Millenials Debate If the Meltdown Affects Them

Even though last week was filled with words like "crisis" and "collapse," life continued as usual for those of us who don't work on Wall Street. That includes two NEWSWEEK staffers, Sarah Kliff and Kurt Soller—fresh out of college, decades from retirement and the furthest things possible from econ majors. They knew that they were supposed to be worried about ... something. Should we be checking our 401(k)s? Investing in Lehman? Cutting our credit cards? These are the questions they debated as they tried to figure out what impact a Wall Street collapse might have on Millennials—and just what "Wall Street collapse" means, anyway. Excerpts:

Kurt: So your iPod's broken, I know that. But is now really the right time to buy a new one? Just get the battery replaced.

Sarah: Well, I've had this one for a few years—it has some other issues. Anyway, do you really think what's happening in the financial markets effects whether or not I should be spending $200 on an iPod? I know these are very serious problems that have far-ranging consequences on the larger markets, but I still have a difficult time wrapping my head around how exactly that impacts what I do as a consumer. Since I graduated from college, I've been pretty frugal, contributing to my savings account and my 401(k), and I keep an eye on those. I feel like if I keep doing that, I'm going to be OK. Do you think we should be worried?

Kurt: Yes, I definitely think there's cause for alarm. To be honest, neither of us are probably the best people to talk about the intricacies of mortgage-backed securities nor how those will directly affect our lives. But this whole crisis has me a little bit nervous—should I be saving more? Contributing more to my 401(k)? Not buying iPods? Those are all things our generation is notoriously bad at, and buying things on credit (as I'm guilty of doing myself) is only going to make the crunch worse. When it comes to savings and all that, you're a generational anomaly. After all, you once told me: "I have no problems with money."

Sarah: Not fair! I might be a generational anomaly in terms of savings, but I think there are some things that I'm pretty normal about—and that gives me at least a somewhat reasonable foundation to not be stressing. First, I most definitely do not have more than $100,000 in a savings account (in which case, an iPod would be the least of my worries) so all my money is insured. So, from what I've read, my savings are pretty set. As for all the fluctuations in the market, like you said, we're probably not the most knowledgeable financial advisers. But from what I've been hearing, I should just be playing the long-term game—not watching my 401(k) go up a little, and then down a little, but just keep contributing and not get too nervous. And since we're in our 20s, insurance company meltdowns like AIG's don't seem to have much of a bearing on our lives. I definitely agree that our generation's credit addiction is an issue—but as long as I steer clear of that, aren't I setting myself up for a pretty solid future?

Kurt: In theory, yes, but not if the rest of our generation screws it up. You're right to gloat about your personal financial well-being. I guess it's more of the macro issues at stake here for me. Retirement and the lack of Social Security money is already an issue for our generation-what's going to happen if the government starts using that to bail out banks? And there are the smaller things: if bars, for example, aren't making money from bottle service, then aren't drink prices at bars going to be more expensive? And, not to mention, taxes will likely rise due to this bailout fund. It's not that any of these will prevent me from eating or paying rent, but I'd rather be, I dunno, paying the Apple Store than the U.S. government.

Sarah: Well, first point—the bars I'm hanging out at, they're not exactly the ones that are offering bottle service, so I think I'm OK in that regard. But more seriously, you're right to bring up the Social Security thing—that's definitely frightening. But its not just the financial crisis that should have us worried about Social Security; there have been plenty of reasons to worry for decades! Ever since I got a full-time job, I've operated in the mindset that I'll most likely need to rely on myself for my retirement, and have saved in accordance with that. I know there's not much of a silver lining in a financial crisis, but maybe—and I might be too optimistic here—this could be a good wake up call to Millennials. After all, we're not verging on retirement. We still have decades to get our finances in order. I'd certainly rather be going through this at my age than at my parents'.

Kurt: Hey! We hang out at the same bars. But while we're talking about the bright side of all this—aren't you feeling sort of vindicated that you never took the investment banking track? Actually, what if they hire one of these former Lehman employees to cover finance for NEWSWEEK—maybe we should be worrying about our own jobs? I'm half-joking here, but one of my bosses did subtly remind me that many magazines rely on financial-service advertising for revenue. Another reason this whole thing is bad news, even for us journalists.

Sarah: I think there's a lot more things that have me worried about my job than the ad pages that we're losing from the big banks—the declining stocks of most major print publications, for example. But I definitely do agree with you on being very happy to have not taken the investment-banking track. But I think that speaks to my point. I don't feel affected by this, because I'm not losing my job, I'm not writing cover letters, I'm still going to the NEWSWEEK office every day.

Kurt: That's what you say now.

Sarah: The only friends I know who are seriously worrying about this are the ones who work in the finance industry—and see their jobs actually being on the line. And even they're not freaking out—my roommate who works at JPMorgan doesn't seem the least bit fazed. Are we being ignorant? I really don't think so, I just don't know what an individual citizen, our age or older, is supposed to do except really keep an eye on their finances.

Kurt: Forgive me if I screw up this statistic, but those who worked at the major banks had control of nearly 5 percent of America's money before this whole collapse. So, yes, I do think we're all being ignorant if we ignore other people's money—and not just our own—and let this continually slide out of control. Neither of us was alive in the 1930s, thank God, but there have already been reports of tent cities, rising commodity prices, even hookers getting less in tips. Go ahead and buy an iPod, but don't say this has no bearing on your life. That's just negligent.

Sarah: Look at things in perspective: our national debt is nearly $10 trillion—we've got a lot bigger problems eating away at our Social Security fund than the current financial crisis. We should be judging our politicians—particularly our presidential candidates—on how well they seem to be able to prevent another mess like this from happening in the future. But that doesn't govern my day-to-day spending. In fact, I'd argue that, unlike Wall Street, I haven't been risky. I won't be buying my iPod on credit. What's wrong with being rewarded for strong financial management skills?

Kurt: Wasn't it the Baby Boomers that called themselves "The Me Generation?" That's coming to mind right now. Ok, well I'm going to go fret—good luck with your iPod.

Sarah: What color should I get?

Kurt: Black. Like our future.

Sarah: I think I'll opt for green—a sign of optimism, perhaps?

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