Sobering Loan, Debt, Savings News; Or, Janet is Yellen at Us Again
We Americans are in dire straits. We need to pay people to find us roommates so that we can afford to live in grossly overpriced apartments on the outskirts of where the jobs are. Student loans are such a crushing financial burden, totaling $1.2 trillion, that an offshoot of Occupy Wall Street called Rolling Jubilee has started urging debtors to organize and fight back.
Americans have an average of about $30,000 worth of student debt, and one in ten borrowers default on their loans. According to Andrew Ross, a Rolling Jubilee board member and professor at New York University, this sizable group of people can make an impact if they act as a unit. … “Debtors often don’t identify their condition as permanent,” Taylor said. Unlike medical debt, which is usually perceived as unavoidable, “people with student loans feel like they made a choice. It’s their problem. They feel shame instead of outrage.” …
The long-term goals, group members say, are to challenge the very existence of student loans in the first place and advocate for free education. “There’s this strong sense in the United States of morality behind debt—that being a good person means paying what you owe,” said Thomas Gokey, 35, who has $67,000 in student loans and came up with the idea of buying portfolios on the secondary market for the collective’s first action back in 2012. “We hope to undermine this fake morality around debt.” Since the debt was bought for pennies on the dollar, he says, people “really don’t owe this debt at all. Someone is simply making a profit.”
The central bank head cited two statistics from recent surveys conducted by the Fed to make her point that most U.S. families don’t have a financial buffer. The first is that the median family in the bottom fifth of income had just $6,400 in wealth in 2013 — and many had no net worth at all. That number, which has declined since 2010, largely reflects lost housing equity, which is the “lion’s share” of wealth for most families, Yellen said. The second statistic Yellen mentioned is that a majority of respondents to a separate Fed survey said that they do not have enough cash on hand to meet an unexpected expense of $400, and would have to borrow money or sell something to raise funds.
Having four hundred dollars of cash to reach for in an urgent situation is not that high a bar. $400 won’t pay an average ER bill; as Josh recently pointed out, it probably wouldn’t be enough to fix your car.
We fret a lot around here about having enough money put away for retirement or send our parents, should they need bailing out, but it turns out that a millennial with $10,400 in savings is doing better than half of their generation. (Why? In part because millennials don’t buy stocks and so missed out on revenue from the recent market surges. Maybe we should all Talk to Chuck. Oh wait, never mind.)
There is a positive spin to this. Forget saving $10,000 in one year; if you’ve saved $10,000, period — or hell, if you have a positive net worth and/or could lay your hands on $400 if you needed to — you’re doing great.