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How the Great Recession Has Affected the Millennial Generation

By Bob Brooks
April 27, 2015

A recent study from www.moneyunder30.com shows some interesting results in how the great recession might have shaped their situation.  The study survived now 21 -29 year olds.  During the Great Recession/Financial Crisis that age range would have been 15 - 23. There have been some positive and then not so positive effects. 

Positive Impact- Savings

62% of Americans on average are saving anything for retirement.  86% of Millennial 's are saving.  Millennials' saw how the Great Recession exposed the negative impact of poor spending/saving habits of their parents.  

Amount of money saved on average for retirement in America is $35,000. The average amount of money saved by Millennials is $7,453,  Considering the young age group versus a broad band of ages, I would say that is a better than the average of all ages.

The average family savings account in America has a balance of $3,800.  The average savings account balance for the Millennials is almost twice that at $6,713.  Once again, this generation saw the negative impact that limited liquid savings had on their parents. 

Negative Impact-Debt

The Average Credit Card Debt in America is $2,200.  The average credit card debt for the Millennials is a little higher at $3,718.  However, that amount is down from a high of $3,993 in 2014.  Millennials have had to rely on credit a little more due to the Great Recession.  However, they are showing responsibility in the fact it is decreasing rather than increasing.  

47% of Millennials have an average student loan debt of $36,584 which is up from 2014.  Leading up to the Great Recession, there was a good percentage of the millennial generation that were near college.  Many families lost a good percentage of money saved for college during the great Recession. Then the Government stepped and socialized the college student loan business taking it from private industry and making it mostly government run. Of course, as a result, borrowing money became easy to do.

Negative Impact- Employment

32% of Millennials have a job but it's not related to their desired career or field of study.  25% work more than job to get by.  Another negative from the great Recession is the employment markets which have improved but far from where they were at one time.  The financial crisis completely changed employment in America at a time when college graduates would be looking for a job.

All in all, the millennials have had to endure a much tougher financial situation because of the Great Recession.  However, as far as financial habits go, they are in better shape than the average American.  Employment markets will get better and good habits will ensure that debt gets paid off.  Bad habits will sabotage your financial wellbeing for a lifetime.

 
US Government Seizing Taxpayer Cash?

By Bob Brooks
April 22, 2015

The other day I wrote about Greece and the Prime Minister’s decision to seize Greek local government cash in order to fund their federal government expenses.  Apparently, cash seizures by the Government are happening here as well.  However, it is the social security seizing the money. 

More than 77 million Americans look forward to receiving tax refunds.  Unfortunately, for some those refunds never made it to them. 

Shalita Grant was looking forward to receiving her refund.  However she never received a refund that was legally due her from the IRS.  Instead, Social Security decided to take her $1,500 tax refund.  Ms. Grant did not owe the social security any money.  She was not drawing on social security.  However, her father was overpaid $13,000 for a Social Security disability payment.  So, they took his daughter’s refund. 

Social Security claims they have the authority to go over a relatives refund. However, they repeatedly deny that they practice such a thing.  In fact, they told Congress: “We did not…(collect) any…debt that was incurred by a parent or another family member.”

A CBS investigation uncovered 12 people that had the same experience.  Due to the investigation, Social Security refunded to at least two of the taxpayers that were interviewed for the story.

Cash seizure by the government…..don’t think it could happen here?  Think again… 

 
Could Asset Seizure Occur in the US?

By Bob Brooks

April 20, 2015

 

Greece is running out of money and nearing default on its debt.  The debt crisis in Greece has been going on now for so long that they are having a tough time getting another bail-out.  They owe roughly the equivalent of 350 billion dollars.  The worst case scenario is a Greece default on that debt.  Financial institutions all over the world would feel that default.   

So, what is the solution for Greece?  The prime minister of Greece announced that they would be seizing all cash from local governments.  That would be like the United States government ordering each state to send in their available cash.  

Greece don't have enough money to pay for salaries, pensions, and their bond payments.  Thus, they are now desperate enough to seize assets that belong to local government.  This situation in Europe is starting to take a turn for the worst.  The worst of it is that this seizure of cash only puts a small band-aid on a big wound.  This seizure of assets would amount to the equivalent of roughly 2 billion dollars.  

So what could be the result of these drastic measures? 

(1)     Civil War - You just can't seize assets from other local governments and expect no one to react.  It wouldn't surprise me if we see the country revolt against the government and a major civil war start.  After all, if things are going to get dire, what do the people of Greece have to lose?

(2)     Greece imploding from within - Taking local government cash would only push local governments into trouble. Now they would be the ones not able to make important payments.  This could cause Greece to implode from within. 

(3)     Greece defaulting on their debt, leaving the European Central Union and dropping the Euro -  This would be the nuclear option that as I said earlier would be felt in financial markets all over the world.  It would be unprecedented waters with unpredictable consequences.  

(4)     Dangerous Precedent for the rest of the world - Could there come a day when you see this happen in the US?  All it takes are two different elements to play out. First, other countries smaller than the US practicing assets seizure.  This would make it a more commonplace situation to occur.  Second, all it takes are things to get desperate enough.  Governments do desperate things in order to keep Government going. Politicians are always first in line to get paid and taken care of.  This of course is often at the expense of its' people.  

You can't fix a system that is broken.  Greece is a broken system. Since 2012, they have been continually bailed out and once again find themselves on the brink.  This is a Greek drama with a tragic ending on its' way. 

 

 
What Your Kids Think About the Family Finances

By Bob Brooks
April 17, 2015

How do you think your kids feel about your family’s finances?  Well. T. Rowe Price did an survey that had some interesting results.   Here were the results:

82% of parents said they think they are setting a good financial example for their children. But only 46% of kids say their parents are doing extremely or very well at teaching them about money and finances. Further, 72% of parents say they are at least somewhat reluctant to talk to their kids about financial matters.  They are concerned that their kids will worry.  Yet, 61% of the children surveyed, who were ages 8 to 14, said their parents worry about money. 

Just remember one thing – What we don’t teach our kids about money, the world will do it for us. 

For some great tips on money talk with your kids, check out this article in this month’s Kiplinger Magazine.

 
What Will You Do With Your Tax Refund?

By Bob Brooks

April 15, 2015

It is April 15th and some will receive a much anticipated tax refund.  The average refund is $3,500.  What should you do with it?  Some use this as a savings strategy knowing that money will come in handy about this time of the year.  Thus, they know it is coming and it is already spent.  

My advice to you would be simply to do away with the tax refund once and for all.  Take this last tax refund and spend it however you see fit.  Then adjust your holdings so this never happens again.  Why would you want to give the IRS a tax free gift? 

Instead enjoy the benefit of increasing your after tax MONTHLY cash flow.  It is much better to receive that money throughout the year in the form of cash flow versus a one-time lump sum.  If you still want to save that money, you can still put that additional money into a savings plan each month.

At least afford yourself the flexibility to use that additional monthly income and put it to good use.  If you needed it during the year, wouldn’t you want access to it? Plus, most people tend to not spend lump sums effectively.  They know that they need to pay down debt.  However, they see a vacation in their instead.  It is the emotional pull of the lump sum of cash.

The bottom line is to use your cash flow wisely versus allowing the IRS to benefit from your cash flow.

 
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