Monday, February 7, 2011

A warning for the 16-20 year olds out there.

This is February, 2011, about 3 years since the Mortgage debacle really started. The first signs of a crisis were felt in 2007. The rest of the population really didn't feel it until early 2008. First Ameriquest closed its doors (voluntarily) and then New Century Mortgage went bankrupt after some belated SEC investigations. Then there were all the Investment Banks that went through their meltdowns and the government bail outs that followed.

The truth is, no matter what we think, its probably going to happen again. It may not be through subprime "no docs required" loans but its going to be something. Someone really smart and even more greedy is going to come up with something else that we're all going to jump on yet again.

Fast forward 10 years and all of a sudden that 16 yaer old is 26. Fast forward 15+ years and they'r;e around 31ish. Think about that. What's so significant about those age groups and how is that correlated to a financial crisis? What do you remember from your 25 to 30 year age bracket?

When I was 25 I got a crappy job but it was my first "real job" out of college. Like a lot of my peers, I lived at home to save money. My mom helped me save 50% of my earnings that year.

When I turned 31 I got married and bought a place to call my own.

I've purchased 3 cars since college.

I don't think my life is realy too different from others.

My theory:

1. 25 - 35 are the post college, first real job years.
2. This is the age they move out of the house (rent or purchase?)
3. This is the age they start buying their own cars and sometimes make some significant upgrades (sports car or entry luxury?)
4. This is the age they eat out ALL THE TIME

In short, this is the group that is eager to spend their money and constantly looking for more and easier ways of doing it. Not only that, now a days this group might spend even more because the internet affords even fewer obsticles than previous generations.

The biggest factor? These kids have no memory of an economic downturn. They may have heard about it or been taught it but you and I know there is nothing that can repalce experience. Remember, they were 16 or so when this stuff was happening still living with mom and dad.

This is for you guys. Be aware. Lets see what creative new financial miracle technique is thrown at us in 10-15 years.

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