The Financial Challenges of Gen Exers

I’ve spent most of my week working on a series of stories for a national publication on the prospects of Gen Xers and retirement. You are a Gen Xer if you were born roughly between 1965 and 1980.

Not surprisingly, the phrase that keeps recycling in my brain as I report on the retirement prospects for many Gen Xers is burnt toast.

Even if the government doesn’t tinker with Social Security, Gen Exers will be receiving less money from this safety net program than the Boomers. Gen Exers are the first Americans who graduated from college with significant debt, but they are expected to somehow be saving diligently for their kids college years at the same time they pay down their own debt. Meanwhile the yearly cost of daycare for these parents can exceed the average college tuition of $6,000 to $8,000 a year.

For many of these Gen Exers (and other Americans), the only way to devote enough money to all the competing financial demands is to reduce their spending.

The prospects of cutting back reminded me of some observations made years ago by Juliet Schor, a media savvy economics professor at Harvard University. In her book, The Overspent American, she observed that Americans in general are no longer trying to keep up with the Jones’s, they are trying to keep up with celebrities.

A star-struck consumer might buy a handbag that Angelina Jolie was seen carrying in InStyle Magazine rather than purchasing a utilitarian bag that costs hundreds less. An iPhone, which has been hyped in the media, might seem like a necessity to those who want the latest electronic toys regardless of the price. Many of us begin to feel entitled to luxuries since we live in a prosperous country where we can drive SUVs with heated seats and retrieve email on electronic devices that are lighter than a peach pit. Under the circumstances, owning a plasma TV is beginning to feel like a birth rite. I’ve certainly been guilty of some of this behavior myself.

But where there are excesses–especially over-the-top ones, there are opportunities to cut back. In the spirit of cutting back, I want to suggest three places where you might get some ideas.

FrugalDad.com, was started by a father of two who suddenly rejected his tendency to rack up debt right after he bought a new truck. He sold it a couple of weeks later and ultimately began his personal campaign to save money so he could someday retire on his own terms.

The next link is from The New York Times which ran a front-page story in March about a new phenomenon — negotiating for better deals. People who frequent garage sales have always done this, but dickering for a better price at stores like Home Depot and Circuit City is newer.

For job hunters, Joyce Kennedy, a longtime syndicated career columnist, told me about a new web site, Indeed.com, that can give you an uncannily accurate idea about the salary of any particular job. You don’t have to waste time applying for jobs that pay woefully inadequate salaries. The web site uses sophisticated algorithms to pinpoint salaries.