A new rebellion by a new generation

August 5, 2013

Now here’s something I didn’t expect.

I have here a news report that says young people are avoiding debt much better than those who went before them. The Great Recession of 2007-9 is credited with teaching the young a lesson that has the potential to lead them to avoid the mistakes of their elders.

Perhaps the young will even take to heart the age-old proverb that “the borrower is servant to the lender” (Proverbs 22:7). One can only hope.

A new analysis from the FICO credit agency says 16 percent of those aged 18 to 29 have no credit cards, according to a “New York Times” blog. None.

That may not sound like much, but that’s a big jump from nine percent in 2005, before the Great Recession. Also, credit-card debt held by the young has been cut from an average of $3,073 five years ago to $2,087 today, another big drop, according to the study.

So that just means that many young people these days can’t get credit cards, right?

Wrong, according to Frederic Huynh, who managed the FICO analysis. It is harder for them to get a credit card post-Great Recession, Huynh concedes, but he asserts that the reason for such a dramatic drop in debt among the young is that they are more wary of it.

“It stands to reason that the Great Recession has influenced, to a certain degree, consumer credit behavior,” Huynh is quoted by “The Times.”

The analyst notes cutbacks on debt by other age groups as well but not to the extent of that of young adults.

That flies in the face of the example offered by their elders, who were given to racking up big debts, including with credit cards. The most egregious example was the federal government, and that example continues unabated post-Great Recession. The federal debt and spending is about to begin making headlines again as we come upon a new federal fiscal year.

At one time credit here in the hometown was limited mostly to what the country-store owner would let you run up on a tab until the autumn tobacco harvest came in.

Then people moved off the farm and into factory work. Here’s how my father, from the Greatest Generation, handled debt.

When Dad got his weekly paycheck from the Chatham mill, he’d go down to the old Northwestern Bank in downtown Elkin where Wells Fargo is today on Friday mornings and cash his check. While at the bank he’d make the house or car payment if either was due.

Then on the way home he’d stop by the old telephone office up on North Bridge Street to pay the phone bill in cash if the bill was due. Or he’d drive one block over to the old Duke Power office (the current Elkin school administration office building) on Church Street to pay the power bill if it was due.

Whatever cash money was left, that was what we’d live on until the next payday. Dad always paid in cash and never had a checking account. And he didn’t open a savings account until his retirement when he needed a place to put his lump-sum pension payment from the mill.

Northwestern Bank mailed us a couple of credit cards in the mid-1960s when cards first came out, but I don’t think my folks knew quite what to make of them. They let me play with the cards until I got tired of them and threw them away.

I did start a checking account when I went away to school Down East, and for years I wrote checks in stores and paid my bills by mailing checks. I avoided credit cards.

But the Better Half was used to credit cards. I got rid of hers initially, but over time and with not a little whimpering from her I did finally give in and got us one major-bank credit card.

To Half’s credit she has always paid the credit-card bill in full each month. As a result we’ve never paid an interest charge, though on occasions we’ve had to dip into our savings when there’s been a big medical or car repair bill that we charged.

With the next generation the view on debt changed again, as two of my three stepchildren did not show such restraint when they were young adults. They were products of the free-wheeling, free-spending ’90s when consumerism was feverish and big money and debt were at the peak of popularity.

The two ran up big debts, including credit-card debts, and one went into bankruptcy for a time.

They’re doing better now that they are older. Hopefully, they’ve learned their lesson.

Next, we await to see how the following generation, the step-grandchildren, do. Reports should start coming in about a decade.

May they and their peers be masters of, and not slaves to, debt.


On a personal note: Check out my new website with details of my new book, “All Roads Should Lead To State Road,” a collection of our favorite “Hometown” columns: https://www.facebook.com/AllRoadsShouldLeadToStateRoad

The book’s at Diana’s Bookstore in Elkin.


Stephen Harris returned home to live in State Road.