By Jamie Malernee
South Florida Sun-Sentinel
Fort Lauderdale, Fla. (MCT) — She grocery shops with coupons, doesn't have cable TV and wore the same pair of sneakers for eight years. But when she finishes graduate school, she'll have zero debt.
He owned his first stock at age 12, invested in real estate before the boom and contributes the maximum he can to his IRA. As a result, at 28, he owns five pieces of property and isn't worried about retirement.
They are members of an age group normally known for maxing out credit cards, spending paychecks on a Coach handbag or the latest plasma TV, despite having massive student loans and savings accounts so empty they echo. Only stereotypes don't apply to these young and responsible South Floridians.
Foreseeing a murky future of stagnant salaries, soaring housing costs and vanishing retirement, a small group of young adults are working to avoid the financial fiasco many are sliding into. Some do it the old-fashioned way, socking away one dollar at a time and proudly labeling themselves "cheap."
"My brother always made fun of my 1995 Nissan Sentra. He'd be laughing, but I didn't care how cool it was or wasn't. What was cool was I didn't have to make payments," said LaChish Rigg, a coupon-clipping, 26-year-old Pompano Beach graduate student who has scrimped to avoid student loans.
Others are getting aggressive with stocks and real estate, turning impressive profits at tender ages.
"Anyone that does their homework who is our age realizes, with all the taxes we're paying, there's not going to be any Social Security," said Brendan Lynch, 28, a Lake Worth insurance agent who co-owns two commercial warehouses and three houses. He plans on using his investments to pay for retirement.
In just the last year, dozens of young adults have moved online, swapping tips on saving, investing and avoiding debt — as well as commiserating about financial difficulties — under such blog monikers as the "Young Professionals Financial Blog" and its Frugal Living Guide, "The Budgeting Babe" and "StopBuyingCrap.com." CNN also has a series called "Millionaires in the Making" on CNNmoney.com, featuring savers, investors and entrepreneurs.
Amanda Gleason, 24, the Chicago blogger of "Young and Broke," thinks the young and frugal lifestyle is rare but catching on.
"When you finally understand that things might not be so rosy, that compels people to save," she said. "I get a lot of e-mails saying, 'Thank you. I had no idea this is how it worked.'"
A recent survey by the New York-based Diversified Investment Advisors shows 62 percent of those between the ages 18-26 believe Social Security will not be around when they retire.
"In our experience, the Gen Yers experience more concern about retirement than even Gen Xers," said Scott A. Coopersmith, vice president for participant communication.
Coopersmith conceded, however, that turning this widespread "concern" into action — getting young adults to save, put money into a 401(k) plan — is difficult. The median head of household younger than 35 has only $1,900 in their bank accounts, according to the latest Federal Reserve data. (Financial planners often recommend that people should save roughly 10 percent of their annual salary. Even if half of the $1,900 is in savings, that is too little unless the person makes only $9,500 a year.)
Where does the rest of the money go? The average 25- to 34-year-old spends 25 cents out of every dollar he or she earns on debt payments, according to Demos, a New York-based policy research group that advocates for expanding economic opportunities and reducing poverty.
One promising tidbit: Some money is increasingly put toward a mortgage. Home ownership is up slightly among young buyers — from 19 percent in 1982 to almost 25 percent in 2006 for those younger than 25, and from 39 percent to 41 percent for those 25 to 29 — according to Census figures.
Professor Pamela Peterson Drake, director of the school of finance for Florida Atlantic University, said most people learn about money and investing through their own mistakes. Drake said the university has tried offering personal finance courses, but few students sign up.
Drake's favorite real-life exercise is to have students get paperwork detailing the credit card or pawnshop loans. Then she has them calculate the cost over time.
"When they look at those numbers, they are in shock," she said. "They can't believe it's 600 percent a year."
Distributed by McClatchy-Tribune Information Services.
