Personal finance guru Dave Ramsey has a lot to say about the nearly half of young adults who are still living at home—a level that hasn’t been this high since the Great Depression.
This cohort (those ages 18 to 29) is driving the growth for luxury goods in the U.S., say Morgan Stanley analysts in a December report. The analysis found that living at home freed up older Gen Z’s and younger millennials’ discretionary spending, enabling them to snap up designer handbags and watches. Ramsey, a self-made millionaire and author of numerous personal finance books, blasted the trend on a recent episode of The Ramsey Show.
“So, let me get this straight. You live in your momma’s basement, but you got a Coach purse,” Ramsey said. “Here’s what’s going to happen—you cannot avoid life, it’s coming for your butt. Momma can’t protect you.”
Saying the trend will result in a “train wreck,” Ramsey blames not the young adults but their parents for “out of control” helicopter parenting and “coddling.”
“The problem is you’ve got debt; you’re not earning enough money; and you’re not doing enough to go out and change it,” cohost Jade Warshaw added. “Mom and dad can’t do this for you.”
But the situation is a little more complicated than that. The economy, rather than parenting or lack of willpower, is forcing many young adults to live at home. (The Ramsey team didn’t respond to request for comment.)
Millennials, a highly educated cohort who graduated into the Great Recession and its aftermath, entered a difficult job market while saddled with enormous student loan debt. Many have since been able to make strides in building wealth, but the long act of getting there has prompted them to marry, start a family, and buy a home at a later time than their parents did—if they even partook in these life milestones at all.
“It’s almost like we don’t want millennials to get a piece of the American dream,” André Perry, a senior fellow at the Brookings Institution, told Fortune in November.
Gen Z has also faced its share of financial challenges, the oldest of whom were thrown into a pandemic and dismal labor market at the foot of their careers. While they gained the upper hand at work as the job market bounced back and recession threats motivated them to save more than other generations, many doubt they’ll be able to save enough for retirement and to buy a home.
Both generations are now facing 40-year-high inflation for the first time, with some unable to afford a roof over their head. U.S. rent prices increased so much last year that Americans now have to work six hours more per month to afford it than they did before the pandemic.
Sky-high rent is why 39% of the millennials who moved back in with their parents last year did so, per a survey by PropertyManagement.com. More than half said they boomeranged back home to save more money.
It’s proof that living at home with parents can be financially beneficial. “This should not necessarily be viewed as a negative thing as long as there are clear fiscal goals in place,” Doyle Williams, an executive vice president at Country Financial, said back in 2018, adding that this can help millennials build an emergency fund and save for a down payment.
At the time, the Country Financial Security Index found that 35% of millennials were still living at home with their parents. That stands at one in four today, per the PropertyManagement.com survey. A separate study found that nearly 30% of adult Gen Zers are still living at home with their parents, held back from moving out on their own by the rising cost of living.
Sure, some young adults prefer to treat themselves—after all, Gen Z is motivated by affording material goods more than any other generation and began spending on these high-ticket items earlier on. But if that’s the case for those living at home, that doesn’t mean they’re also not socking money away. It also doesn’t mean that every boomerang kid is splurging on luxury.
Many just hope that living with their parents will help them one day afford what was once more easily attainable for mom and dad.
Dave Ramsey is the poster-dork for Millennial Landlordism. Dude's advice generally isn't bad on its face (he was a crypto-skeptic and hostile to the goldbuggery of the last two decades, he generally recommends conservative low-risk investments, he's a notorious debt-hawk). But its nakedly geared towards the privileged failson class.
The advice always boils down to aggregating property and pulling in more passive income. Don't spend money when you're young. Just horde it in low-risk investment vehicles and build up larger and larger piles of revenue-generating assets.
In a capitalist market, it isn't bad advice. Ramsey couches a bunch of his messaging in conservative ideology, but if you're looking for a "winning playbook" in the War of All Against All, he's not handing out fundamentally incorrect suggestions.
But the "don't be stupid, just be smart" attitude combined with the "don't be poor, just be rich instead" baseline premise of his advice inevitably sets WASPy failsons on the path of delusional self-aggrandizement.
Gen Z is motivated by affording material goods more than any other generation and began spending on these high-ticket items earlier on
:citations-needed: literally everything is just price gouged and labelled "luxury" now
Having clothing, appliances or anything else not constructed out of tissue paper particle board is a luxury. You will sleep on the broken Ikea bed. You will buy new pants every single month because they last three washes.
This is absolutely a factor I hadn't even considered: a lot of people including myself these days buy "luxury" goods because the "luxury" part basically means its not constructed like complete shit and will last (IE, its an investment). I own like 6 pairs of these pants:
https://outlier.nyc/collections/pants/products/futureslimworks
You know why I own them instead of khakis from wallmart? Sure...in part its cause they look nicer but also: -They breath incredibly well in the hot texas sun. -They stretch nicely. -They repel water and staining (I've litterally soaked them in blood and salvaged them). -And they're goddamn durable. I've had them for almost 8 years at this point I think.
Luxury can often just mean a dumb branding but it can actually mean cost effective as well at times.
“So, let me get this straight. You live in your momma’s basement, but you got a Coach purse,”
This person does not really exist outside of Dave Ramsay's head. He takes two different, unrelated data points ("young people are driving luxury good growth" and "more young people are living together") and tries to mash them together like a kid trying to mash together a Duplo and a Lego. It doesn't occur to him that there can be wealth disparities within Gen Z; that the wealthier end are buying Coach purses while a very large other group is living at home.
And fuck this guy, like most "investment advisors" this guy doesn't actually know jack shit about things but he has to pretend he does so he sounds like a "trusted financial advisor". Nearly every investment advisor is a glorified car salesman.
Literally the only reason me and partner own a house is because her landlord didn't cash her rent checks for two years, letting us keep that 40% of income that would have been lost
I know, the best part was right after we moved he called my partner and left a message asking if we could send replacement checks since the ones he had were expired
She blocked his number
“The problem is you’ve got debt; you’re not earning enough money; and you’re not doing enough to go out and change it,” cohost Jade Warshaw added
Execute these people
The problem is you’ve got debt; you’re not earning enough money;
Correct
and you’re not doing enough to go out and change it
Incorrect :PSL: :cpusa: :an-tifa: :meow-anarchist: :im-doing-my-part:
I disagree. None of us are doing enough to go out and change it - otherwise there'd be a revolution.
This is just more richsplaining about how stupid people are for buying avacado toast, or shaming poor working families for buying their kid a gameboy rather than an investment portfolio or something (or fucking crypto for that matter).
I admit to being bad at numbers but even if its true that GenZ is driving the boom in luxury good sales, unless they are the 20k models or something this is just nonsense. I am the rare millenial who manage to get into home ownership because I lucked out during the 2008 crisis but the fucking reality for a lot of people is that barring some kind of radical change that shit is off the fucking table no matter how many pennies you pinch. There's bounds of reason but frankly if you're going to be stuck in a rent seeking hellworld eitherway why not at least treat yourself to some nice things and experiences?
This is basically a religion telling you to deny all earthly pleasures, but there isn't even a fucking Heaven at the end of the road.
Any comment on the baby boomers that are living out of their cars now my guy?
Asked my mom about Coach purses since I've got no clue and she said they'll run you like $300 or less if you're smart about buying on sale, plus apparently they've been out of style for a while (and only now are beginning to come back)
And all that on top of "You'd be financially independent if you hadn't made a one time $300 purchase". That's quite a few layers of out-of-touch Dave
My purse is 15 years old and I got it at a charity shop...
Rich people are so out of touch.
I don't know anyone my age who's buying luxury goods. Everyone's trapped paying off student loan debt working 1-2 low paying retail jobs.
I don't even have student loans because I dropped out and I sure as hell wouldn't be living with my parents if I didn't have to
These gotcha articles on millennials keep assuming we're flush with cash somehow from living at home and not fucking broke because we were told to go to college or we'd end up homeless.
Seriously, the only reason my bank account isn't totally empty is pandemic unemployment benefits that were taken away too soon
Yep, the only reason I was able to actually build a (very small) savings is because of those initial ~$900/wk payments
Same and I already burned through more than half of what I saved by being a depressed dumbass and just letting a few subscription services that I wasn't even using keep charging me
After the revolution anyone who owns a subscription based service gets treated like landlords, maybe worse
the funny thing is the farcical frivolous young people they're describing are probably their own children or their friends children, they have absolutely no idea how any other young people live.
Once I realized that millennial stereotypes are really describing rich NYC kids, everything started making SO much sense.
They say write what you know but they never accounted for the people who take that advice not knowing shit
looks at rent pricing and available housing ITS THOSE DAMN GUCCI BAGS
Fucking psychos gaslighting you into thinking the American nuclear family ideal literally the only way to live. Motherfucker spend even a second looking at other countries then go fuck yourself. The year is not 1955.
im in my 40s, and if it was logistically possible, i damn sure would be living with my parents. i know a lot of people about my age who do, and it is the right fiscal move. rents are absolute bullshit. the property ladder has been pulled up so high in most places, someone absolutely needs some kind of monster leg up (like no rent, minimal utilities) + a decent, steady job to scrape together a big enough down payment so they can get into a realistic mortgage on good terms. or at least, that was the case when interest rates were like 3% here for a 30 year fixed. now that they've more than doubled, that amortized interest is fucking heinous and really kicks the borrower in the ass when it comes to building equity in the first 5 years. and what fucking job/career/employer is a safe bet for the 1st decade it will take to be a transferable asset, let alone the 3 decades it will take to payoff?
don't get me wrong, in this bullshit society where housing is an artificially scarce commodity, getting on the property ladder (unless it's some poorly constructed shitheap or you get roped into some predatory loan) is a major step in building equity, but unless you're richie rich, you are not going to be getting into the right kind of loan or house without first being in some kind of no-rent/low-rent arrangement to save up a pile of cash first.
Well said. I'm also one of the millennials who scraped together some property ownership. I lived in one of the most expensive metro areas 2011-2018 (sf bay), but moved in during the 2008-2012 recession, and had rent control; paying $1100 for a one bedroom in the hood. That, combined with sharing all expenses with a partner who works, enabled us to save enough to cut and run and buy in a less expensive area, leaving behind everyone we know for a chance at home ownership
i basically stumbled into a very low rent situation nearly 10 years ago with apparently the one non-evil landlord on the planet, who after 5 years wanted to sell because he didn't want to be a landlord anymore and let me make an offer before he put it on the market [after getting it inspected and having it come back solid]. i didn't want to buy a house, but i sure as shit didn't want a new landlord who i am sure would've instantly doubled the rent. so i forked over a big chunk of my savings and now i'm the weird, older millennial with a little house in a little, quiet neighborhood.
my stomach was in knots for the entire month the process took.
it's literally stupid how lucky with the stars aligning to put me into a stable, cheap housing situation after literally decades of being fleeced by various scumbags. every other landlord i've had should literally be frog marched in front of a crowd, tied to a post, and shot with a snub nose .38 in the stomach.
I'm in my late 20's, and am just about to have my mother in law move in to my appartment, since she is on a fixed income (due to disability) and my wife and I are legit wondering if it will ever be possible for her to have her own place/space ever again, since property prices and rent values in our part of Denmark just never seems to go fucking down.
