“The money-management needs of the under-40 set today are just widely different from even 15 years ago.”
A lot of Geezeo users ask, “where do I start”? Gaining control of your finances can, at times, feel overwhelming. Sometimes it requires you change habits. Sometimes you have to learn new things. And sometimes, you just have to cut to the chase, get down to basics, and take action.
That’s why I liked “Generation Debt: Take Control of Your Money, A How-To Guide” by Carmen Wong Ulrich so much. It has three advantages over a lot of similar books: first, it is written for those just starting out. It assumes you’re new but it doesn’t assume you’re stupid. Secondly, it doesn’t waste any time covering the most fundamental areas critical to a solid financial plan. And third, it’s easy to read and understand! No jargon!
So I was pleased to ask Carmen a few questions about her book and get her thoughts on issues close to young people’s wallets.
Carmen, what compelled you to write the book Generation Debt: Take Control of Your Money: A How-to Guide?
I was a young editor at a personal finance magazine and I realized that there was a big hole when it came to the needs of young adults. At the time, a couple of year ago, most personal finance information and media didn’t have a 20-something graduating five-figures in debt and with no health insurance in mind. The money-management needs of the under-40 set today are just widely different from even 15 years ago. I wanted to address that. And mostly, I wanted to pull together my advocacy side with writing swathes of people don’t subscribe to personal finance magazines and don’t grow up exposed to good financial advice. It’s important now, more than ever, to be on your money-toes. Why not spread the word to regular folks? The advantage of having exposure to and knowledge of personal finance these days is an advantage that can mean the difference of living a life in constant financial strain and living a comfortable, in control life. I want to give as many people as possible that edge.
What do you see as the largest contributing factor(s) that keep young people (particularly women) from taking an active role in managing their finances?
Fear. It’s intimidating. They don’t teach personal finance in school, yet it’s a very technical life-skill we all should have. Some of us start out at the gate way ahead in terms of knowledge and exposure while many others learn from scratch and in practice. Learning the hard way is a difficult way to learn. Think of money management like mechanics. It has its own vocabulary, rules, changing products, etc. How many people know how to change their oil? It’s technical and anything technical, even if it’s a basic life skill, is intimidating.
I also think that there’s an element of struggle for many young adults graduating with a load of loans, then landing a great but low-paying entry-level job and trying to live on your own is a big burden. One our parents didn’t have. Just managing to keep your head above water can be overwhelming. Sometimes it feels better to hide your head in the sand!
Women have the added societal pressures of expectations, in terms of appearance and roles, but it’s only been a couple of generations where it’s the norm for women to live on their own, have a fulltime career and be partners in taking care of the household financially. We’re still blazing trails here! To adjust in two or three generations what has been the norm for centuries is difficult and so we have a funny relationship with money. The tradition of women as breadwinners hasn’t taken hold in a substantial way yet. All the more reason why we should be on top of things — plus, we live longer, decades longer on our own, especially as parents.
You break your book down into broad categories a person needs to control in order to get their finances in good order. Which of these chapters was most personal? Which do you think is most critical for our generation to master (Gen X and younger)?
Knowing when and how it’s OK to spend and when and how it’s good to borrow. There is a big fat corporate machine out there that wants you to spend, spend, spend — don’t be easily manipulated. Be selfish and protect yourself financially.
Everyone can read the book and get information but a big part of it is attitude and approach. How do you manage your money? Are you pretty much on top of things? Or are your bills all over the place? Do you know when you can and when you can’t afford something? And do you have a plan in place to get rid of debt and build some savings and then equity? It’s similar to keeping your body healthy. We all know what to do, but do we do it? And just like with dieting and exercise, if you integrate a manageable program into your everyday life (leaving room for slip ups here and there), you’ll be in great shape. If you make the decision to make money-management a regular part of your life, one that gives you a deserved element of control and comfort, you will always be taking care of yourself, and one day, your loved ones.
As for what I write about that is most personal for me, well, I’ve been through it all! My mother and I waited tables to help put me through undergrad and I still left with a nice chunk of debt. I also started on the job-front with little help except three months on my brother’s couch while I saved up a deposit for my own place (Thanks, bro!). I went into credit card debt just to get a futon to sleep on and some clothes to look decent in. And yes, I followed my own plan (credit card debt chapter!) to get out of debt years later. I now own my first home with the hubby and we even pay for our own insurance. Point to a page, I’ve been there! Self-made, through and through.
There isn’t a specific chapter on philanthropy so I’m curious how you see giving as part of a good financial plan. Is it unrealistic for young people fresh out of school to have the money to contribute to causes?
I would have loved to address that and I do get this question now and then. I grew up in a family that tithed (the practice of giving 10% of your income regularly to your church or charity) no matter how little money we had. Sometimes I had to ‘tithe’ with my time rather than cash, but I believe that giving back is an amazingly important and rewarding thing. Ten percent or ten dollars a month whatever you can afford you can afford it if you make it a priority to do so. I was always amazed in my lean days how I would find that extra $20 I needed to pay dues or the phone bill. Cash can be found, usually in those couple of dollars at the toll booth or newsstand or iTunes. No matter what your budget or income, more so when you’re young and no one else is depending on you yet (such as children), if you want to give back, find a way to give back. Make an automated deposit to your favorite charity every other month or even make it once a year if things are super tight. There’s always room in a budget to give back. And if and when you’re in such dire straits that you can’t give as much as you’d like, do what I did and hook up with a volunteer agency. Doing both can be doubly rewarding!
Politically speaking, students and young adults face a changing world .. and generally speaking, we aren’t standing up for our (financial) selves in the voting booths. You address some of these issues — like student loan reform— in your chapter “A Pricey Future”.
If you could boil it down to one financial issue our generation should consider critical for the next presidential election, what would it be?
Health care. As important as student loan reform is, we are all much more affected by the huge health care gaps in this country and it’s getting worse. Young adults are the fastest growing group declaring bankruptcy these days and a large % of this is due to medical debt. Young adults are the least likely to have health insurance. You have the advantage of time to pay off student loans but medical debt can go from $0 to $100,000 in a matter of days and that debt-load is a matter of life or death. It’s absurd. And I’ll stop there because I could go on and on with this one!
Can you tell us a bit about your upcoming book?
Let’s just say it’s going to help a lot of people.
I can’t wait! Thanks for speaking with us, Carmen, and thanks for writing such a clear and concise book. I think many Geezeo users will enjoy it, too. You can find out more about Carmen and buy her book by visiting her website, GenDebt.com.
Did your cable get shut off? Good. Crack open a book. Look for more financial book reviews here at the Geezeo blog.
P.S. Carmen is going to be featured as one of four experts on two upcoming CNBC specials of ‘The Millionaire Inside’ taping this week, airing on CNBC at 9pm next Tuesday, the 29th.
January 21st, 2008 at 1:36 pm
Wow…thanks for a great interview Carmen. Love your book. To our Geezeo users, Carmen’s book actually help serve as a lot of inspiration to the start of Geezeo and definitely helped solidify our belief that young adults “generation debt” should be our target audience.
Thanks Carmen! Looking forward to the CNBC special!
Pete
January 22nd, 2008 at 12:08 pm
[...] — can you afford coverage? [see yesterday’s interview with author Carmen Wong Ulrich] Social Security — you’re paying into it… will it be there for you? Working Wages — [...]
January 25th, 2008 at 12:40 pm
If you do find yourself in debt, then there are a few tips on how you can help yourself. Failing that there are companys out there who can help http://freshfinance.net/blog/
January 28th, 2008 at 4:23 pm
Also, check out a freely available resource from the US Government. The My Money Tool Kit is free package of helpful publications on saving, investing, protecting and getting the most for your money. Check out more info at:
http://themoneykings.com/blog/free_mind_over_money_toolkit