A Life Stage Analysis of Changing Attitudes and Behaviors
is revealed in a new Dr. Robert Manning report: Living with Debt, Part I

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 patterns:
- 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 debt.

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 life stage.
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 grandchildren.
- 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 competitive consumption.
- 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 perfect) investment.
- 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 possible.
- 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.