expensive things were about £450.  I need to get at least this much into my emergency fund before the next emergency.  Once I have managed six months or so without it I am going to close the account and return the card.

My “credit card cut-up & shut-up day” is August 22nd 2010.

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