“Strapped: Why America’s 20- and 30- Somethings Can’t Get Ahead”

July 12, 2008 at 5:48 am | Posted in Economics, Nonfiction, Personal Finance, Politics | Leave a comment

(April 13, 2007)

Strapped, written by Tamara Draut and published in 2005, aims to prove that current American economic conditions are different for Generation X than for the previous two generations.  Education costs have skyrocketed, job opportunities have shrunk, paychecks are increasing less, a corrupt banking industry has seduced millions into crippling debt,  real estate prices have launched into the stratosphere, and children have become more expensive to raise.  Not only that, but Generation Xers have been excluded from politics because our sheer numbers are fewer than those of our elder generations.  This book has garnered a great deal of attention.  I read it and I thought I would share my observations.

First of all, I am well within Generation X, defined as those born between 1971 and 1987.  I fit many of the statistics in the book:  I had to wait to go to college until I was 24, worked full-time and took a full course load during my freshman year, worked part-time the other three years, graduated with over $20,000 in student loan debt, do not own a home, and would definitely feel raising a child to be outside my budget.  My income was average compared to the case studies in the book.  Yet I did not find I could identify with those case studies, did not find the book inspiring, and did not agree with most of the author’s interpretations.

The first paragraph of the introduction relates the tale of Draut and her husband sorting through CDs to sell to cover bills.  They had $19,000 in credit card debt, built up by “eight years of start-up costs” including household goods, travel to friends’ weddings, and unemployment (and, apparently, compact disks).  Draut devotes an entire chapter to debt, using the epidemic of credit card debt in the last couple of decades to show how the economic climate is hurting Gen X.  She paints a sympathetic portrait, explaining how various people got into debt for “going to the dentist or fixing the car” (11), and how a $35,000 salary was “quickly eaten up by rent, groceries, and bills” (76).  She uses the terms “survival debt” (110) and “unavoidable debt” (115) (racked up in travel to friends’ weddings and family visits).  She describes how any expense such as “an out-of-town wedding, a busted computer, dry cleaning – gets charged to the credit card” (12-13).

The “out-of-town” wedding theme comes up several times in Strapped.  This appears to be an entirely recent trend.  Draut explains poignantly that “to beg off is to lose a friend” (93).  Is she really saying that it is better to live beyond your means and incur crippling debt than to miss a wedding?  Those of older generations generally made the effort to hold either the wedding or the reception in the home town – maybe have one in the groom’s hometown and the other in the bride’s.  If it proved to be impossible to attend someone’s wedding, it was considered good form to send a thoughtful letter and a gift.  (For instance, one of my best friends got married the same day my brother did, at the same time, in a different city).  It was also understood that sometimes people moved away.  If the relationship was strong, letters and calls were enough to keep the friendship alive.  If it was not, well, people learned to make new friends, right?  In either case, one wonders what sort of friend would make spending money you couldn’t afford a condition of the friendship – and what kind of person would get sucked in by that kind of attitude.

Education is the subject of the book’s first chapter.  Draut makes a very convincing case for how earning at least a bachelor’s degree is far more important for Generation X than for those previous.  She has all the numbers for how costs in real dollars have increased at an astonishing pace, and how most students start their adult lives dragging the shackle of thousands of dollars in student loans.  (I found this chapter painful to read, because it echoes my own frustrating situation – and I got a much later start than most of the examples in the book).  She goes on to demonstrate that these costs keep many students from finishing school, leaving them with large debts but without the degrees that could actually lead to higher earnings.

Is this a tragedy, though?  College students have always been poor.  Literature is full of examples of students wearing holey clothes, living in drafty garrets, using grocery money to buy textbooks, etc etc.  Students of the Baby Boom generation got through school by eating spaghetti and beans and rice, having small wardrobes, and skipping haircuts (and defaulting on their student loans before going on to comfortable lives – thanks for that, by the way).  Students have always expected to be poor and hungry during the college years – knowing with certainty that it would be easier on the other side, and cherishing the opportunity to “build character.”  (Does anyone use that expression any more?)  Now students expect to own cars, eat in restaurants, and have fashionable wardrobes, not to mention go on vacations, study abroad, and go to concerts (which are also more expensive than they used to be).  Dropping out of school before completion, while still incurring debt, is like swimming halfway across a river and then turning back because “it’s too far.”  If you’re already committed enough to suffer debt either way, can’t you just stick it out a little bit longer?

Draut aims her book at the children of the middle class.  She says that to write about illegal immigrants, high school dropouts, and the poor would require “a wholly different book” (25-6).  No kidding.  As a person who entered the middle class, let’s see, last year, I was shaking my head over this book from the first word.  I knew in kindergarten that if I wanted to go to college, have my own family, and own a home one day, I would do it by the sweat of my brow and it would take a long time.  My parents put each other through school and bought a home in the 15th year of their marriage.  Having anyone else shoulder the financial burden of my college education was never on the table.

It’s true that my generation is having a tough time, and it’s true that economic conditions aren’t what they were in the 1950s or the 1980s.  But when have people in their early 20s and 30s ever had an easy time, piling up money in bushel loads, drinking mai tais by the pool?  Youth is the time to make big plans for the future – over a bowl of cheap starchy food – and scrimp and save every spare penny.  Draut uses statistics to show that Gen X’s debt load is similar to that of Baby Boomers at the same age.  There’s a reason she doesn’t compare it with that of the “Greatest Generation,” our grandparents who grew up in the Depression Era.  They did not go into debt, plain and simple.  Complaining that we learned our consumption habits from our parents is pretty feeble.

Yes, of course I would like to be debt-free and own my own home.  I’m not silly.  In fact I’m on track, although I graduated class of 2004 and have barely scraped the skin off the top of my debt.  I put aside the maximum match for my 401(k), have zero credit card debt, and save an additional 10% of my income.  How do I do it, when in all other respects I share the horrible economic conditions of my peers?  Simple – I spend virtually nothing on entertainment.  I never go to concerts, buy CDs, or go to bars, I rarely travel – and that with a $100 budget – and I don’t have cable.  I don’t eat convenience foods or buy clothes that require dry cleaning – and I don’t pay retail.  I budget for those entirely predictable expenses like going to the dentist and car maintenance.  I have a month’s rent saved.  If I lost my job I would walk out the door and call the temp agency.  When money is tight, I clean house on the side for extra cash.  If I had to ask for someone to lend me “$10 for something to eat” (38) it would last me a week.

If there is one message Generation X should get from this book, it is an emphasis on the extreme importance of planning ahead.  If we can’t live within our means, come up with ideas for better careers or new businesses, and save and save hard, we’re just never going to be able to keep up.  Ours is a time of increased global competition, increased corruption (Enron, WorldCom) eating into possible investment proceeds, increased costs in every arena, and catastrophic climatic and ecological conditions.  Times may very well get worse before we reach old age.  If we sit around waiting for politics to take intest in us, try harder to catch our attention enough for us to participate, and solve our problems, well, we may be exhibiting the most patience we’ve ever shown.

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