Being debt free, it took me to get retirement to achieve it is freeing. Knowing that the fundamentals of our life are covered, in as much as they can be, is an amazing space to be in.
It's inspiring to hear that you've achieved this milestone in retirement. Financial freedom truly provides peace of mind and allows you to focus on enjoying life without the burden of debt. It's encouraging to know that careful planning and dedication to managing finances can lead to such a rewarding and secure place. 🙂
Debt free: no mortgage/paid for house, no student loan debt, no credit card debt and no personal loans! This has been very intentional and not easy, but very rewarding. We are now doing a bit of catch-up for retirement.❤
@tressasalewis7004 I call it "condiment mode" (ketchup mode). And who doesn't love ketchup? I would describe our debt free journey as a time of abject misery, in a word...exhausting. As we got closer and closer to that day when we would have it all paid off, we thought about how nice it would be to just blow some money simply for the fun of it. Now that we are in full bore catch-up mode, we are more frugal than we ever were during our debt free journey. A lot of people talk about how inflation is eating up their budget. It is true and I feel so bad for people struggling to make essential expenses. But I have to say that as things have gone up in price, our expenses have stayed the same in some cases gone down. Intentional with our money is the key. Harder work for us, we prepare our own meals for example and shop for good food at the lowest cost. At a time in our financial lives where we could hire a maid, we do literally everything for ourselves and at the lowest cost. We do this because we know our future self will thank our present self.
I'm an older Gen X and proud to be part of the 23% that is completely debt free. Great video! I especially love the five ways to spend money but only four really brings happiness. That should be very eye opening for some folks.
Debt absolutely tanks my mental health. Especially debt incurred from unexpected things or emergencies. Car debt or mortgage didn’t bother me much (but I was always living below my means and cautious). I’ve been in situations several times in my life where I couldn’t pay off my entire credit card debt (due to piggy-backing, insurmountable emergency expenses) and I had such a hard time with it. I’m now finally debt free, and even though we’ve just had yet another round of big emergency expenditures one on top of another, we have been able to get past them with only depleting our emergency savings, not having to go into debt. That has been huge for my mental health.
I’m 65 and newly retired with only a small mortgage balance (under 50,000). I just want to say how REFRESHING it is to see a young person include Baby Boomers and the Silent Generation in their financial videos! Well done!
Baseball, Hot Dogs, Apple Pie and Erin Talks Money! March 15, 2018 was the day when we said to ourselves enough is enough, changed direction and made that first important move to get our finances under control. We were in that group of couples with a six figure income that were living paycheck to paycheck. It was that day in 2018 when we stopped using debt and started acting like adults. From March 15, 2018 to Dec 6, 2022, we (Sue & Tom Inc.) we paid it all off, every cent. We became Debt Free Babies! Home paid off, no credit card debt, no personal loans, no student or parent plus loans, no car payments. On basically the same income we had in 2018 (adjusted slightly up for raises), we are now saving 50% instead of just keeping our heads above water. Before watching this video we purchased $500 of index fund shares. Our cup runneth over.
Debt free. Buying experiences does not give long term joy. Unless they are purposeful like family experiences that draw you closer. But most of those can be done CHEAPLY. Love the video!
Erin, great content as always! My wife and I have been debt-free since around 2007, and one thing that being in that position does to strengthen mental health is the insulation from bad economic news. Losing a job is bad news, but not a crisis. Having a significant repair (assuming that along with being debt free you have a healthy emergency fund) is irritating, but not panic-inducing. Also, the level of discipline required to live debt free tends to build up a healthy resistance to the clamor to buy new (stuff, experiences, time, even giving) that others push on us.
I'm 59 and wife is 49. Zero debt with a 6 year old house, two new 2021 vehicles and I'm retiring in two years with a hefty 401k and savings acount. We have always lived frugle.
I have a credit card with a Three hundred dollar credit limit I budget and I live very frugal no mortgage no car loan living debt free is a wonderful feeling ❤❤❤❤
I've been debt free for three years now. What a relief! My wife and I have about 10 more working years, so we are able to save for life's expenditures fairly easily. We are planning a major trip (bucket list type) next month and have already paid for everything except dining. We are also able to max out our Roth IRAs and my Roth 401k. She does contribute 50% to her 403b as well.
I CAN'T believe people are willing to go in DEBT for those frivolous things!!!! Only good debt is house, limited 3 year loan on a car and/or student loans. INSANE! I'm FIRE and although I know people do spend on momentary pleasures, its so AGAINST my frugal nature. EYE Opening video!
I have a friend that is in his mid-50's, lives in low income housing, and games the system. I am also in my mid-50's, own my own home, have zero debt..except for the rare freak accidents in life, it is ALL about the CHOICES we make !
Wise advice as always! Unnecessary purchases are a means to and end. I've noticed that the enthusiasm for a new item begins to taper down rapidly after the first day. Even a new car; it's exciting when you drive it home from the stealership, maybe even for the first couple of weeks, but soon, boredom will kick in, and the enjoyment of a new vehicle will be overshadowed by the high car payment. I'm in the 23% with no debt, and plan to keep it that way. On a side note; I LOVE the bloopers at the end!
I love the outtakes! I bet if you were to survey your regular viewers you'd find a much higher percentage of debt-free individuals (or households) than the generational averages you reported. Debt-free is very freeing and I am so glad that I worked to achieve it. I also think it made me debt-adverse. It's pretty difficult to quantify that level of peace-of-mind.
Love your content, new subscriber here! About debt, I don't like it and I'm glad to be down with a mortgage only. We've decided to keep investing as our mortgage rate is under 3% and the balance is around $100k left so we can pay it off quickly from our investments if we really wanted to.
I am 40 years old and have a paid off house, 3 cars paid off and no CC debt. I was 100% debt free in January of this year but ended up getting sick the very next month. I now have a little over $8,000 in medical bills after having surgery. The reason it's so high was because I hit my max out of pocket 2 weeks before it started over! My insurance at my job starts over on July 1st. And I had to have thyroid surgery on the 23rd. So, with that I hit my max out of pocket again! It really sucks but at I feel so much better so it worth it in the long run. Now to get these bills paid off! I also have a savings account, use cash envelopes and sinking funds. I have a state funded Retirment plan ( 17 years so far), so I feel I am doing pretty good. My husband and I live a VERY minimal life style so that helps too! Trust me I was not always good with money!
Great video, thanks. I am currently debt free and that has always been a goal/priority. Some of the things you say about buying things for happiness are not universally true, they are generalities that vary from person to person. For example, I always hear (especially from my spouse) “I prefer experiences over things”. Guess what? I do not. Certainly, impulse purchases have a short shelf life in terms of generating happiness. But when I buy something I really care about it, is often old (antique) and quirky, relatively one of a kind. That doesn’t mean it has a high, or any, market value. But I can look at a beautifully made antique I purchased twenty or thirty years later, and still be struck by how beautiful it is and how its presence in my home just gives off good vibes. Comparatively, I find experiences (vacations, concerts) to be a lesser value for my money because they feel very brief and fleeting. I know I am not in the mainstream, but I also don’t believe I am the only person with this attitude. All that said, for me the best thing money can buy is freedom with my time.
Another excellent video Erin. I have had absolutely zero debt since about 2000 when my mortgage was paid off. I have never been happier. I have complete peace of mind. My motto is if I can’t afford something and have to carry a balance to buy it, I don’t need it. I know too many people who use credit cards to supplement their income. Credit cards are a great way to monitor your expenses but you MUST pay them off in full every month.
I love your videos. You're plan, clear spoken, and just fun to watch. You're not one of these 'Download my book' or 'buy my book' type of person like many of the others in this forum. As far as the topic of debt, My wife is 70 and I'm 67. The only debt we have is about $10,000.00 on a car loan at 3.5%. Home, paid off. Schooling? Paid as you go. Travel? Save and pay before you go. Our only other financial we have to worry about is helping 1 of our 4 children, but he does a lot for us also, so I say I'm pretty lucky.
Good morning Erin. Great video and discussion. The paradox of thought and behaviors across multiple generations, as your date reflected, is astounding, I was surprised to see some of those stats. If people would just learn to live within their means. I enjoyed the couple of outtake clips you included at the end. I think they might enable viewers to really connect and relate to you. Keep up the great work and content Erin and have a blessed week. Larry, Central Valley, Ca.
As a 34 year old male, single no kids never married with no consumer debt, small mortgage making six figures investing 40% of my income. Life has been been good! Soon to cross over millionaire net worth within the next few years. Never understood why people carry debt, make poor choices and start families when clearly they are not financially stable or ready.
@@jasonleatherwood2172 I don't agree with his blanket statement about families, but to say he's not successful because he doesn't have a family is simply wrong. That being said, I applaud your own financial accomplishments.
In my 20's and 30's I got into and out of debt. The second time I vowed to live on a budget, keep a paycheck ahead in my checking, and stay out of debt. It is the lessons I learned along the way that helped me become free of debt and want to stay that way. I remain debt free including house, cars, and a 6+ month emergency fund.
Older Gen X here - Currently debt free, but my triplex is needing renovation. I've been putting it off so I might have to get back into debt again for that. Not sure if I will ever be completely debt free again so I'm enjoying it while it lasted🙂
I had a lot of debt when I graduated college and first started working. I bit the bullet and started paying it off and life has become much less stressful as a result. We're on schedule to retire 100% debt free with exception of a small amount left on our 2.3% mortgage. The property has already appreciated over $500,000 so I'm perfectly fine taking as much time as possible to pay off the remainder of that mortgage.
I think it's important to note that average car debt has increased significantly. It's hard to get ahead financially if hundreds of dollars are going out the door each month for a depreciating asset. Our philosophy is to hang on to vehicles as long as possible and save up for a new car. My parents think it's not possible to pay cash for a car, but you just have to think about it in advance, not when your car is on its way out
61 just paid my mortgage off on a high value home.Just my credit card which im paying off next month, with the saved mortgage payment.Then im on to investments, have 4 cars, camper ,boat and other hobbies
This is for you Erin. Clearly you have a finance and accounting background and education, as do I. So maybe you can relate to this. I graduated college in my late 20s after serving in the military, so I was older and more mature and had a little more of life figured out. What did they teach us in college about spending? They taught us do not spend a lot on depreciating assets. Well do you know one of the most common purchases I've seen in my life and career thus far from those who actually understand money? It is high end vehicles. The number of BMWs, Mercedes, Audi, Lexus, Cadillac Escalades, etc. I saw accounting and finance professionals driving has been staggering and many go into debt to afford these. It is not good for anyone to go into debt for a vehicle, but it is worse for those who know better!! Overall, debt is not good but if you are going to carry debt, at least make it for the purchase of an asset that maintains its value or appreciates such as a mortgage for your home!! And fyi, over the years I have been trying to embrace a simple life, one that rejects stuff and materialism and embraces more minimalism and that has made me happier!!
It's hard to make sense of the "average mortgage debt" metric because the number sounds ridiculously low - until you realize that it probably includes a lot of people with zero mortgage debt because they don't own a house.
I felt just the opposite, I felt it was ridiculously high. It must not be including everyone with paid off houses/renters. I'm 44 and my mortgage debt is 35,000. Also remember what housing prices were like for the last 20 years. In my market, 22 years ago, a good starter home was $90k, 16 years ago, it was 140k, 7 years ago, 150k, today 250k. I would gess that the average mortgage is over 8 years old. And there are thousands of 30 year notes with less than $10k left on the balance.
💯 debt free, house paid off, no car payments and a two salary house hold where one salary is completely funding our retirement portfolio… like me nana used to say “ go kick today a$&” yall
I’m a boomer at 61 years old in the messy middle stuck between assisting a 23 year old starting out after college and in-laws in their 80’s. Mortgage debt of $132K, auto loan debt of $23K, no credit card debt or personal loan debt.
I got my first credit card in 1978 and made a small purchase with it. I paid a portion of the balance on it thinking I would pay the rest later and have some cash left over. I was stunned that I had to pay $3.00 in interest as the interest was paid on the total charged for the month going back to the time of the purchase. In my outrage, I swore to never pay interest on credit card debt again - and haven't. Being debt free allowed me to retire when I wanted to...
To get a handle on goofy spending, make a monthly dollar amount. Make it reasonably high so you can be satisfied without having to exceed it, then don't exceed it. Really helped me self-regulate. It's not about the money as much as it is about being forced to wait till the following month. You'll be blown away by how much less crap you buy if you wait a month...
@ErinTalksMoney Erin, thank you for this video and your many others. I've really appreciated them! In most of your videos, you use appropriate statistical terminology and source your references. Unfortunately this one is loose in use of "total" and "average", doesn't fully source references, and doesn't explain why "median" is almost always a more useful indicator than "mean" in the context of consumer finances. For example, 0:05 uses "total" in "total debt for all Americans" as a sum but 1:50 uses "total" in "the youngest generation Gen Z has a total mortgage debt" as some kind of average. The Bankrate sources are credited briefly on screen but incompletely (no dates or links etc). I saw no sourcing at all for the debt statistics by generation and type. In some of your previous videos you have emphasized the importance of median over mean due to skewing from the tails / outliers, I think it just got omitted here. Again, I really appreciate you and your channel and content, I just ask that you please consistently credit your sources fully, and remind viewers of the distinction between mean vs median and why median is usually more useful. If it would burden the videos to have this in the script, this information could be included in the overview text instead. Thank you so much! Glenn
Thanks for the feedback Glenn! I will make sure to be more careful going forward, and include citations and links for those who are interested in exploring the topic further 😊
I did carry both a mortgage and a car loan when a car died unexpectedly, I would never carry a balance on a credit card. That’s just crazy. Money you borrow isn’t yours to use. A credit card is a convenience only…
It’s very important to watch the amount and type of debt you have. I have a mortgage at 3.5%. I could pay it off, but I earn more than double that with my investments. And, each year I’m with dollars that are worth less. I did have a car loan at 1.8% and the same factors above also apply here. I wish could have gotten more money for longer. Lastly, I had cataract surgery on both eyes last year. The bank offered me 0% for three years. You know my answer. In conclusion, the terms conditions and current economic conditions make all the difference. Be ever vigilant of the pitfalls of debt but don’t be afraid to use it when favorable.
Difficult knowing what to do with spare cash in the UK right now. Like you, I look for high-interest and I'm favouring 1-, 3-, 5-year fixed-rate bonds to get it. Post-tax, it's possible to beat the expected inflation-rate.
Debt = how much you owe and how many "people" you owe. The more debt the more weighs on you mentally because you're not free! It owns your money and time. Love what you said about setting up your future self for exponentially better opportunities and lifestyle. Also agree 100% with using money to buy back happiness, like paying someone to mow your grass while you do things that make you happy, like going to the gym or anything else, honestly. lol. 😂
You notice net debt just keeps moving up until boomer. And that being average is sad when 3 of 4 of those I have 0 debt as a millennial and even the auto loan is under the average, and house paid off
These stats aren’t averages for the people who have each kind of debt in each age group? I have a hard time thinking a significant amount of Gen Z has a mortgage, for example. The mode for at least most of these numbers is surely 0, and whether that is included or not in the average or median makes a huge difference. Heck, the median could be 0 on something like personal debt, for example, so even that distinction can make a big difference.
It boggles my mind that so many people are willing to take on debt for entertainment. Those numbers you showed are crazy, and I see it happening around me.
I have NEVER considered debt as normal. We paid off our home after 5 years in 1992. Since then we have been debt free for the past 32 years. We have paid cash for all cars we have purchased in the last 35 years and we have never carried over a debt on our credit cards.
Almost 42. Disciplined since out of college. Started with 0. Sitting on 2 mill+ net worth/0 debt. Key being disciplined to the core and will always be. Will work still for 15 yrs atleast bec i love it. Moral is - if I can do it, anyone one. 😎
Debt is a necessity in life but can also be a huge financial advantage. But not all debt is equal. I have a mortgage, home equity loan account, and free interest extended payoff loans on various purchases - Kubota tractor, wife's sewing machine, truck. The mortgage and HEL are low interest. The cash I saved with these loans is invested at a much higher return than the debt rate, so I make money off the loans. Plus the mortgage and HEL loan interest is tax deductible..a win win for me. I would never pay credit card interest, take out a personal loan, borrow money to buy a vehicle, or get an education......all bad debt!
THIS!!! 1000% THIS!!! But when your daily basic needs require using credit cards because your income isn't enough, then life is going to get really rough. And often times, in those situations, people aren't thinking very far in the future because even their basic income is unstable. They don't have the energy to plan. To see that investing a in themselves a little bit every day will lead to something better. Education leads to knowledge. Knowledge leads to opportunities. Opportunities lead to income. Income leads to stability. Stability leads to wealth. And, the cycle repeats.
Just read a story about Colorado woman $20k+ in debt, getting further into debt by flying to Paris for Olympics. Story explained how $300 / month toward her debt would take 4.5 years to pay off, and she has to get serious about this now, as 34% of her current take home pay is already earmarked for servicing debt. They were worried she will never be able to retire, and I thought that's the least of her problems. With that lack of self control, she's more likely to go bankrupt long before she needs to worry about retirement.
I don't have any debt currently (other than credit card, which I pay promptly on the 1st of every month). I'd be willing to go into debt for business and house (currently renting alone). Just turned 40 in June.
Taking on debt for entertainment and leisure is a terrible decision. But aggressively paying off low interest good debt like a mortgage, if you're relatively young, may also not be the best approach. Balance is key. If you amass a huge nest egg while sacrificing for years, will you be healthy/active enough to actually enjoy it in your later years? Experiences often lead to most impact on long term happiness as Erin indicates...so if it takes you 20 years instead of 10 to pay off your low interest mortgage for ex, but you are able to spend thr difference to afford meaningful experiences and otherwise live within your means, I see no issues with that. Just avoid consumer debt and pay cash whenever possible
What surprised me is that gen z mortgage debt is less than millennial and x mortgage debt, has home prices gone down? what can explain the gen z lower mortgage debt?
In these surveys measuring "willingness to take on / go into debt", how do they define it? I pay for virtually everything with a credit card - so every purchase I make, "puts me into debt". I never carry a balance, but nonetheless I "took on debt" when I bought a movie ticket yesterday...
I feel that including mortgage/HELOC/HEL on these lists is wrong - unless they consider the net value of the asset minus debt and people are upside down on mortgages. Because.... If I borrow $100k to buy a house, but it is worth $200k, there is no debt, and there is a positive asset. So is this graph at 0:14 gross or net? Similarly with car. Unless upside down, it should not be on this chart. Thanks.
I completely disagree about buying stuff not bringing happiness. I suppose it depends on what you buy but for example I’m a woodworker and buying a high quality tool that I know will last a very long time brings me tremendous joy. I appreciate the quality of that tool everytime I use it and the quality of my tools directly impacts the quality of my work. In addition I have found that high quality tools hold their value very well and if I decide to sell a tool I can get a majority of my initial investment back. I suppose the people that dont get happiness from purchases are buying non essential trinkets or other garbage thats clutters up your house.
There are various aspects to it BUT I think when you buy stuff to show off to others i.e. Keeping Up with the Jones's you will find that the short-term euphoria wears off very quickly and it is a never-ending cycle because you have to buy more and more. And that is all too common in America! Or if you buy stuff on impulse, you will also lose interest, and the short-term euphoria will wear off quickly. But yes, when you buy something useful and something you will often use, you may receive greater joy and happiness for a long time!
You're building equity as you pay it down, and most folks don't have enough cash on hand to buy a home outright. If you do, then congratulations, but you're in a tiny minority.
Just curious to what taking on debt really means. If I put a vacation or eating out on a credit card that I pay off in full each month with no interest, does that count as credit card debt?
Debt free shouldn't be the goal. Living life free of debt that is less than investment returns is key. Just paid off my 2.9% car loan, but why pay it off sooner when I'm averaging 11.4% returns in the market. Same as my 2.375% home loan. No bad debt and $860k in investments (401k, Roth IRA, HSA, and brokerage account) at 41. Bad debt is bad, but good debt is a great tool to grow your investments. Key is to INVEST money and don't save it: poor people work for money while rich people have their money work for them. BTW all this was done while earning less than 6-figures.
I'm sorry but the newness of buying some things definitely hasn't worn off for me 😂 It's because I bought things that spoke to my values, are related to hobbies, and/or made my life easier in some way. It's just not that _every_ purchase is valuable like this.
Give us some examples of purchases that speak to your values. I am genuinely curious what they may be. Because everyone's values are different and yes your purchases and lifestyle will say a lot about your values. Example, I am middle age, and I do not get all excited when I see someone driving a $75,000 vehicle for example. To be absolutely honest my first thought is compensating for something. I don't know what, but something.
In the breakdown of types of debt, is the credit card debt figure the average balance? Or is that a balance that’s carried over the the next month? We have a handful of cards but we also have the cash to pay them off when the bill comes due, I don’t count that as debt.
No debt. Nada, Zilch. Zero. Nothing at all. Been that way for decades now. Retired at 52. Yes, it can be done. Live below your income and don't try and beat the Jones'. Funny fact, I pay my credit card balance every month. I also charge EVERYTHING so it can be high. If my balance is high my credit score goes down because they think it's debt. It could fluctuate 10, 20, 30 or more points per month because of that! On the flip side when it goes down the credit scores goes up by similar amounts.
Mid-40s and I have the liquid assets to wipe out my only debt, which is my mortgage. I am also staring down a huge reno bill. So do I live debt free with the worst house in the neighborhood or carry a modest debt and fix up a house?
Can you explain the breakdown? For instance, my Gen X wife and I have 500k in a mortgage. In your example, do we each have 250k in mortgage debt? Or are we counting it twice? How does the car debt calculated? Divided as well?
Being debt free is a good goal, but don’t lose the forest through the trees. Low interest debt for needs (home and transportation) is ok. Debt for wants (vacations, weddings, new sports cars, boats, campers, etc) is bad. Paying on a 3% loan with tomorrow’s money while averaging 10-12% in the market is a better plan.
Would you kindly make an updated video about retiring on Crypto, the last one was about 2 years ago, now we have crypto ETFs in the market and potential new regulations and even the idea of having Bitcoin as a reserve asset and the kickoff of game theory. I'd love to know your thoughts! Much thanks
Take on debt for a taco??? We really are in trouble. I've seen friends do it for a concert and I thought that was bad. I don't like to judge cause I'm debt free and my lifestyle has gotten a little out of hand sense then.
ZERO debt here...lived within my means, saved, paid bills on time, owe no one
Being debt free, it took me to get retirement to achieve it is freeing. Knowing that the fundamentals of our life are covered, in as much as they can be, is an amazing space to be in.
It's inspiring to hear that you've achieved this milestone in retirement. Financial freedom truly provides peace of mind and allows you to focus on enjoying life without the burden of debt. It's encouraging to know that careful planning and dedication to managing finances can lead to such a rewarding and secure place. 🙂
Debt free: no mortgage/paid for house, no student loan debt, no credit card debt and no personal loans! This has been very intentional and not easy, but very rewarding. We are now doing a bit of catch-up for retirement.❤
great position to be in!
Congratulations 🎊
@tressasalewis7004 I call it "condiment mode" (ketchup mode). And who doesn't love ketchup? I would describe our debt free journey as a time of abject misery, in a word...exhausting. As we got closer and closer to that day when we would have it all paid off, we thought about how nice it would be to just blow some money simply for the fun of it.
Now that we are in full bore catch-up mode, we are more frugal than we ever were during our debt free journey. A lot of people talk about how inflation is eating up their budget. It is true and I feel so bad for people struggling to make essential expenses. But I have to say that as things have gone up in price, our expenses have stayed the same in some cases gone down. Intentional with our money is the key. Harder work for us, we prepare our own meals for example and shop for good food at the lowest cost. At a time in our financial lives where we could hire a maid, we do literally everything for ourselves and at the lowest cost. We do this because we know our future self will thank our present self.
All sorts of debt. Huge amounts. Low interest rate. Earning more in dividends.
‘Debt’ doesn’t tell the whole story.
I am a wimp, I do not like risk.
I'm an older Gen X and proud to be part of the 23% that is completely debt free. Great video! I especially love the five ways to spend money but only four really brings happiness. That should be very eye opening for some folks.
No debt since 1998. Living off my dividends since I fully retired at 59. I will be applying for my max SS next year at 70.
This makes me feel better about my debt. 40 years old with $97,500 mortgage debt. No other debt!
No debt in the last five years. It buys you peace of mind and happiness
I enjoy the bloopers at the end. It makes your videos more unique and relatable. Those debt levels are higher than I expected to see.
thanks!!
Agreed!
Love the bloopers!
Debt absolutely tanks my mental health. Especially debt incurred from unexpected things or emergencies. Car debt or mortgage didn’t bother me much (but I was always living below my means and cautious). I’ve been in situations several times in my life where I couldn’t pay off my entire credit card debt (due to piggy-backing, insurmountable emergency expenses) and I had such a hard time with it. I’m now finally debt free, and even though we’ve just had yet another round of big emergency expenditures one on top of another, we have been able to get past them with only depleting our emergency savings, not having to go into debt. That has been huge for my mental health.
I’m 65 and newly retired with only a small mortgage balance (under 50,000). I just want to say how REFRESHING it is to see a young person include Baby Boomers and the Silent Generation in their financial videos! Well done!
Baseball, Hot Dogs, Apple Pie and Erin Talks Money!
March 15, 2018 was the day when we said to ourselves enough is enough, changed direction and made that first important move to get our finances under control. We were in that group of couples with a six figure income that were living paycheck to paycheck. It was that day in 2018 when we stopped using debt and started acting like adults. From March 15, 2018 to Dec 6, 2022, we (Sue & Tom Inc.) we paid it all off, every cent. We became Debt Free Babies! Home paid off, no credit card debt, no personal loans, no student or parent plus loans, no car payments. On basically the same income we had in 2018 (adjusted slightly up for raises), we are now saving 50% instead of just keeping our heads above water. Before watching this video we purchased $500 of index fund shares. Our cup runneth over.
love it!
We started 3 years earlier, and other than mortgage at a low rate, all debt gone. It is great.
Debt free. Buying experiences does not give long term joy. Unless they are purposeful like family experiences that draw you closer. But most of those can be done CHEAPLY. Love the video!
Erin, great content as always! My wife and I have been debt-free since around 2007, and one thing that being in that position does to strengthen mental health is the insulation from bad economic news. Losing a job is bad news, but not a crisis. Having a significant repair (assuming that along with being debt free you have a healthy emergency fund) is irritating, but not panic-inducing. Also, the level of discipline required to live debt free tends to build up a healthy resistance to the clamor to buy new (stuff, experiences, time, even giving) that others push on us.
I'm 59 and wife is 49. Zero debt with a 6 year old house, two new 2021 vehicles and I'm retiring in two years with a hefty 401k and savings acount. We have always lived frugle.
Wow...eye opening for sure. Debt is a harsh headwind on the trip to financial freedom.
I have a credit card with a Three hundred dollar credit limit I budget and I live very frugal no mortgage no car loan living debt free is a wonderful feeling ❤❤❤❤
I've been debt free for three years now. What a relief! My wife and I have about 10 more working years, so we are able to save for life's expenditures fairly easily. We are planning a major trip (bucket list type) next month and have already paid for everything except dining. We are also able to max out our Roth IRAs and my Roth 401k. She does contribute 50% to her 403b as well.
Good Job! 👏 The best for you and your wife!
I CAN'T believe people are willing to go in DEBT for those frivolous things!!!! Only good debt is house, limited 3 year loan on a car and/or student loans. INSANE! I'm FIRE and although I know people do spend on momentary pleasures, its so AGAINST my frugal nature. EYE Opening video!
Oldest year genx’er. The average debt load in this video is shocking.
I have a friend that is in his mid-50's, lives in low income housing, and games the system. I am also in my mid-50's, own my own home, have zero debt..except for the rare freak accidents in life, it is ALL about the CHOICES we make !
so true!
Your friend is a leech. Government money comes with all sorts of strings.
@@robnelson6545 I am not saying they are or are not....but what does it matter when what he is doing is 100% LEGAL ?
Wise advice as always! Unnecessary purchases are a means to and end. I've noticed that the enthusiasm for a new item begins to taper down rapidly after the first day. Even a new car; it's exciting when you drive it home from the stealership, maybe even for the first couple of weeks, but soon, boredom will kick in, and the enjoyment of a new vehicle will be overshadowed by the high car payment. I'm in the 23% with no debt, and plan to keep it that way. On a side note; I LOVE the bloopers at the end!
thanks for watching & thanks for sharing a bit about your journey :-)
Never carry credit card debt.
Just paid off our car 4 years early. 46k left of my wife's student loans.
Then there's our mortgage 360k.
I love the outtakes! I bet if you were to survey your regular viewers you'd find a much higher percentage of debt-free individuals (or households) than the generational averages you reported. Debt-free is very freeing and I am so glad that I worked to achieve it. I also think it made me debt-adverse. It's pretty difficult to quantify that level of peace-of-mind.
I agree, I have a very financially astute audience!
Love your content, new subscriber here! About debt, I don't like it and I'm glad to be down with a mortgage only. We've decided to keep investing as our mortgage rate is under 3% and the balance is around $100k left so we can pay it off quickly from our investments if we really wanted to.
I am 40 years old and have a paid off house, 3 cars paid off and no CC debt. I was 100% debt free in January of this year but ended up getting sick the very next month. I now have a little over $8,000 in medical bills after having surgery. The reason it's so high was because I hit my max out of pocket 2 weeks before it started over! My insurance at my job starts over on July 1st. And I had to have thyroid surgery on the 23rd. So, with that I hit my max out of pocket again! It really sucks but at I feel so much better so it worth it in the long run. Now to get these bills paid off! I also have a savings account, use cash envelopes and sinking funds. I have a state funded Retirment plan ( 17 years so far), so I feel I am doing pretty good. My husband and I live a VERY minimal life style so that helps too! Trust me I was not always good with money!
Great video, thanks. I am currently debt free and that has always been a goal/priority. Some of the things you say about buying things for happiness are not universally true, they are generalities that vary from person to person. For example, I always hear (especially from my spouse) “I prefer experiences over things”. Guess what? I do not. Certainly, impulse purchases have a short shelf life in terms of generating happiness. But when I buy something I really care about it, is often old (antique) and quirky, relatively one of a kind. That doesn’t mean it has a high, or any, market value. But I can look at a beautifully made antique I purchased twenty or thirty years later, and still be struck by how beautiful it is and how its presence in my home just gives off good vibes. Comparatively, I find experiences (vacations, concerts) to be a lesser value for my money because they feel very brief and fleeting. I know I am not in the mainstream, but I also don’t believe I am the only person with this attitude. All that said, for me the best thing money can buy is freedom with my time.
Another excellent video Erin. I have had absolutely zero debt since about 2000 when my mortgage was paid off. I have never been happier. I have complete peace of mind. My motto is if I can’t afford something and have to carry a balance to buy it, I don’t need it. I know too many people who use credit cards to supplement their income. Credit cards are a great way to monitor your expenses but you MUST pay them off in full every month.
I love your videos. You're plan, clear spoken, and just fun to watch. You're not one of these 'Download my book' or 'buy my book' type of person like many of the others in this forum. As far as the topic of debt, My wife is 70 and I'm 67. The only debt we have is about $10,000.00 on a car loan at 3.5%. Home, paid off. Schooling? Paid as you go. Travel? Save and pay before you go. Our only other financial we have to worry about is helping 1 of our 4 children, but he does a lot for us also, so I say I'm pretty lucky.
Thank you 😊
Good morning Erin. Great video and discussion. The paradox of thought and behaviors across multiple generations, as your date reflected, is astounding, I was surprised to see some of those stats. If people would just learn to live within their means. I enjoyed the couple of outtake clips you included at the end. I think they might enable viewers to really connect and relate to you. Keep up the great work and content Erin and have a blessed week. Larry, Central Valley, Ca.
have a great week Larry!
"The rich rule over the poor, and the borrower is the slave to the lender" - Proverbs 22:7
As a 34 year old male, single no kids never married with no consumer debt, small mortgage making six figures investing 40% of my income. Life has been been good! Soon to cross over millionaire net worth within the next few years. Never understood why people carry debt, make poor choices and start families when clearly they are not financially stable or ready.
congrats!
Watch what you say, you can get cancer tomorrow, and lose all that money you worked hard for in an instant. Stop judging peoples choices..be humble
add a spouse, a kid or 2 (or 3) and a larger house and watch that surplus available to invest shrink dramatically.
Hopefully one day you will be successful as of now you are not im 38 debt free be a millionaire by 40 with wife and 3 kids
@@jasonleatherwood2172 I don't agree with his blanket statement about families, but to say he's not successful because he doesn't have a family is simply wrong. That being said, I applaud your own financial accomplishments.
In my 20's and 30's I got into and out of debt. The second time I vowed to live on a budget, keep a paycheck ahead in my checking, and stay out of debt. It is the lessons I learned along the way that helped me become free of debt and want to stay that way. I remain debt free including house, cars, and a 6+ month emergency fund.
Older Gen X here - Currently debt free, but my triplex is needing renovation. I've been putting it off so I might have to get back into debt again for that. Not sure if I will ever be completely debt free again so I'm enjoying it while it lasted🙂
I had a lot of debt when I graduated college and first started working. I bit the bullet and started paying it off and life has become
much less stressful as a result.
We're on schedule to retire 100% debt free with exception of a small amount left on our 2.3% mortgage. The property has already
appreciated over $500,000 so I'm perfectly fine taking as much time as possible to pay off the remainder of that mortgage.
Thank you Erin
Debt is like drinking heavily at a party knowing you are having a great time in the moment and tomorrow is going to be bad.
I think it's important to note that average car debt has increased significantly. It's hard to get ahead financially if hundreds of dollars are going out the door each month for a depreciating asset. Our philosophy is to hang on to vehicles as long as possible and save up for a new car. My parents think it's not possible to pay cash for a car, but you just have to think about it in advance, not when your car is on its way out
61 just paid my mortgage off on a high value home.Just my credit card which im paying off next month, with the saved mortgage payment.Then im on to investments, have 4 cars, camper ,boat and other hobbies
This is for you Erin. Clearly you have a finance and accounting background and education, as do I. So maybe you can relate to this.
I graduated college in my late 20s after serving in the military, so I was older and more mature and had a little more of life figured out. What did they teach us in college about spending? They taught us do not spend a lot on depreciating assets. Well do you know one of the most common purchases I've seen in my life and career thus far from those who actually understand money? It is high end vehicles. The number of BMWs, Mercedes, Audi, Lexus, Cadillac Escalades, etc. I saw accounting and finance professionals driving has been staggering and many go into debt to afford these. It is not good for anyone to go into debt for a vehicle, but it is worse for those who know better!!
Overall, debt is not good but if you are going to carry debt, at least make it for the purchase of an asset that maintains its value or appreciates such as a mortgage for your home!! And fyi, over the years I have been trying to embrace a simple life, one that rejects stuff and materialism and embraces more minimalism and that has made me happier!!
It's hard to make sense of the "average mortgage debt" metric because the number sounds ridiculously low - until you realize that it probably includes a lot of people with zero mortgage debt because they don't own a house.
Median is a better metric
I felt just the opposite, I felt it was ridiculously high. It must not be including everyone with paid off houses/renters. I'm 44 and my mortgage debt is 35,000. Also remember what housing prices were like for the last 20 years. In my market, 22 years ago, a good starter home was $90k, 16 years ago, it was 140k, 7 years ago, 150k, today 250k. I would gess that the average mortgage is over 8 years old. And there are thousands of 30 year notes with less than $10k left on the balance.
💯 debt free, house paid off, no car payments and a two salary house hold where one salary is completely funding our retirement portfolio… like me nana used to say “ go kick today a$&” yall
I’m a boomer at 61 years old in the messy middle stuck between assisting a 23 year old starting out after college and in-laws in their 80’s. Mortgage debt of $132K, auto loan debt of $23K, no credit card debt or personal loan debt.
I got my first credit card in 1978 and made a small purchase with it. I paid a portion of the balance on it thinking I would pay the rest later and have some cash left over. I was stunned that I had to pay $3.00 in interest as the interest was paid on the total charged for the month going back to the time of the purchase. In my outrage, I swore to never pay interest on credit card debt again - and haven't. Being debt free allowed me to retire when I wanted to...
To get a handle on goofy spending, make a monthly dollar amount. Make it reasonably high so you can be satisfied without having to exceed it, then don't exceed it. Really helped me self-regulate. It's not about the money as much as it is about being forced to wait till the following month. You'll be blown away by how much less crap you buy if you wait a month...
@ErinTalksMoney Erin, thank you for this video and your many others. I've really appreciated them! In most of your videos, you use appropriate statistical terminology and source your references. Unfortunately this one is loose in use of "total" and "average", doesn't fully source references, and doesn't explain why "median" is almost always a more useful indicator than "mean" in the context of consumer finances. For example, 0:05 uses "total" in "total debt for all Americans" as a sum but 1:50 uses "total" in "the youngest generation Gen Z has a total mortgage debt" as some kind of average. The Bankrate sources are credited briefly on screen but incompletely (no dates or links etc). I saw no sourcing at all for the debt statistics by generation and type. In some of your previous videos you have emphasized the importance of median over mean due to skewing from the tails / outliers, I think it just got omitted here. Again, I really appreciate you and your channel and content, I just ask that you please consistently credit your sources fully, and remind viewers of the distinction between mean vs median and why median is usually more useful. If it would burden the videos to have this in the script, this information could be included in the overview text instead. Thank you so much! Glenn
Thanks for the feedback Glenn! I will make sure to be more careful going forward, and include citations and links for those who are interested in exploring the topic further 😊
@@ErinTalksMoney You are welcome! You have a great channel and it keeps getting better ❤
I did carry both a mortgage and a car loan when a car died unexpectedly, I would never carry a balance on a credit card. That’s just crazy. Money you borrow isn’t yours to use. A credit card is a convenience only…
It’s very important to watch the amount and type of debt you have. I have a mortgage at 3.5%. I could pay it off, but I earn more than double that with my investments. And, each year I’m with dollars that are worth less. I did have a car loan at 1.8% and the same factors above also apply here. I wish could have gotten more money for longer. Lastly, I had cataract surgery on both eyes last year. The bank offered me 0% for three years. You know my answer. In conclusion, the terms conditions and current economic conditions make all the difference. Be ever vigilant of the pitfalls of debt but don’t be afraid to use it when favorable.
“Neither a borrower nor a lender be, Do not forget- Stay out of debt”
Im 55 in uk and debt free. My wife and I can't even spend our combined wage. Any spare get split 50/50 invested and saved in high interest account.
Difficult knowing what to do with spare cash in the UK right now. Like you, I look for high-interest and I'm favouring 1-, 3-, 5-year fixed-rate bonds to get it. Post-tax, it's possible to beat the expected inflation-rate.
Debt = how much you owe and how many "people" you owe. The more debt the more weighs on you mentally because you're not free! It owns your money and time. Love what you said about setting up your future self for exponentially better opportunities and lifestyle. Also agree 100% with using money to buy back happiness, like paying someone to mow your grass while you do things that make you happy, like going to the gym or anything else, honestly. lol. 😂
You notice net debt just keeps moving up until boomer. And that being average is sad when 3 of 4 of those I have 0 debt as a millennial and even the auto loan is under the average, and house paid off
Great show today.
These stats aren’t averages for the people who have each kind of debt in each age group? I have a hard time thinking a significant amount of Gen Z has a mortgage, for example. The mode for at least most of these numbers is surely 0, and whether that is included or not in the average or median makes a huge difference.
Heck, the median could be 0 on something like personal debt, for example, so even that distinction can make a big difference.
It boggles my mind that so many people are willing to take on debt for entertainment. Those numbers you showed are crazy, and I see it happening around me.
I'm favoured, $27K every week! I can now give back to the locals in my community and also support God's work and the church. God bless America.
I know this lady you just mentioned. She's really good with and on her job. She's helped a couple of families and individuals' finances
She is really a good investment advisor.
I was privileged to attend some of her seminars, that's how I started my crypto investment
I have heard a lot of wonderful things about Anna Duke on the news but didn't believe it until now. I'm definitely trying her out
Started with 5,000$ and Withdrew profits
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I’m Gen X with zero debt
I have NEVER considered debt as normal. We paid off our home after 5 years in 1992. Since then we have been debt free for the past 32 years. We have paid cash for all cars we have purchased in the last 35 years and we have never carried over a debt on our credit cards.
way to go!
Almost 42. Disciplined since out of college. Started with 0. Sitting on 2 mill+ net worth/0 debt. Key being disciplined to the core and will always be. Will work still for 15 yrs atleast bec i love it. Moral is - if I can do it, anyone one. 😎
Debt free great life ! No mortgage, car payment or credit card bills.
Feels great!
Debt is a necessity in life but can also be a huge financial advantage. But not all debt is equal. I have a mortgage, home equity loan account, and free interest extended payoff loans on various purchases - Kubota tractor, wife's sewing machine, truck. The mortgage and HEL are low interest. The cash I saved with these loans is invested at a much higher return than the debt rate, so I make money off the loans. Plus the mortgage and HEL loan interest is tax deductible..a win win for me. I would never pay credit card interest, take out a personal loan, borrow money to buy a vehicle, or get an education......all bad debt!
THIS!!! 1000% THIS!!!
But when your daily basic needs require using credit cards because your income isn't enough, then life is going to get really rough. And often times, in those situations, people aren't thinking very far in the future because even their basic income is unstable. They don't have the energy to plan. To see that investing a in themselves a little bit every day will lead to something better. Education leads to knowledge. Knowledge leads to opportunities. Opportunities lead to income. Income leads to stability. Stability leads to wealth. And, the cycle repeats.
Not having debt frees up money for better things.
Just read a story about Colorado woman $20k+ in debt, getting further into debt by flying to Paris for Olympics. Story explained how $300 / month toward her debt would take 4.5 years to pay off, and she has to get serious about this now, as 34% of her current take home pay is already earmarked for servicing debt. They were worried she will never be able to retire, and I thought that's the least of her problems. With that lack of self control, she's more likely to go bankrupt long before she needs to worry about retirement.
debt just went up by $100 more just now ..... I just had to
I don't have any debt currently (other than credit card, which I pay promptly on the 1st of every month). I'd be willing to go into debt for business and house (currently renting alone). Just turned 40 in June.
happy belated birthday!
@@ErinTalksMoney thank you
Taking on debt for entertainment and leisure is a terrible decision. But aggressively paying off low interest good debt like a mortgage, if you're relatively young, may also not be the best approach. Balance is key. If you amass a huge nest egg while sacrificing for years, will you be healthy/active enough to actually enjoy it in your later years? Experiences often lead to most impact on long term happiness as Erin indicates...so if it takes you 20 years instead of 10 to pay off your low interest mortgage for ex, but you are able to spend thr difference to afford meaningful experiences and otherwise live within your means, I see no issues with that. Just avoid consumer debt and pay cash whenever possible
What surprised me is that gen z mortgage debt is less than millennial and x mortgage debt, has home prices gone down? what can explain the gen z lower mortgage debt?
Those “willing to take on debt for (non-essentials)” stats are terrifying to me.
Same here!
In these surveys measuring "willingness to take on / go into debt", how do they define it? I pay for virtually everything with a credit card - so every purchase I make, "puts me into debt". I never carry a balance, but nonetheless I "took on debt" when I bought a movie ticket yesterday...
No debt whatsoever and I thank god 3 times a day for it.
Zero debt. Also, I've never done anything wrong.
I love your videos. Who do you have edit your videos and who do you have do your thumbnails?
I LOVE THE BLOOPERS....LOL
Being debt free allows you to have peace of mind, and more freedom.
I feel that including mortgage/HELOC/HEL on these lists is wrong - unless they consider the net value of the asset minus debt and people are upside down on mortgages.
Because.... If I borrow $100k to buy a house, but it is worth $200k, there is no debt, and there is a positive asset. So is this graph at 0:14 gross or net? Similarly with car. Unless upside down, it should not be on this chart.
Thanks.
I completely disagree about buying stuff not bringing happiness. I suppose it depends on what you buy but for example I’m a woodworker and buying a high quality tool that I know will last a very long time brings me tremendous joy. I appreciate the quality of that tool everytime I use it and the quality of my tools directly impacts the quality of my work. In addition I have found that high quality tools hold their value very well and if I decide to sell a tool I can get a majority of my initial investment back.
I suppose the people that dont get happiness from purchases are buying non essential trinkets or other garbage thats clutters up your house.
There are various aspects to it BUT I think when you buy stuff to show off to others i.e. Keeping Up with the Jones's you will find that the short-term euphoria wears off very quickly and it is a never-ending cycle because you have to buy more and more. And that is all too common in America!
Or if you buy stuff on impulse, you will also lose interest, and the short-term euphoria will wear off quickly.
But yes, when you buy something useful and something you will often use, you may receive greater joy and happiness for a long time!
As long as you can afford it, buy anything you want. Issues are when people are going into debt to acquire the desired item.
Also people that have mortgages, say they are home owners. The bank is the owner.
True but at least we are getting equity.
You're building equity as you pay it down, and most folks don't have enough cash on hand to buy a home outright. If you do, then congratulations, but you're in a tiny minority.
Debt is slavery. - My dad. I’m in the 23% group with no debt. Thank you God.
Just curious to what taking on debt really means. If I put a vacation or eating out on a credit card that I pay off in full each month with no interest, does that count as credit card debt?
I would say that's not debt. Always paying off a CC and never paying interest isn't much different than using a debit card.
I didnt see anything about student loan debts
Debt free shouldn't be the goal. Living life free of debt that is less than investment returns is key.
Just paid off my 2.9% car loan, but why pay it off sooner when I'm averaging 11.4% returns in the market. Same as my 2.375% home loan. No bad debt and $860k in investments (401k, Roth IRA, HSA, and brokerage account) at 41. Bad debt is bad, but good debt is a great tool to grow your investments. Key is to INVEST money and don't save it: poor people work for money while rich people have their money work for them.
BTW all this was done while earning less than 6-figures.
Do you have kids?
That's the average but what are the median?
I'm sorry but the newness of buying some things definitely hasn't worn off for me 😂 It's because I bought things that spoke to my values, are related to hobbies, and/or made my life easier in some way. It's just not that _every_ purchase is valuable like this.
Give us some examples of purchases that speak to your values. I am genuinely curious what they may be. Because everyone's values are different and yes your purchases and lifestyle will say a lot about your values. Example, I am middle age, and I do not get all excited when I see someone driving a $75,000 vehicle for example. To be absolutely honest my first thought is compensating for something. I don't know what, but something.
No way would I take on debt for travel or dining out... That is crazy!
In the breakdown of types of debt, is the credit card debt figure the average balance? Or is that a balance that’s carried over the the next month? We have a handful of cards but we also have the cash to pay them off when the bill comes due, I don’t count that as debt.
I don't consider CCs that are paid off in full every month as debt - I look at that as the same as cash.
Erin are the numbers you share for retirement per indivisible or per couple?
No debt. Nada, Zilch. Zero. Nothing at all. Been that way for decades now. Retired at 52. Yes, it can be done. Live below your income and don't try and beat the Jones'. Funny fact, I pay my credit card balance every month. I also charge EVERYTHING so it can be high. If my balance is high my credit score goes down because they think it's debt. It could fluctuate 10, 20, 30 or more points per month because of that! On the flip side when it goes down the credit scores goes up by similar amounts.
Mid-40s and I have the liquid assets to wipe out my only debt, which is my mortgage. I am also staring down a huge reno bill. So do I live debt free with the worst house in the neighborhood or carry a modest debt and fix up a house?
Can you explain the breakdown? For instance, my Gen X wife and I have 500k in a mortgage. In your example, do we each have 250k in mortgage debt? Or are we counting it twice? How does the car debt calculated? Divided as well?
People can’t live within their means, who hasn’t seen people with teslas that should not be with $1000 a month payment
Being debt free is a good goal, but don’t lose the forest through the trees. Low interest debt for needs (home and transportation) is ok. Debt for wants (vacations, weddings, new sports cars, boats, campers, etc) is bad.
Paying on a 3% loan with tomorrow’s money while averaging 10-12% in the market is a better plan.
Waaait a minute. How many of those 23% debt-free people pay rent instead of owning and don't have a car?
Shenanigans.
It was impressive
Intelligent and lovely
Would you kindly make an updated video about retiring on Crypto, the last one was about 2 years ago, now we have crypto ETFs in the market and potential new regulations and even the idea of having Bitcoin as a reserve asset and the kickoff of game theory. I'd love to know your thoughts! Much thanks
You don’t mention the cost of raising children. (at least I didn’t see it listed). Crazy expensive these days.
Very interesting - another great video. Was there no data on Student Loan debt - or was this included in Personal Loan debt?
I took it to be included in personal debt.
Take on debt for a taco??? We really are in trouble. I've seen friends do it for a concert and I thought that was bad. I don't like to judge cause I'm debt free and my lifestyle has gotten a little out of hand sense then.
Hahaha…the phrase take on debt for a taco 😂
Debt free. Retired. My own home. Vehicle. Bachelor. A cat. Life is fine.
how is Gen Z possibly strattled with that much mortgage debt? Who's approving all these mortgage loans?