WASHINGTON — People between the ages of 35 and 48, commonly known as Generation X, are not only getting deeper in debt than the baby-boom generation that came before them; they’re getting used to the burden, a new study shows, and experts say that that’s bad news for their long-term finances.
The study, conducted by Allianz Life, finds that 48 percent of Gen Xers and baby boomers alike see credit cards as a financial survival tool, but that 20 percent of the younger set, as opposed to 14 percent of boomers, think going into debt to handle regular purchases is a fact of life.
Katie Libbe, of Allianz Life, which conducted the survey, tells USA TODAY that Generation X is operating within a “Bermuda Triangle” of financial troubles — high student-loan debt, a weak job market and low home values — and that leads to higher debt.
Gen Xers averaged $144,000 in mortgage debt, the study found, compared with $90,000 for boomers, and $8,000 in average credit-card debt, while the boomers averaged $6,000.
That said, Gen Xers know the score: 41 percent in the survey are uncomfortable with their debt load, while 25 percent of Boomers feel the same way.
Libbe says the answer is simple.
“First, you have to have the discipline to live within your means so if I can’t afford to pay for it with cash, then I don’t buy it,” she tells USA Today. “Then you begin to build up a fund for emergencies. … Then you begin to funnel some of your money into paying off debt, maybe more than the required balance.”
Other experts have a more nuanced view — financial planner David Walters tells the paper, “It typically makes more sense to pay off high-rate credit card debt first before building a large cash reserve. A savings account will earn you less than 1 percent, whereas the interest rate you pay on your credit card is much higher.”
Those debt problems have long-term impacts, USA TODAY reports — 23 percent of Gen Xers say they don’t feel they can save for retirement until their credit cards are paid off, and that means they’re missing out on a lot of interest.
