Personally, even though my wife and I fit the 35 and under age category, our situations is not one of “no house, no car, less debt,” but one of “house, car, no debt”. While it wasn’t an easy path to get to this point, here is how we did it.
The housing market collapse hit us hard. We had just purchased our first home in the middle of 2008 and we thought that we had avoided the majority of the housing market’s demise.
We were wrong.
While home values in our area dropped by about 10 percent before leveling off, after a short respite they continued their long journey down to the bottom of the market, dropping a total of almost 40 percent and actually still falling in the area of Chicagoland in which we purchased.
We lost nearly $100,000 on this home when we sold in 2011, but we found a way to make the situation a positive one. Rather than just giving up, we took the little remaining equity we had from our home, sold a lot of our unneeded possessions, and downsized significantly. We purchased a much smaller home -- a two bedroom one bath condo -- that was about half the price of our first home. We bought the home outright so that we could avoid the costs and constraints of a mortgage, as well as the associated interest. While our first home experience was far from a perfect one, we did our best to make the best of a bad situation.
CarWhile we are currently a one-vehicle family; I guess the takeaway from that is that we at least have a decently working vehicle. According to the NBC News article:
“Younger Americans are also putting off borrowing to make other big-ticket purchases, including cars. In 2007, when credit was easy to get, nearly three out of four under-25 households had a car, the Pew researchers reported. By 2011, that number had dropped to two-thirds. Despite a recent surge in car buying, and a pickup in auto lending to subprime borrowers, both the number of younger households and their average loan balances have fallen since 2007.”
We have avoided taking on a vehicle loan for several reasons. First off, we downsized to our one-vehicle situation in order to cut costs on things like parking, insurance, maintenance, and upkeep. Secondly, we’ve looked at newer used vehicles, and most of what we’ve seeing out there isn’t much better than what we have now, and making such a purchase could end up being costlier than just maintaining our current vehicle.
Therefore, since we’re not willing to buy new, and the used inventory isn’t on par with what we’d like, we’re willing to have to put $1,000 or so into vehicle maintenance each year since it’s still cheaper than buying a used vehicle or making payments on a new one.
No DebtThe NBC News article state that, “Americans under 35 are carrying substantially less debt than they were before the 2008 meltdown, according to an analysis released Thursday by the
We’re not only carrying less debt, we’re carrying no debt at all. The entirety of our debt in 2008 came from our home mortgage, and the elimination of the debt when we downsized in order to own outright allowed us to become debt free and stay that way. With no mortgage payment, we can ensure payment of bills with greater reliability since we have more money to put toward these areas.
Therefore, while we’re similar to the younger American norm after the 2008 financial crisis and recession, we’re trying to take it a step further and push ourselves even harder to stay financially stable and responsible members of the younger generation.
Schoen, John W. NBCNews.com. “Younger Americans: No house, no car, less debt”. February 22, 2013. http://www.nbcnews.com/business/economywatch/younger-americans-no-house-no-car-less-debt-1C8473187. February 23, 2013.