Second Generation Debtors

Debt is a weird thing – few people talk openly about the debts that they have (even with spouses sometimes) and yet most Americans have debt. Why are we so afraid to talk about it, yet so comfortable with having it?

We’ve come to expect that it’s just a fact of life. Our parents had (or have) debt, and so therefore it’s normal – and expected – to have your own as well.

A Brief History of Modern Debt

Debt is a weird paradigm that’s accelerated in the past 100 years, but really has taken off since the 60’s. Back in 1919, GM introduced automobile financing. Welcome to the century of car loans. This got extended a bit to financing for other things like appliances. We still didn’t have the concept of a credit card at all.

Just 30 short years later in 1949, and the credit card is introduced. Over the next 20 years, new brands would begin to pop up that we’re all familiar with today in the credit card industry. For millennials, this was at the very start of our parents’ generation.

Family Ties

Think about that: for their entire lives, all an entire generation has known is a world where you can buy stuff with someone else’s money, just by copying down a few numbers.

Sure, many families didn’t use credit cards. But when you see your next door neighbor doing it and getting cool stuff, it’s natural to envy that and want it also. How did they pay for it?

They didn’t – someone else did, and now they’re paying them back for the opportunity to get something before they could afford it.

This generation then raised kids of its own, and in many cases, we unwittingly turned into second generation debtors.

Break the Trend with Education

Wow this has really gone off the rails and turned into almost a Baby Boomer Bashing post. That’s not the intent. As our generation starts raising kids of their own, there is an opportunity to break this trend.

For starters, as millennials we have the entire world of knowledge at our fingertips. Access to virtually unlimited information at such a young age means we have the tools necessary to educate ourselves early in our lives. The number of people equipped with the knowledge to pursue early retirement is unprecedented.

In addition to the vast (dry) textbook-like knowledge we have about managing money, we have a ton of blogs. Blogs allow us to follow people’s personal stories and learn from their experiences and mistakes. With blogs becoming easier and easier to start, there’s a huge opportunity to learn from others who want to share their story.

We also have sweet tools that weren’t around for older generations which can help us manage our money. Things like Credit Sesame help us keep an eye on our credit, while more advanced tools like Personal Capital help us take stock of all of our money. Technology makes it easy for us to visualize how our money flows through our lives.

Break the Trend with Behavior

For all of the awesome things we can learn and use to help us track and manage our finances, there’s one piece that’s missing. The piece that can undermine all of the knowledge and systems in the world: our behavior.

Mismanagement of money isn’t a math problem; it’s a psychology and behavioral problem.

We may have started as 2nd generation debtors. Our generation is the product of a lack of education, aggressive (and effective) marketing, and easy access to other people’s money. However, as our generation grows up, we can break the trend through changing our behavior. Doing so will set an example to future generations and to our peers.

It’s weird to not be in some kind of debt. But sometimes weird is a good thing to strive for.


How did your parents teach you about debt and money in general? If you have kids, how are you teaching your kids?

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  1. I think millennials and the current generation have the greatest advantage of any generations – information. Because information is so readily available, i think we see a decrease in stupid money decision and fewer people going to college instead of starting careers.

    1. Totally agree Lance. The information at our fingertips is ridiculous. I think we’re getting better at consuming that information and using it to our advantage to change our behaviors, but we’ve definitely got a long way to go!

  2. Isn’t it funny how the proliferation of debt is actually relatively new? It also isn’t helped by out throw-away lifestyle, either, which I do think contributes in some small part to our fascination with buying things.

    I needed an entire paradigm shift to realize I had to get out of debt. My entire life I was told that debt was normal. I was even told that the point of life insurance was to pay off all your debts so you would leave the world at an even balance. Messed up, right?

    I agree that a combo of education and behavior are necessary here.

    1. Wow, that’s messed up about life insurance for sure! My thought on it in general was: I never wanted anyone to worry about having to pay for me dying. In its simplest form that meant enough to pay for a funeral and all that such. But I suppose it also extends to debts.

      Now, when thinking about life insurance, I want to make sure that if either Kristin or I die, the other could stay in the house if they wanted to. They may not want to, but I don’t want that sort of decision to be a financial one.

      The throwaway lifestyle is so troublesome on SO many fronts. From the environmental impacts to the financial impacts, its implications are very wide-reaching…

  3. Interesting that debt began with the car loan! Yes, we have it pretty good as Lance mentioned, we have information and help when we need it. I think industrialization and two income families also has to do with it to perhaps- people are feeling more stressed, less time and end up buying things on credit card and borrowed money to feel better about themselves. Then the cycle continues.

    1. Ah, very interesting idea about the two income thing. I may do some reading up on that and see how spending habits differ between one income vs. two income families, etc.

  4. Really interesting post, I never knew the history of where debt and credit cards came from, I just assumed they had been around forever.

    My mom was very open with my financial education and I remember her taking me to the dealership with her when I was 13 and she was buying a new (to her) car. She spent at least an hour running me through her whole cost analysis, what you had to look out for, and why she was buying the car she was. While I would say I had a great financial upbringing including learning about debt, it hasn’t completely stopped me from making some mistakes of my own with debt. However now I have that solid foundation that has been helping me pay off my debt.

    1. Yeah I think that education is good but it’s not going to prevent everyone from avoiding every mistake, and people will still use debt. Some would argue that’s fine depending on the type of debt, too. I think at least with the education you hopefully can understand WHY you’re making the decisions you are, so that’s definitely a plus. 🙂

      Thanks for reading and commenting!

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