Disney or Bust

AN ARTICLE PUBLISHED in The Wall Street Journal told the story of Americans in their 30s who are spending heavily and piling on debt as we leave the pandemic behind.

One family with an income of $80,000 in Lincoln, Nebraska—where the cost of living is low, with housing costs 22% below the national average—had $20,000 in credit card debt and $160,000 in student loans.

They used stimulus checks to work down their credit card debt. The couple claims to have saved money during the pandemic, but it’s not clear if that was actual savings or merely saving 20% by buying something on sale. I’m guessing the latter because unplanned spending—on a new water heater and health care expenses—has lately gotten them even deeper into debt.

Taking the family of six to Walt Disney World and other local trips probably had something to do with a doubling of their credit card balance to some $40,000. An online calculator shows that paying the minimum of $635 a month on that credit card will result in $200,000 in interest payments over 30 years.

The wife seems confused as to how this can happen, “a never-ending cycle of playing catch-up,” as she is quoted as saying. Who created this cycle? What will they do when the student loan repayment moratorium is lifted?

I was ready to write something a bit snarky about this couple and other 30-somethings in similar situations, but then I thought it’s really quite sad. When I was in my 30s with four children, the idea of going on vacation to Disney World wasn’t even on the radar. We lived without credit card debt, not because we had lots of cash, but because we abhorred debt—and still do.

In short, we lived well within our means and, back then, it was on my income as an office clerk. How could a family that’s heavily in debt receive government payments, which they use to reduce debt, and then voluntarily double their debt? The real kicker is they don’t seem to understand what they’re doing to themselves.

I wish the article had discussed their retirement savings—or lack thereof.

Some people will see their student debt as part of a national crisis. I see it as making poor choices or failing to leverage the value of their education. Making $80,000 a year from an education that left them $160,000 in debt seems like a poor investment. Perhaps a critique of the cost-benefit of college, or the way that education is put to use after graduation, is in order.

Their vacation took priority over not only debt repayment, but also building an emergency fund. Hence, we can guess where the money for the water heater and medical bills came from. Credit cards. With this pattern of living, the family will never catch up.

I can’t say such financial decision-making is typical, but I doubt it’s unusual, either. Different generations view spending and debt quite differently. Shared life experiences determine attitudes. It seems to me that each generation—especially since the 1960s—creates its own set of excuses. Market crashes, inflation, the pandemic, recessions and job losses are all given as excuses for not saving.

Adverse events have affected all generations. It’s the individual’s response that determines how someone gets through these setbacks—by, say, skipping an expensive vacation. Cutting costs, even on basic expenses, seems to be a forgotten strategy.

No doubt some people will disagree, but the decisions made by this couple—and perhaps many of their generation—seem self-destructive.