Debt-Ridden Generation X Zeroes In On Personal Finances College Loans, Credit Cards Smothering

When Beth Kobliner graduated from Brown University in 1986 and went to work as a personal finance journalist, she found her college friends generally uninterested in her career.

“A year after graduation they would roll their eyes when I talked about, ‘You need to start putting your money in IRAs, you need to do this,”’ Kobliner recalled.

“Maybe two years after that, they started asking me lots of questions on how do I get out of debt, what’s the best mutual fund to invest in. There was a real interest in the topic.”

The 31-year-old Kobliner, a contributing writer for Money magazine, is the author of a new book, “Get A Financial Life: Personal Finance In Your Twenties and Thirties.”

Kobliner writes for a generation facing radically different financial circumstances than their parents a quarter-century ago.

More young people are leaving college with huge loan debts, entering a world in which they likely will work for several companies and facing retirement with an uncertain Social Security system.

“The lifetime employment that used to await college grads who kept their noses to the grindstone just doesn’t exist anymore,” said Ken Kurson, the author of a monthly column in Worth magazine and publisher of Green, a quarterly personal finance magazine targeted to young adults.

Kurson, 27, toured with a rock band for two years after graduating from high school in Chicago, but said he always was fascinated by personal finance.

“I had to be secretive about my interest in money,” he said. “It was considered very corporate, very yuppie. I think there’s a big stigma about talking about money among young people. It’s not cool.”

Kobliner said debt was a primary concern of young people she met on a recent tour promoting her book.

“People have thousands of dollars in credit card debt, tens of thousands of dollars in student loans. People in graduate school have hundreds of thousands of dollars in loans,” she said.

“Most people my age come out of college and grad school with what can only be called mini-mortgages,” Kurson said. “It’s just like this ugly albatross.”

Between skyrocketing tuition costs, which force many to take out loans, and the need for students to equip themselves with expensive books and personal computers, it is alarmingly easy to go into debt on the nation’s campuses.

“I think society’s expectations are quite high,” Kobliner said, “To live up to them a number of people are going into debt.”

To meet those expectations, many start charging purchases, sending themselves deeper into debt.

Kobliner and Kurson agree that for young people interested in a sound financial future, the first priority is to pay off high-interest credit cards. Both recommend making minimum payments on lower-interest student loans while using as much income as possible to pay off credit cards.

According to Kobliner, young people should not even begin saving money until they have paid off their credit cards. Someone who puts $1,000 in a savings account might earn $30 in annual interest while running up $180 in interest payments on a credit card with a $1,000 balance, she said.

After the credit cards are paid off, the next priority is to begin saving, first in a taxdeferred retirement plan like a companysponsored 401(k) or an Individual Retirement Account (IRA).

Kobliner recommends putting as much money as possible into a 401(k) plan or IRA, then trying to put 10 percent of take-home pay into a conservative money market mutual fund or stock index fund.

“I try to make the point that the advantages of 401(k)s are so incredible that you don’t want to pass them up in your 20s and 30s,” she said.

Her book also addresses such topics as bank fees, insurance, how to reduce tax bills and how to buy a home.

As young people learn more about personal finances, Kobliner said they will feel more comfortable about money and planning for the future.

“As more and more people become aware, I feel optimistic that they’re going to start getting out of debt, learning to save and beginning to invest,” she said.