Some People Still Don’t Get It

by Ron Haynes

The debilitating power of debt seems to have its grasp on almost everything we are and do today. I had the opportunity to spend some time with a Gen Y 30 year old who thinks that a new Infiniti is in his near future…a $47,000 Infiniti. When questioned about the price, he flippantly said, “If I can qualify for the loan, I should be able to afford the payments.” I reminded him that the price (and payment) was only one aspect of owning a $47,000 car. You have to consider the insurance, the fuel costs, the maintenance costs, and the cost to replace the tires he plans on squealing at red lights. “I’m not worried about all that stuff, I’ll just pay for it as it comes up,” came the reply.

All this happened on a short overnight business trip (driving) where another co-worker (Baby Boomer) and I (Gen X) were listening to an audio version of Freakonomics [Revised and Expanded]: A Rogue Economist Explores the Hidden Side of Everything. The Gen Y’er listened with one ear to Freakonomics while using the other ear to listen to his iPhone. Judging from his comments on the book, I don’t think he heard much of either.

As we were on our way back home, the current economic situation came up. The Baby Boomer told us that he was furiously paying off all his debt, including the mortgage, and that he was trying to get himself into a position to be able to retire in about 10 years. I commented that he was making some smart moves and that I was attempting to do the same thing. The Gen Y guy said, “You are two old guys making plans to retire? I don’t know why you’re so worried about it. I’m certainly not.”

Then he popped back up and said, “Paying off debt is stupid. If you have $200,000 invested in the stock market and can get a mortgage at 6 percent while managing to get 8 percent in the stock market, you’re silly to pay off the mortgage, just borrow the money and invest the difference.” He thought he made a great point and sat back.

I responded that, yes, you can make a lot of money playing spreads like this, but 99.99999% of the people who say they’re going to do this….never do. They just spend the excess. Then I asked him if he managed his personal finances this way. “No, I don’t have that kind of money sitting around to invest.” I told him that when he did have it, then he could play the spread, but for right now, his best bet was to pay off his loans and save up enough so that he had the option of playing the spread. He just went back to listening to his music.

When I related this story to my wife later that evening, it struck me that what was important to the Gen Y’er was stuff. All he really wanted was stuff. He has the latest tech toys, he has the premium package on his iPhone, he wants a new expensive car, he isn’t concerned with his financial situation. The Baby Boomer and I are concerned about something else. We both want freedom, specifically time freedom. We aren’t wrapped up in how easily a new car can “smoke the tires.” True, we would like to have some of those new things, but they aren’t the foremost things in our lives. They won’t deter us from our goal of time freedom.

About the author

Ron Haynes has written 1000 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.

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I think it’s unfair to cast it as a Gen Y thing. How many bloggers in their mid thirties and older are trying to get out of debt. It sounds like you want someone to learn from the mistakes of their elders. Everyone always wants that, and it doesn’t happen.


Oh, it’s not just a Gen Y thing. Both the Boomer and me are both trying to get out. The point I was trying to make was that some are still looking to go into more debt and others are trying to get out…even as the credit crunch worsens.

Sadly, it doesn’t happen that people learn from their elder’s mistakes. I didn’t either.

Frugal Dad

Ron, your Infinity story reminded me of a friend who just bought a new SUV for ~$40k. They knew I would object, so they put out a pre-emptive strike – “Hey, we can easily afford the payments.” It is sad people continue to use monthly payments to gauge whether or not they can afford something!


@Frugal Dad:
That’s how many things are sold today, based ONLY on the payment. There are banks that are financing homes for 35 and 40 years, cars for 7 or 8. You can buy furniture in almost any town and have “No payments for FIVE years.”

It IS sad…

Jeff@My Super-Charged Life

Ron – I think it is more accurate to say that “Most People Still Don’t Get It”. I wished they did, but they just don’t. I look around and see everyone living and spending just like your friend. By the way, did you point him to my article Please Let Me Talk You Out Of Buying A New Car?

Hope you don’t mind the link!


@Jeff@My Super-Charged Life:
Well, I’ve already been scolded for generalizing! I’ll just keep it at some! :D

Yes, I told him about your article, but I’d be very surprised if he read it.

(Of course, I don’t mind the link) ;)


Yeah, I agree with Plonkee–careful calling him “Gen Y,” even for the sake of giving your example guy a name.

I don’t think you were trying to generalize an entire generation, however.

There are financial idiots at every age, and people who do a good job of handling their money at any age, as well.

Good luck to that 30-year-old. He’s going to need it, as I’m sure his lifestyle will catch up with him sooner or later.


You’re right, I wasn’t trying to generalize, and there ARE financial idiots at every age. My experience is that the younger you are, the less you know and that is the point I was trying to get across.

Granted, there are some brilliant people who are very young and “get it.” But there are some that are old and experienced and DON’T.


Of course, there’s always a problem with generalizing because not everyone fits into that group. I don’t know many people in my age group (I’m 23) that are that bad about not wanting to pay back debt and try not to have so many monthly payments, but it does exist.

I have a 27 yr old brother who continues to take out loans to record music, which is his hobby. I keep trying to tell him to save up cash for that and not increase his debt. He also sees no reason to start saving for retirement yet because it is “so far off.”

I actually feel like I’ve been BLESSED to take on so much student loan debt that it made me wake up before I even graduated and start getting my finances in order. Otherwise, I’d probably be just like a lot of other Gen Yers who don’t think they need to worry about personal finance.


That’s an interesting viewpoint. Kind of like getting mildly injured in a car accident to get you to realize that you need to pay better attention to your driving.

One thing I WILL generalize on is that I personally think the average age that Gen Y will see the light will be far younger than the average Gen X’ers or Baby Boomers did. There’s just so much more information available to help them make good decisions earlier in life.

Andy Wood

This guy is a Consumer – not just a spender, but somebody who gauges his worth in light of his ability to get what he wants. What’s scary is that, when he runs out of his own money/time/resources, he’ll start consuming somebody else’s. Make friends with him, but leave your wallet at home.

Check out “How to Go From Consumer to LifeVestor” at


Nora Dunn

The short-sightedness of people who buy buy buy based on monthly payments always floors me. I can’t tell you how many people I saw buy houses based solely on what the bank told them they could afford for a mortgage, completely forgetting about property tax, insurance, repairs, not to mention the intangible “money pit factor” that eats up all the rest of the already non-existent disposable cash flow! These people are now the house-rich cash-poor, if they can even afford to keep their house at all.

So the question is….how do we help people from making these mistakes? Or can we?



Sounds like you’ve been watching “Property Virgins” on TLC again!

Or is it “Flip This/That House” ???


Shama Hyder

Hi Ron,

I hope you won’t write off all of us Gen Y’ers that way.
= )

I was lucky because my parents paid for my college and graduate school. I came out without any debt. It enabled me to start my own marketing company without loans or VC funding.

I REALIZE how important it is to keep debt low and invest smart. I often invest in myself and the company (books, seminars, courses, consulting, etc). I know that pays off 10-fold.

Aside from the occasional cool eBook reader tech toy, I keep other expenses to a minimum.

I love your stuff. Keep writing!


No, I would never write off Gen Y as a group! It’s just that I used to think the same way when I was his age. I DO think that Gen Y will probably come around as a group much faster than Gen X or the Baby Boomers ever did.

In another 15 years there will be a Gen Y blog talking about how Millennials just don’t understand [fill in the blank] !

Hopefully, and I believe it’s true, Gen Y is made up of high caliber people like yourself who can help get this world going in the right direction. :grin: One thing’s for sure: there is a lot more information available to Gen Y to help them make good decisions.


This Gen Yer is 23 and has 50K for a house deposit from many years of careful saving.
I’m not saying that your story isn’t indicative of a generation, but I think that Gen Y more than any other gen is quite polarised. Of my peers, I can classify all into one of two distinct categories: the spenders with their credit cards, iPhones, expensive vacations, and the savers with their growing home deposits. I think the unaffordable housing market (which is luckily going down in America but for us Australians it is still record high) has scared my generation into thinking they need to either save every dollar possible to have any chance of eventual home ownership, or just throwing in the towel and deciding they will never have financial stability so why not just have the toys?


Wow, Holly, that is a very interesting observation. I haven’t thought of the “group” being so segmented like that but you’ve raised a very good point. I would venture to say that ALL generations could be characterized this way early in their lives, but tend to come around to right thinking as the wrinkles and gray hair set in. I haven’t thought about the “throw in the towel–we will figure out a way to pay for it later” factor. Thanks for your very interesting comment. You’ve really got my mind to thinking!

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