Housing Costs, Debt Force Frugality Among Young Adults In South Florida
Out of necessity, a growing number of young South Florida residents are returning to the frugal habits of generations past. Clipping coupons, making trps to discount stores such as Costco instead specialty grocery stores, and bringing lunch to work — these daily routines may seem out of place in the Miami area, but they are growing in popularity. Why?
With staggering Florida real estate prices rising much faster than seemingly stagnant income levels, many young adults ranging in age from 25 to 34, are reassessing their lifestyles. Throw in college loans and mountains of credit card debt and you have a recipe for disaster all too common these days, according to a Wednesday Miami Herald piece.
While Florida housing costs have risen by 20 percent statewide since 2000, young adults’ incomes have gone up only 10 percent. In other words, they are swimming upstream. Since most earn less than $30,000 a year in Florida, buying a new home isn’t even in the equation. Prices in many parts of South Florida have appreciated by more than 100 percent.
”They’re getting crunched. Jobs are further away, child-care costs are high and there’s a smaller pool of jobs and housing,” said Gihan Perera of the Miami Workers Center, a non-profit which advocates affordable housing and economic equity for the working class.
For a group a few years removed from college or technical school and that should be hitting its prime, looking toward marriage and the purchase of their first home, it is instead a struggle — particularly when substantial student loans and credit card debt are thrown into the mix.
A web designer for a local trade magazine, 28-year old Paula Nino has made drastic changes to a once uninhibited life. To help pay off $10,000 in credit card debt and other expenses, she regularly empties coins into a small box to cash in later. A $60 sofa bed from a thrift shop did the trick when it came to furnishing her place — no furniture store needed. She also nixed cable TV and eats almost exclusively at home, despite her love for restaurants.
”It’s expensive. When I was growing up . . . I didn’t know a lot about handling money or being frugal at all. I’m still learning,” Nino said.
THE IMPACT OF CREDIT CARD DEBT
Credit card debt among this age group ballooned by 55 percent to $4,088 from 1998 to 2001, according to a study dubbed ”Generation Broke” by Demos, a New York research and advocacy group. By comparison, credit card debt among people age 49 to 55, while higher overall at $4,861 per person, grew by just 25 percent. The result is a young generation whose income is swallowed up by paying off debt at nearly a quarter of every dollar earned.
”They’re weighed down by student loan debt, with starting salaries that haven’t kept up with the cost of healthcare or housing,” said Tamara Draut, who co-authored the study. ”They never have a chance to catch up and get ahead. This is a generation that finds that it’s constantly running to stand still.”
More than half the young adults in Florida — 55 percent — make less than $30,000 a year, according to the U.S. Census population survey of 2004. With a modest median income, it means the average young adult is unlikely to qualify for a home purchase in Broward or Miami-Dade or counties, where prices now average over $366,000. Rents have increased as wekk, climbing from $571 to $775 for a typical one-bedroom apartment in Miami-Dade. Fort Lauderdale saw a similar increase from $572 to $830, according to the U.S. Department of Housing and Urban Development.
”It used to be the case that the people in this bracket is where upward mobility would begin. This is scary because it doesn’t bode well for our median young workforce. You expect those numbers for teenagers, but this is the point where they should have established their careers,” said Bruce Nissen, director of research at the Center for Labor Research at Florida International University.
Americans as a whole are being forced to cut costs with rising energy prices and bills. Florida residents are especially squeezed after heavy damage from this past hurricane season. More and more individuals are flocking to discount retailers, discount websites, and anywhere else they can save a buck or two. For the coveted 25- to-34 age group — a target for advertisers — such lifestyle adjustments have become the new way of life.
COMING TO GRIPS WITH A HARSH REALITY
An investigator with the Broward Sheriff’s Office, Christine Charles, 33, has a salary well above the median income, but has been forced to supplement her income by doing other jobs. Her parents enjoy a comfortable lifestyle in Florida, and she assumed hers would be similar.
“Reality slapped me in the face. This is not what I thought it would be. These days, I’m the sale queen. Coupons are my best friend,” she said.
At a Miami Beach apartment complex off Lincoln Road, Julienne Gage, 32, and a group of neighbors share lunches and dinners and scour clothing racks at thrift stores and discount chains. Gage has had to make drastic changes to survive and pay off the $40,000 in student loans after earning two master’s degrees — cutting off her gym membership, getting around by bicycle, and doing whatever it takes to save.
It remains to be seen how much of this is likely to continue in the long run. But for the foreseeable future, it appears that middle-class young professionals across Florida are getting pinched by high costs of living. With Florida home loan rates rising and prices dropping as a result of a number of factors, some leeway is possible in the next year as far as housing costs go. Until they fall in line with salaries, though, the penny pinching will undoubtedly continue. If the trend worsens, many young professionals may look to relocate to other housing markets.
