Steering the Next Generation Clear of Debt: My Visit with DD1

DD1 = Dear First Daughter
DH = Dear Husband
I am in the middle of my week out west visiting DD1, and it’s going to take all of my self-discipline to turn my thoughts towards the journey out of debt that is supposed to be the focus of this blog. I’m getting a lovely glimpse of what life-after-debt could be. A mountain hike; jogs along the sea-wall; a downtown shopping expedition; meals out at Thai, Malaysian, Italian, and Japanese restaurants; indulgent reading ; a nap every single afternoon . . . I say bring it on. So I’ll harness my attention and keep steering in the direction of debt-freedom – which is looking awfully good right about now.

DD1: Employed!

A few days before I flew out west, DD1 received a job offer. In the spring, she completed her master’s degree, and this summer she worked as a coach. Her intention for the fall was to take a year off school, find a job, and make decisions about her education/career direction. The job she was offered is one that fits her area of study. It is with a large and long-established company, and it includes a very decent starting salary. Great, great news for DD1! The thing is, she had to start work this week. Just as I had to start my summer job the week DH flew DD1 home to surprise me for my birthday (See post “Gazelle Intenseon Debt-Reduction . . .”), she has had to start work the week of my visit. That’s life, and it’s all good.

“What financial advice can you give me?”

          The situation has afforded the opportunity to talk about money matters. For DD1, who managed to graduate without a cent in student debt, work has always been a means to pay for rent, food, tuition, and books. Things are different now. The pay will be significantly higher. Expenses, with no school fees, will be significantly lower. “What financial advice can you give me?” she asked. (Yes, she actually asked.) My advice was to stay out of debt and to save as much as possible. When she asked how much she should save, she made it a point to tell me that she doesn’t want to be a miser. (As if I would advise that!) She’s at a point where parental input is welcome – but only in the context of her autonomy. So I respectfully offered the advice of Dave Ramsey, our debt-reduction guru: “Save 15% of your gross income.” We figured out what that would be, and DD1 seems confident that she can do it – though she’s not committed. “I don’t need to buy a car. I’m not at the point where I’m thinking of buying a house,” she said. It is hard to save without a specific goal, but I promised her that no matter what direction her life takes, she’ll be very grateful for her savings.

          It is generally accepted that parents want their children to “do better” than they have. I think this truth is often understood in terms of career advancement and material acquisition. For my part, I don’t cherish dreams of DD1 buying a bigger home in a more prestigious part of town than ours. But I do feel enormous satisfaction in seeing her start out on the right financial foot. She stands a very good chance of side-stepping the whole quagmire of debt that has been an underlying stress for her parents all our adult lives. At her age, DH and I were just starting to multiply our respective debts. She, on the other hand, is about to start multiplying her savings. And multiplication is what happens either way. Good money management won’t be the answer to all of life’s problems or yearnings, but if she continues along this trajectory, she’ll set herself up to meet the challenges that will come her way unencumbered by the burden debt is. She’ll set herself up to have the freedom of choice when opportunities present themselves. That’s huge.

          This is a great vacation week. Social and family visits; rest; fun; beautiful mountain and ocean views; fabulous food. But what can compare to motherly pride in a daughter who is “doing better” than her mom?      

Comments are welcome!

I would love to hear what you have to say. Feel free to share your thoughts, offer advice, disagree, or ask questions. (Disrespectful comments will be deleted.)

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  1. Hey Prudence! (Ottawa gal here too!)
    I’m going to throw my 2 cents in here (I know how my son would love unsolicited advice from internet strangers…). Fifteen percent savings is terrific – better than most people ever manage in fact. However (and this is my personal pet peeve), that “gold standard” advice is designed to get you to retirement at 65. If you asked your daughter when she’d like to retire and to pick ANY age, I’d bet money she’d pick something younger than 65. I’m not sure if you’re a reader of Mr. Money Moustache (former Ottawa high tech guy now living in the US and retired in his 30s…). He has a blog article and chart showing the math of savings rate vs years to retirement. There are multiple options shown but for example 50% means you retire in 17 years. Wouldn’t you have loved to have that information when you were your daughter’s age? I try not to beat myself up for not knowing this before my 40s, but I regularly pass this information along now that I do know. I can’t make up for the wasted decades when I saved “only” 15% and thought I was a superstar. We are now saving 40-45% most years and as a result I’ll retire at 57 not 65, but man I wish I had a do over for my 20s and 30s. I hear your daughter on not wanting to be a miser, but if you have a clear vision about where you are headed and how long it will take, it can make opting out of a few nonessentials much easier to swallow. At this point in her life she is used to a tight budget with few luxuries. She’s probably also used to a heavier work schedule (add a PT job to the new full time gig?) Before she becomes used to her new lifestyle with more cash to spend, it would be useful to at least consider that retiring at 65 is AN option but certainly not the only one (or a particularly desirable one in my books). I understand wanting to enjoy her new financial situation, but perhaps she could set a dollar and time limit to get that out of her system, and then chart a course that truly sets her free in a timeline she can visualize, not some far off date 40 years from now.

    Here’s the link to the article, but his site is really worth a read from the very beginning. You can practially hear the lightbulbs going off in his readers heads as they see the light and stop drinking the “retire at 65” Koolaid.

    1. Thanks for your comment. Wow! I’d like to respond to a few items:
      1. It’s fabulous that you are saving 40-45% of your (take home?) pay! I am very impressed.
      2. I have heard of Mr. Money Moustache, and I am interested in what he has to say, but I consider him so extreme. As someone with a family, I don’t know to what extent I would be able to model myself after him. I will take the time to read his blog some more since he’s clearly inspired you.
      3. I will get my daughter to read your pointers on the whole 15% for age 65 issue. I know that when I was in my 20s, I had absolutely no interest in anything to do with retirement. I could not even conceive of it. The difference between 55 and 65 to me at that time was insignificant. Both ages were simply old. I don’t know if it’s possible for her – or for any young person – to get excited about the idea of saving for an early retirement. But perhaps I’m wrong. Feel free to let me know if I am!
      Thanks again for sharing your thoughts.

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