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John Brecher / msnbc.com
Brian and Katie Delano are doing well on the median annual household income of about $50,000.
Katie Delano has seen what it’s like to struggle financially. She’s determined to avoid that.
Delano, now 21, was a teenager when her father was out of work for nine months. Her mother’s salary as a teacher was only enough to cover the family of five’s health care costs. They ended up with credit card debt and other financial woes.
“Those nine months put, like, a fear in me,” she said.
Katie’s husband, Brian, 23, also saw his family's finances squeezed when he was a teenager and his parents took care of two of his cousins (and their own four children) for a couple of years because of a family emergency.
TODAY.com’s Life Inc. blog interviewed the Delanos as part of a series of stories on what it’s like to live on around $50,000 a year, the nation’s median household income.
The Delanos, who live in Tacoma, Wash., both consider themselves lucky to have stable, full-time jobs. She works as a barista for Nordstorm and he works for Home Depot.
Katie is going to school full-time and Brian is working another 17 hours a week as a tutor in preparation for a career in teaching. The plan is for Brian to start school again once Katie graduates next year with a degree in law and justice.
John Brecher / msnbc.com
Brian and Katie Delano play with their dogs at their home in Tacoma, Wash.
They are paying Katie’s $10,000-a-year tuition payments as they go and don’t plan to take on any student loan debt. Their only debt is for their vehicles, and they rent a house.
Together since high school, they got married in 2010. They have two dogs and say their budget would be a lot tighter if they had kids.
The couple uses a financial planning program her father created to set a budget and plan ahead for things like holidays and birthdays. They try to buy only what they need and use coupons whenever possible.
They have a three-month emergency fund in case one of them loses a job and a general long-term financial plan.
Katie says she finds it comforting to have a budget.
“It sounds like we don’t have any fun, but we have budgeted fun,” she said. “It’s nice not to worry.”
Click here to see previous stories in our "We are the median" series. We’re also sharing our thoughts — and yours — on Twitter (hashtag #median), Facebook and Google Plus. We invite you to comment on our posts — but keep it civil and on topic, please!
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I grew up in the 50s and 60s. We were probably considered lower-middle class. My father worked for an oil company and we lived in company housing. They used the 'envelop' method. They didn't have a checking account but had an envelop for food, gas, etc. Our rent and utilities can out of his check.. I even remember the Christmas envelop.
Until we bought a house 'in town' my folks never bought anything on credit except a car. And then they bought their one and only house. I guess that's where I got my aversion to credit. Luckily my husband is the same. Except for our house we only use our credit cards for airline tickets, etc. and pay it off every month. Our last car payment was in 1986. Since then we buy used cars that are about 2 years old and pay cash.
My parents best legacy - if you don't have the cash you can't afford it. If you want it, save your money.
Many folks start off with a game plan like this but bad things happen. Let's say when she gets out of college no one is hiring? Or he gets out of college and no school system is hiring. Both are looking at jobs in the public sector.
Let's say the pill doesn't work and she gets pregnant. Lets say he comes down with non Hodgkins lymphoma.
Many folks are simply careless and ignorant but many are not. We were told to put our money in a house and get the biggest mortgage you could - real estate values always go up. We are operating with a new set of rules - these folks may survive since they are cautious but many folks who are broke now were cautious.
Looks like these two have a good plan. Hope they are saving as well. Life ALWAYS throws you a few curve balls.
Smart move not having student loan debt or credit cards. Going to an "inexpensive school" is smart. ( Who would have thought that 10 grand a year is inexpensive, but it sure beats paying 50 grand a year for the same degree)
The only change I would make is to try to pay cash for cars. Cars are a depreciating asset. Maybe you finance one and pay cash for the other. Or pay them off early.
Kudos to them for having a plan and taking financial responsibility for themselves.
Why do we waste time worrying about the median? Our standards of worth have become pathetically low.
Or are they to high causing people to make themselves poor chasing the standards that the world thinks they should live and not live with what they have.
Wow - imagine that - this young couple is making SACRIFICES for their future, and doing it well. Not bringing a baby into the world until they get their career goals and schooling started. Age is obviously no excuse - here they are in their early twenties, doing things right, yet we're constantly being bombarded with stories of train wrecks in their forties and fifties who couldn't conceive of doing things to better themselves. hats off to this young couple!
Unfortunately, should anything unexpected happen such as a major illness or accident, there will be little or no help available for people like these. Since there's no child in the house they're unlikely to be eligible for any form of welfare or food stamps, and since they're not in over their heads in terms of unsecured debt, they're not eligible to get a bunch of free stuff by declaring bankruptcy. It's people like these who are hit hardest by taxes while being served the least by government.
Taxes will help the people less able them they to be prosperous.
RA and Auto - I agree. Because I have lived within my means, saved for emergencies and avoided debt, I don't "get" the extra benefits, whether they be foodstamps, energy assistance, "earned" income tax credit (although many people who receive this haven't earned anything apparently). But we live in a society that rewards bad choices. Like not getting married to keep extra benefits fro children. That is my biggest worry for this young couple
My working class parents taught me to live within my means, that material items aren't important, and that saving for the future should always be part of my budget. Talk about an education worth the price of gold...
EVERY THING I AM is because of my Mom, she hammered me about the depression and i am near 70 years old now and today is the worse time, but because my Mom was a person of stocking up on food and her money as well i am the apple that did not fall far from the tree, so i live on a budget as well plus i have my sons woth me one is a disabled vet and i am his care giver, i get a great feeling of respect and love from both of my son's. I am blessed to be in good health, to be able to care for my son he is in a wheelchair the only thing he can do for himself is feed himself the rest we do for him, that's what family is all about.
good for these young folks. they are starting their life off on a road that will take them where they want to be. sacrifice is part of the deal. many do not understand that everything is not given you have to earn.
Couldn't have gotten better advice/leadership by example from my parents. "Live below your means." "Get a career you like, thats in demand, and that not a lot of people can or are willing to do."
I learned NOTHING from my parents. There was no conversation on how to figure out finances. My step-mother would take any money I had gotten (gifts, working) and use it for whatever she wanted. This made me hide money or spend it as fast as I could. I will say that we never did without, were considered middle-class,but probably because she would steal money from the children. She always wanted to keep up with the Johnson's.
How very sad. And what an awful example--that theft is okay. My heart goes out to you. Hopefully you have learned good financial techniques along the way.
They will follow in the Parents footsteps sooner or later. Look at them in 10 years.
Wow, what a downer you are!!! I know LOTS of people who live just as this young couple do, and they have done it all their lives!!
Agreed! What a downer! Actually following their parents may NOT be so bad, as their parents DID get it figured out, and DID pass their (admittedly bad) experience on, along with how they fixed it. Think this is a case of being smart enough to learn from someone ELSE's mistakes! Go, kids, GO!
Young people like these are our hope the future. In 20 or 30 years, this generation will be in charge. More of their peers need to follow their example.
That will NEVER happen. It only gets worse, not better. Open your eyes.
SO HAPPY to see a smart couple interviewed for one in this series. Good job guys of having your priorities straight! Now if only your friends would listen right?
the glass is half empty. What makes you think it will only get worse? More many they live better then their must have it now baby boomer parents.
The ruling elite will never let people like this into politics to threaten the upward flow of wealth.
Ever.
Adults Under Age 35 Carry More Debt Relative to their Income than Any Other Age Group
Adults under age 35 have a higher debt to income ratio - meaning more of their monthly income goes toward debt - than any other age group. In 2007, young adults spent nearly 20 percent of their earnings on debt.[1] Young adults also exceed other age groups in their frequency of late credit card payments.[2] But young people in the work force are not the only ones with consumer debt. College students are increasingly likely to pile on debt as well. In 2009, 30% of students paid for tuition with their credit cards.[3] In fact, half of college students have four or more credit cards and pay monthly finance charges - payments such as interest and fees which do not reduce the underlying principal - for failure to fully pay off their credit card balance.[4]
Young Adults Pay Millions in Overdraft Fees, Late Payment Fees and Other Finance Charges, Leading To A Debt Cycle
Overdraft fees, late payment fees and other finance charges cost young adults billions of dollars each year.[5] Because young people are often new entrants to the work force, unemployed job seekers or students, few of them have significant experience with managing their finances and are prone to overlook hidden costs. Young adults are generally low or middle- income and can struggle to stay on top of their credit card and student loan balances, let alone pay additional charges in interest, penalties and fees. Strong consumer protections would go a long way toward preventing finance companies from taking advantage of young people.
Many young adults also turn to payday loans in times of need, loans that rarely work out well for consumers. The loans use extremely high fees and interest rates to trap customers in a harmful pattern of borrowing that keeps them coming back to pay off debt from the prior loan. Over one-third of payday loan consumers are 34 years old or younger and the median borrower earns $31,000 a year.[6] During these difficult economic times, college students are also turning to payday lenders. One study found that 5% of University of Arizona freshman took out payday loans in 2008, which was twice the percentage in 2007.[7] Regulators will soon have an opportunity to protect young people from harmful lending, and should take special care to protect against these abusive practices.
Once young adults fall into financial trouble, they have a hard time climbing out. In fact, long-term consumer debt can damage a young person’s credit report and score for years to come, leading to other problems. P eople with low credit scores often struggle to borrow money to purchase a house, buy a car, or start a business. They also pay more to borrow - meaning higher interest rates and more fees. They may face discrimination from prospective employers, who are increasingly using credit scores to screen job applicants. Landlords often look at the credit scores of tenant applicants. For all these reasons, having a negative credit report and a low credit score makes it more difficult for young adults to seize economic opportunities, pay off their debts, and establish financial security and stability. In other words, high debt can be yet another hurdle for young adults as they try to pursue an education, build their careers and start families.
Strong Regulation is Needed to Protect Young Consumers
The federal government has made some progress toward protecting young Americans and all Americans from the worst practices of the lending industry through the recent passage of both F inancial R eform and C redit C ard R eform. As a result of new federal rules issued in August 2010, banks can no longer automatically enroll customers in overdraft protection. In other words, banks can’t approve a debit card transaction which overdraws a customer’s account, and then charge that customer $35 or more as an overdraft fee, unless the customer chooses to enroll in overdraft “protection.” These and other safeguards found in the Credit Card Act of 2009, will better protect young adults against abusive credit card fees and penalties than they have been in the past. In the Financial Reform Bill, the creation of a new Consumer Financial Protection Bureau (“CFPB”) to closely look at common financial products will provide a powerful new way to hold financial service companies accountable for deceptive practices targeted at young consumers.
However, despite these positive reforms, there is still much to be done to adequately regulate lenders and credit card companies and effectively protect consumers. Credit card contracts are long, hard to understand, and full of provisions that give the credit card company the right to impose very high interest rates, and unfair fees and penalties. With limited financial experience, young adults are ill-equipped to decipher these contracts and choose among competitors. With scant or poor credit history, young adults are particularly vulnerable to “subprime” credit card offers, which charge even higher interest rates and more extreme fees than traditional “prime” credit cards.
That still doesn't mean EVERY young adult lives that way or EVERY young adult WILL live that way...hope you aren't a parent!!! Lots of people in their 40's and 50's have the same bad spending habits.
Wow--Raymond--you've learned to copy/paste. Very impressive. (Anyone who is interested can check the original article out at www.younginvincibles.org/Issues/ConsumerDebt.html)
Yes, young people tend to be spendthrifts. They have always been spendthrifts, but there are more serious repurcussions these days than there used to be.
However, not all young people are spendthrifts. Some are clever and find ways to live within their means and still get what they want. These two young people have--they are making extremely sensible choices, and there is no reason to think they will not continue to do so. She will have a law degree soon, and then he will study teaching--both are fairly stable careers (depending on what area of specialty she is going into), and it isn't as though one of them is studying "fashion design" while the other is studying "tattooing."
While these young people may be somewhat atypical, it is still good to look at them as an example--you might try following their lead and living way below your means, investing in an education, and more importantly, pairing off with someone so that you can cut many of your costs in half while simultaneously having someone else to depend on if you lose your job or get sick.
Stable marriages are one of the best safety nets out there, financially speaking (and emotionally, too, but that's beside the point).
There's also statistics that show people over the age of 35 are bald in higher proportion than any other age group.
Point?
You know, most people 35 and under haven't quite established their careers, haven't paid off their home, etc. Were you completely debt-free at the age of 30? I'm 29, but debt-free. I rent a home, have no lingering student loans, no car loan, and actually am saving 12% of my post-tax gross into a Roth 401(k) (company matches up to 9% for effective total of 21%). How well were you doing at the age of 29?
Boy oh boy, Ray must have really messed up big time to be so bitter and negative.
Matt: I'm 41 and have a great head of hair. ;-)
This couple could start saving money by getting rid of the dogs.
Did you READ the article??? They DO save money, they aren't complaining, they pay for their education as they go, they have very little debt. The dogs evidently are part of their budget!!
Agreed. Those would be the first thing to go.
The dogs are not a problem. They are saving money and paying for things as they go. READ the article, then comment.
Pete and lifelong - sorry you have holes in your heart.
All during my youth I heard, "just because you have money don't mean you can or should spend it" those gems from both mom and dad. We as kids worked for most everything. Grew large gardens, did odd jobs for nickles and dimes. During summers at the ages of 10, we were shipped off to work on a ranch. That money bought school clothes. I'm 72 and still work, but just part time now. Wonderful those early lessons, best is the work ethic we all gained. These kids have the right idea, to them I can only say, stay the course, it won't always be like it is now.
Romy: Out of curiousity, do you still work because you want to or have to?
My parents taught me what not to do with money. So I'm doing better then they were at my age.
Note that over the last three decades, through corporate control, the media has shifted focus with young children through advertising to turn them into consumers as early as possible and get them to be 'cradle to grave' consumers.
So, kids can no longer be kids, they are consumers.
What do we expect? I expect young people in debt with no money skills, that's what I expect.
Couple that with an economic system gamed to benefit the wealthy, low paying jobs due to outsourcing and corporate greed, and you have a perfect storm brewing.
PeteMT, what you say is true. When my son was very young, we used to analyze the ads on TV aimed at turning children into consumers. He learned from me the habit of skepticism about advertised goods, and so today, in his mid-twenties, has a very conservative attitude toward money. He does not even like to accept expensive gifts if a less expensive alternative exists. He and his fiancee live in an admittedly expensive apartment in San Francisco, but have no car and eat out rarely, and then at "ethnic" restaurants where the food is likely cheaper. He can dress casually for his job, at which he makes $80K/yr, so he is not swayed by fashion. He was graduated from a Cal University with honors in math and retired his school loans within a year of having a job, because he resented having to pay interest. His only problem right now is figuring out what is the best and safest investment for his excess income. I am proud of him and take a small measure of credit for his habit of thrift. I only hope he doesn't go too far and become a miser. For myself, I am grateful for my material wealth, which compared to that of 99.99% of the people of the world, is more than abundant.
Another article on budgeting and this 50K series. Minimum wage jobs and/or lack of available decent ones from throw all of this ancillary discussion out the window in the real world.
Oh yeah and do not give me the emergency savings argument. 3 months comes and goes and then what? If one cannot get hired anywhere due to discrination of unemployed, then what? Many in the REAL WORLD did EVERYTHING BY THE RULES INCLUDING BUDGETING BUT ARE NOW IN POVERTY.
A lot of republican'ts want to ignore what you said Legal... They think that if they did it then everyone else can too, which is not true at all. They also believe that a child who was born with a disability at birth, has only themselves to blame for being born that way, and that's diffinatly not true.
Their famous phrase: "Personal Responsibility", is a load of rubbish. Its code slang for "Don't make us pay taxes for benefits for the disabled and poor"
And thats my opinion.
Yes, Legal Sin you are right. However, having a budget and a three month emergency fund is surely better than having nothing whatsoever, then being comfortable one day and on the street the next.
At least you might be 'less' in debt if all goes badly or you might have the fortune of finding work in two or three month. Or, not.
Those bad consumers.
How are the banks supposed to make any money if people aren't paying interest on loans for things they can't afford because...
the bank (the fed) devalued the dollar and put these things (cars & homes mostly) out of reach for the average worker.
The banks will get it back one way another. Currently they are taxing the crap out of us through inflation of commodities ie gas, groceries.
I have a feeling they are working on some other currency manipulation ploys yeepee - damned if you do and damned if don't. Save your money and it gets devalued, try to spend it and you end up in debt that you can't pay back. LOL maybe our government should learn a thing or two about sovereignty and printing their own sound money. Yeah I think a few other civilizations have tried this fiat currency thing.
19 deleted, Tiber drive-by trolling about who they want to 'tap'. Keep it to yourself, it's not really on-topic. You're suspended for a day for violating #4 of the Code of Honor.
A pattern of whitenoise-and-worse contributions may result in account termination.
Bravo to this young couple. Most people their age are still living with their parents/supported by their parents and just wonder where the next party is at.....Good luck to them and well wishes for their future!
It seems to work fine until the bills are more than what is coming in and you have to use credit cards for groceries, the electric bill, etc. Then the credit card bills go up, the payments are more and you are in a vicious cycle. Not all people in credit card debt are there because they overspend or don't have any discipline.
Not ALL, but MOST
My parents refused to discuss money, because they "knew" that we kids would blab all over town how much Dad made, and it would ruin our lives. (We lived, in in a small, isolated rural town where there were few jobs outside the forest industry.) Other than that, it was "save your money for college," which meant that every dollar and five dollars I got from relatives for holidays went into a bank account, and when it was time for college, it was less than $100 dollars, total. "If you need money, I'll decide if and when I'll give it to you," was another theme, and that was it.
I had a checking account at an early age, and was always taught to put away a percentage of savings (as early as 10). When I graduated college my Dad told me, "3 months salary in cash MINIMUM" so I kept up with the Ramen diet until I had that in cash.
It's all about learning how "the system" works and working it to your favor. People always talk about the evils of credit, but if you have discipline, credit can be your friend. Not only does it allow you to get better rates on larger purchases, but you also (with the right card) get cash back for purchases (that you would have otherwise not gotten back) and in the case where you can do a "12 months same as cash", you can invest that money in an 11 month CD and take it out, literally earning interest on money that really isn't even yours...but again, that's only if you have discipline.
The coup de grâce was learning about extreme couponing and it's benefits. Now I'm teaching others how to save thousands on their annual grocery bill and "paying it forward" as best I can to see how I can take what I've learned and seek out others that need help - after all, we're all in this together.
Shawn
The Coupon Hubby