Millennials vs. Boomers

I don’t know about you, but I’m getting sick and tired of baby boomers telling me (either directly or indirectly) how bad millennials are with money, or how clueless we are to how the world works.

Their criticism comes in various ways: the oft-repeated joke about how all of us millennials live in our parents basements; the snide comments about how we all leave college with huge debt and demand a great-paying job right away; or the joke that all of us need congratulations for work accomplishments, akin to our childhood participation trophies.

These comments drive me bananas, especially because many of my patients are boomers, so I have to hear them in one form or another day after day. Occasionally when I tell them that I’m a millennial, they will say something like, “Well you’re the exception. You’re a doctor with a family…” (or something like that to excuse their rudeness)

True, I am a doctor, so I may break some of the mold that society has crafted, in which they cram all millennials. But I am very much a product of my generation, so my thoughts are similar to those of my demographic. Most of my millennial friends, many of whom are not doctors, are also very successful and break the mold boomers put them in.

First, the joke about living with our parents. When many millennials came out of college, we were met with the great housing collapse that older generations had created for us. For me, I’m glad I didn’t get to buy a house while in doctor school, because if I had, I would have lost a fortune. Instead, we waited until we could afford a house, without breaking our budget, and got in on some undervalued real estate. I was 31 when we bought our first home (I actually signed the documents on my 31st birthday), which is right around the median age of when millennials are buying homes. (Some sources say 31, others say 30.)

The fact is, according to Zillow, the median age of first time home-buyers hasn’t changed much in the past 40 years. Millennials are buying homes right around age 31, and boomers bought around age 30. Same difference. Most millennials aren’t even 30 yet, so cut them some slack.

Second, the comments about our debt and our demands. We are saddled with huge debts partly because the educational system which is run by boomers decided that they can charge as much as they want, and they have trained us since childhood to believe only a college education can provide for a happy life. College tuition seems to have kept pace with the ability of students to qualify for more loans, instead of the other way around. Tuition now has to cover the pensions the colleges promised to boomer teachers, thereby enrolling current students in one of the largest Ponzi type schemes ever. (The largest Ponzi scheme in history is Social Security. Think about it.)

And of course we demand good jobs. We have been promised them since we were kids. “If you work hard and study hard, you will be successful.” Other generations demanded similar employment, but instead of forming unions, we take to social media, or create our own companies and economies.

Finally, when I was playing soccer at age 8, I did not go buy myself a trophy for participating in the league. It, and many others in subsequent seasons, was given to me by a baby boomer coaching staff, and applauded by the baby boomer parents section. Now we are accused of demanding trophies, but we were trained to believe that accomplishments should be applauded.

Everyone likes to be recognized for their accomplishments. We may be more vocal about our needs, but everyone likes recognition, regardless of demographic. Boomers may be upset that they didn’t get as many ‘atta boy’ praises from their parents, but we got a lot from our boomer parents, and we are grateful for them.

None of this post should be misconstrued as me wearing ‘complainy-pants’ or placing blame. I only write it to show the flip-side of boomers attacks on me and my fellow millennials.

WHOA…WE’RE HALFWAY THERE…

I can’t help but sing that classic Bon Jovi song today. Today I made a large payment towards my monstrous student loans, and brought the total down below half of the $215,000 that it was at it’s peak.

In other words, in the past 20 months, I have paid off more that $107,000 in student loan debt!!!

I did this in large part due to the early retirement studying I have done over the past year and a half.

If I had not read and applied the principles of Mr. Money Mustache (www.mrmoneymustache.com), as well as some other early retiree bloggers, I would likely be following the same script as other high-earners; spending most of the money I earn on stuff I don’t need or really want, and afterwards making small token payments towards debts and retirement.

I know I still have a lot of debt to crush, but I can actually see a little light at the end of the tunnel. I can taste the freedom I am buying for myself and my family, and this taste is driving me to want to pay down the second half in less time than the first.

Becoming Rich: Get an HSA

In writing this blog, I might make several basic assumptions. One is that many readers are themselves high-earners. Another assumption I may make it that many readers are professionals (doctors, attorneys, etc.) or business owners. If a professional owns their practice, the can be lumped into the business owner category.

One major issue facing business owners and the self-employed is health care costs. Since, in California, the salary limit for health care subsidies in a family of four is $97,200, many high-earners find themselves footing the entire bill for their health insurance.

This leads many of us to choose high-deductible plans, and in our family, we know we are on the hook for all medical procedures up to the out-of-pocket (OOP) max of $6,500 per individual, or $13,000 for the family.

Since we are relatively young and healthy, we treat our insurance as protection against catastrophe. This attitude regarding health insurance can have some great benefits when it comes to taxes.

One positive thing that comes with high deductible plans is the available tax break associated with a health-savings account (HSA). An HSA is a bank account, similar to a checking account, that you can contribute a limited amount to each calendar year. (The contribution limits may change, and are defined by the IRS each year.) The deposits go in with pre-tax money and the withdrawals come out untaxed, as long as the funds are used for qualifying medical expenses. If the funds in the account are not used during the year, the contributed funds do not expire like an employer-back Flexible Spending Account (FSA). The money you put into an HSA can sit there indefinitely, growing a miniscule amount of interest.

Just remember, the goal of using an HSA is not to gain interest, but rather to reduce tax-liability. The 2016 HSA contribution limit for a family is $6,750. If a high-earner is in the 28% federal tax bracket, plus the 10% California tax bracket, they could save just over $2,500 in taxes by contributing the maximum amount. That savings should make up for interest lost. Not to mention the peace of mind it brings to know that if ever a health crisis did occur, you should have plenty of money stashed in an HSA to cover the insurance deductible or out-of-pocket max for the year.

Since tax season is upon us, it may be too late to start an HSA for last year, but it would be a good thing to start now for next year. Just make sure your insurance plan is eligible according to IRS guidelines.