Generation Mortgage: Why Gen X Is In More Debt


One thing I notice when reading the news is that people love comparisons – especially when it comes to debt. We compare “good debt” to “bad debt”, we compare levels of debt from year to year, and we compare generation to generation to see who really has it the worst. While comparisons are important for understanding the problems that need solving in our day and age, sometimes I wonder….what’s the point?

Are we comparing to learn more? Or are we comparing to say, “Whew, glad I don’t have it as bad as they do!”? And how can we use these comparisons to truly solve problems instead of simply noting the stats and moving on?

It was with this mindset that I read the latest study of debt highlighted in Fortune. The study compares the amount of debt held by people of each generation to see who really has the most debt. While the results may surprise you, my hope is that what really surprises you is how much each generation really has in common…especially when it comes to debt.

Why Gen X is Saddled With More Debt

At first thought, if asked which generation has the most debt, most people would probably guess the Millennials. Given the high cost of college tuition and how it has led to crippling debt for many young professionals, this just seems to be the logical answer.

But it’s not. Even with the rise in student loan debt, the generation bearing the burden of the most debt is in fact Generation X. And it’s mostly because of steep mortgages. Federal Bank of St. Louis economists William Emmons and Bryan Noeth released this study, as reported in Fortune:

“The study showed that the single most indebted birth cohort in the nation are 44 year olds, who owe on average $142,077, most of that composed of mortgage debt.

This figure is actually a marked improvement, as every generation, including Generation X, has made progress paying down or discharging debt. For its part, Gen X has reduced what it owes by between 10% and 15% since 2008. But even on this score, they were beaten out by the much-maligned Millennial generation. These folks, also known as Generation Y, reduced debt even more aggressively than Gen Xers, discharging or paying down upwards of 25% of what they owed in 2008.”

Fortune goes on to say that part of the difficulty Generation X is having paying down debt at a faster pace is due to the slowest rise in income our country has seen since World War II. And it certainly doesn’t help that a mortgage still carries a much higher price tag than most student loan debt.

Why We’re More Alike Than It May Seem

Generation X and Millennials may be facing different amounts of debt and different types of debt, but they are much more alike than it may seem. Learning about the commonalities can help bridge the gap of understanding so these two generations can finally work together to fight debt…instead of pointing the finger at who’s the most irresponsible.

Commonality #1:
Both generations are battling debt that they got into largely thanks to the advice of their elders. Generation X grew up with parents who believed a home to be a good investment. Therefore, as soon as they came of age, they thought, “Now it’s time to buy a house.” For many, that was the sign of truly becoming an adult. An important milestone and the best investment for the future.

Millennials grew up with parents who believed college education to be the gateway to a solid career. Therefore, as soon as they came of age, they thought, “I must go to college, no matter the cost.” There simply seemed to be no other choice, so if college was too expensive, loans were the logical way to make it work. Taking out a lot of student loans also didn’t seem like a big deal if it would lead to higher earnings later and therefore the ability to pay them off.

In both cases, the parents of each generation weren’t wrong – they just faced different economies and taught their children what they thought would be best for their futures. But in both cases, these choices have paid off for many, but have also led to challenges that are easiest foreseen in hindsight.

Commonality #2:
Whether it’s mortgage debt, student loan debt, or both, the other thing both of these generations have in common is that, by the time they realize the true cost of the debt, there’s not much that can be done about it. Generation X struggled to stay current on their mortgages when the economy collapsed in 2008 the same way Millennials struggled to find a job in a suddenly shrinking job market.

And in both cases, looking back and thinking “shoulda coulda woulda” will only hurt more than it helps. Telling a family to get out of an underwater mortgage on a home they can’t sell is the same thing as telling a recent college graduate that they shouldn’t have taken out student loans in the first place. What the focus should be on is moving forward.

How can a family get caught up on their mortgage payments? And then, are they able to downsize or is it too unrealistic for their family size? And how can a college graduate pursue options to earn income while they look for their first professional jobs? And once they do, how can they tackle their debt head on? Those are the questions we should be answering. Most Americans are facing some type of debt or another. And it’s time we came together to fight it.

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Coming Together to Eradicate Debt

Whether you’re facing what you would consider to be “good debt” or “bad debt”, the most important thing to do is remove the judgement. You have debt. That’s okay! Most of us do. So what do you have to do to make sure you pay off your debt as fast as you feasibly can? And how can you make sure to avoid debt in the future?

First thing’s first, forgive yourself so you can move forward. Second, make a plan. Target your debt payoff the same way you would target any other goal in your life. Third, celebrate milestones along the way. It’s not a short journey so it’s imperative to stay motivated and recognize the benefits of the hard work you’re doing! And finally, keep the conversation going. We won’t fix our societal debt problem overnight. But we can start making steps to make that happen if we are open and honest about it now!

Image Credit: Lotus Carroll

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  • Billiam

    Yes, yes, and yes.

    Great commentary. And I’m actually a GenXer with GenY type debt. (Returned to finish college, but with loans.)

    The analysis does help. The key, as you mentioned, is to stop dwelling on what dreadful choices may have been made, and to move forward with no new debt, poised for strategic paydown.

    Thanks as always for the excellent RFZ posts.