RACHEL MARTIN, HOST:
This is WEEKEND EDITION from NPR News. I'm Rachel Martin.
UNIDENTIFIED WOMAN #1: I think most people hate to think of themselves as middle class (laughter).
UNIDENTIFIED WOMAN #2: Have what you need but maybe not everything you want?
UNIDENTIFIED MAN #1: We have a car, but we live in an apartment. That's middle class.
UNIDENTIFIED MAN #2: If you add a boat, then you're not middle class anymore. That's what changes it right there.
UNIDENTIFIED MAN #3: The middle class are families who are earning six figures.
UNIDENTIFIED MAN #4: Thirty thousand, $35,000, probably.
UNIDENTIFIED MAN #5: That means me (laughter). And it means I'm in trouble (laughter).
MARTIN: This is Hangin' On, our series about the economic pressures of American life. And today, we're going to talk about how coming of age in a recession can affect how a person thinks about money and debt. This is the case for a lot of millennials. And we're going to hear from three of them. First, Austin Prater - he grew up on a small family farm in Akron, Ind.
AUSTIN PRATER: Tiny little town in Indiana. No stop lights, just a four-way stop in the middle of town.
MARTIN: Austin has about $85,000 in student loans. And paying them down is his primary goal, in large part because of his family's own experience in the recession.
PRATER: My parents had a pretty steady working life. But then when the crisis hit, I remember, specifically, my mom taking a second full-time job, my dad, who was injured at the time, getting notices through the mail saying - or reporting the losses each month that he was getting on all of his investments. And just watching money go out and them constantly talking about - well, should we just cash out now, pull the money out now and take the loss? Or do we hang in there?
MARTIN: Next, Amanda Jones - she works in tech in Melbourne, Fla. Debt feels inevitable to her.
AMANDA JONES: Unfortunately, I feel like it's just a way of life. And I, of course, would like to be debt-free. But as it stands, my life right now I'm just in debt. And that's how it's going to be for the foreseeable future.
MARTIN: But she's saving money where she can.
JONES: Growing up at this point in time, it definitely drilled that into me that you never know what's going to happen in the future. So you want to make sure you have a cushion.
MARTIN: And finally, Kaylie Burns Gahagan of Minneapolis, Minn.
KAYLIE BURNS GAHAGAN: You know, I was the kind of kid that saved all my birthday money.
MARTIN: Kaylie has a good job in the public school system out there. And while she isn't too stressed about her student loans, she feels like she's making decisions in the dark.
BURNS GAHAGAN: Had there been someone that was willing to give me advice, I would have had a lot less bumpy of a road until now.
MARTIN: So we brought in someone who could answer their questions. His name is Jude Boudreaux, and he's a financial planner in New Orleans. He advises young professionals about cash flow, retirement, savings, all of that.
BURNS GAHAGAN: I have a question, Jude. This is Kaylie. So I grew up in a family that wasn't financially sound. And I am at a point in my life where I've got a 403(b), I've got term life insurance. I've got a few different savings strategies. And my husband and I bought a house two years ago. And we're really thinking about what's next as far as investments go. And how do I know whether I'm more of a conservative investor, or if I'm willing to take those risks?
JUDE BOUDREAUX: Well, I think the general wisdom has always been you're younger. You should take more risk. And I don't really think that's valid any longer.
The biggest question I always have is can you live with it? Can you stick it out if there's a downturn in this kind of an investment? And just because there's more potential return, if I'm going to get so much anxiety, I'm not going to be able to sleep at night, I'm going to have to sell that investment during a bad market, that's a bad investment for me.
MARTIN: Jude, what are the metrics of measuring whether or not someone is conservative or can tolerate a little more risk? Because just because you're a saver, in general, and, like, a responsible human, as these three sound to be...
MARTIN: Does that mean that you're going to assign them the most conservative portfolio strategy? Or what are the other kinds of questions you ask?
BOUDREAUX: Well, I think the first question always when I ask people when they - we're trying to determine where you are is really kind of the background story that they all shared of - what was money like growing up? When you think about what they've gone through, they've gone through two of the biggest financial downturns since the Great Depression.
So that's already enough to shake somebody's confidence right when they're starting out with investing. We then have their family situations. When you see what's happened with their parents, I don't think they're any more or less conservative or aggressive than a 40, 50-year-old client's cohort. But I think they're not this universally aggressive stance that is kind of pushed on them from the financial world.
MARTIN: Great. OK. I'll just ask each of you. Amanda, do you have a specific question for Jude?
JONES: Yes. I'm actually considering doing somewhat of a career change and taking on some paid internships and some temporary positions. I was wondering if you had any advice or recommendations for people who may be in the gig economy. And should I work on investing, saving...
MARTIN: That's a good question because so many people live in that world now.
BOUDREAUX: Absolutely. And so I think anything where your income is going to be rather lumpy, accumulate cash. If things go bad and we don't have some cash to back us up, we're going to start to accumulate some credit card debt. And having extra cash, I often talk to people about - oh, well, savings accounts returns are so low. And that's absolutely true. We're at historic lows. And that hopefully will get better but not anytime soon.
The reason we're saving that money is not because we think we're going to go and get a quarter of a percent in our savings account. The purpose is to help protect us from any of those uncertain things that might come up, whether that's a job opportunity that requires us to move across the country or I'm going to try to start a business. If we have cash, it provides us a lot of ability to ride that out.
MARTIN: Good advice. Austin, do you have a question you wanted to put to Jude?
PRATER: Yes. It kind of rolls right along with those. With me focusing 100 percent on debt for whatever money I have left over after normal expenses and maintaining that savings amount, should I continue to place 100 percent of that towards debt? Or should I maybe put 90 percent and put the rest toward a Roth IRA or a 401(k), not so much that I'm going to get a better return on that money, but just to get the proverbial ball rolling?
MARTIN: Yeah. Jude?
BOUDREAUX: Yeah, I'm going to answer this two different ways, if that's all right.
BOUDREAUX: You know, again, so the rational, kind of financial purely numbers way would be to say, yes, if you start to put money into Roth IRA now and we let it compound for 35 years, you're going to have more than if we start one year from now and do the same thing for 34 years. So that's true. But I think when we come down to actual life standpoints, paying the additional money towards the debts to clear that off and to get free of that issue is going to provide us a greater return on life, if you will.
So if paying off those debts and really making that the focus and meaning you're starting a few years later a little bit further behind from a retirement savings standpoint, but you can do that in a life and in a place that you want to be in for the next 20 or 30 years, I don't feel like that's a bad trade-off.
MARTIN: In closing, I would ask each of you - Amanda, Kaylie and Austin - how you think about your financial future. Do you let yourself dream? And if you do, what are your financial goals? Amanda?
JONES: I am thinking about paying off my student loans, paying off my car loan, ultimately owning a house or a tiny home at some point in the future and just being financially secure, not having to worry about all this debt looming over me for the rest of my life. That would be my goal.
MARTIN: But you do think about owning a home?
JONES: A tiny home.
MARTIN: A tiny - oh, a tiny - like an actual - one of these tiny, tiny things.
JONES: It's a dream right now. But it's definitely something I would like to achieve.
PRATER: It's funny that Amanda mentions the tiny home because that's a similar thought that I've had. So if I decided to travel, I could travel for six months working and come back and have a low-overhead home. But the main appeal of everything is just having the flexibility without any of the concerns.
BURNS GAHAGAN: I was kind of giggling because I own a tiny home. But it's just a small house.
BURNS GAHAGAN: It's not actually, like, a cool tiny house.
MARTIN: It's not actually a trendy, cool tiny home.
BURNS GAHAGAN: No.
MARTIN: It just is tiny.
BURNS GAHAGAN: No, it's just itty-bitty. But I think that my goal is to have a family and to be a family that can actually go on vacation, that doesn't have to worry about debt. I would really like not to accrue more debt besides a home and possibly a car here and there. But that's my dream.
MARTIN: Well, it has been a fascinating conversation. Thanks to all of you for having it with us, Amanda Jones, Kaylie Gahagan and Austin Prater. We were also joined by Jude Boudreaux. He's a financial advisor from New Orleans, La. Thanks to all of you.
BOUDREAUX: Thanks, Rachel.
PRATER: Thank you.
BURNS GAHAGAN: Thank you.
JONES: Thank you, Rachel.
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