San Diego, CA - "Don't Get Your
Kids Hooked on Credit" was the title of an essay, written
a few years ago by this writer. This idea was validated in
the book "Credit Card Nation" written by Robert D.
Manning, PhD, economist and professor of finance at the
Rochester Institute of Technology. Dr. Manning is a
specialist in consumer finance, socioeconomic trends, and
retail banking deregulation and has testified at U.S.
Congressional hearings on the use of credit. He is
involved in developing financial literacy programs for
college students, community-based alternatives to
high-cost rent-to-own stores, and an informal bankruptcy
option for consumers who seek to retain their homes.
Dr. Manning has a new report titled: LIVING WITH DEBT: A
Life Stage Analysis of Changing Attitudes and Behaviors.
It contains some very useful insights. It was underwritten
by LendingTree, which was launched in 1996 and has since
processed more than 16 million mortgage loan requests.
Lending Tree is now focusing on a multi-year consumer
advocacy program with the goal of educating and inspiring
people to make smarter borrowing decisions.
In commissioning this study, Lending Tree indicated it
wanted to learn more about how consumers are living with
and managing their debt; to explore American's attitudes
as well as their behaviors. They hope to contribute to the
national dialogue about the state of debt in our lives,
and, most importantly, to help consumers arm themselves
with the financial literacy skills they need to make
prudent borrowing decisions.
Study Focus and Methodology
The study specifies a life stage approach that examines
six distinct age and family structure groups based on the
assumption that their experiences illuminate current and
future trends related to consumption and saving/borrowing
- College Students (17-27 years old)
- Young Singles (under 35 years old)
- Young Families (under 35 years old)
- Mature Families (45-64 years old)
- Empty Nesters (45-64 years old)
- Seniors (65 years and older)
The central research question is whether the six basic
life stage groups have different attitudinal and
behavioral responses toward the use of consumer credit and
The underlying assumption is that different generational,
family structure, and work/career factors influence the
views and use of consumer credit in American society.
Key Findings - Across All Life Stages
The following summarizes the key findings of this research
project, including major trends that are consistent across
multiple life stages and those that are unique to each
1. Living with increasingly higher levels of debt has
become an accepted and normal state of affairs. It is
considered an inevitable and likely permanent
feature of everyday life.
- Adherence to traditional attitudes toward the use of
consumer credit and the accumulation of debt is declining,
especially among younger life stage groups. The social
stigma of high debt levels is largely gone.
- The traditional pattern of accumulating debt early in
life, which is then reduced as incomes rise and after
children leave the nest, is changing. Instead, the rise
and fall pattern of debt is being replaced with the
accumulation of higher levels of debt and extended
financial contributions to children and grandchildren.
- Much of the traditional social and cultural views of
good debt vs. bad debt have been influenced by mass
marketing to Baby Boomers and their children and
grandchildren, many of whom expect or feel pressured to
pursue immediate gratification over traditional values
like saving for a rainy day.
- The exception are Seniors, whose personal or family
experience with the scarcity of the Great Depression and
World War II makes them most likely to maintain
traditional notions of needs vs. wants or desires.
2. Many people attribute their willingness to go into
debt, or to take on additional levels of debt, directly to
a dramatic increase in spending on children and
- All groups, including Seniors, reported using credit
more freely when spending on lifestyle activities for
their children and grandchildren. Even parents who limited
spending strictly to needs for themselves were willing to
consciously ignore their traditional spending values and
make purchases for their children's wants and desires.
- There is an acknowledged and high degree of pressure
regarding keeping up with the Joneses, when it comes to
spending. Parents described spending on the lifestyle
requirements of children as the key factor in peer driven
- Ironically, increased spending on children during their
earliest years is compromising parents ability to save for
the rising cost of their children's college educations in
later years and actually contributing to higher debt
levels among their children as they begin adulthood.
3. Attitudes toward homeownership have changed
significantly, from simply providing necessary shelter to
satisfying both a need and a tangible, secure (and near
- Many respondents see the uncertainties of the stock
markets, as well as the continued increases in home
valuations, as reasons to buy a home as quickly as
- Home ownership has become a much more important piece of
the overall financial equation; the real or expected
appreciation in home equity is considered a financial
stabilizer or way out of trouble for many participants.
4. Despite expressed needs and desires for practical
financial planning services, people feel ill-equipped to
create and follow a basic financial plan, especially as
they transition between different life stages.
- Parents and grandparents remain the largest influence in
personal finance education, but younger groups in
particular lament the lack of training in personal finance
at the high school or college level.
- Although financial planning information is widely
available, both younger and more mature groups lack
adequate skill sets for making basic cost-benefit
financial decisions or estimating the true cost of major
purchases bought with credit.
- Few have developed, let alone adhere to, a personal
budget, although older groups were more likely than
younger groups to do so.
- Long-term financial planning, with the exception of
buying a house, is largely absent among Baby Boomers and
their children, who acknowledge a fear that they are not
accumulating sufficient resources for maintaining their
life styles in retirement.
This story ran on
on February 4, 2006.