Gen Y Refusing Debt? I Agree That Credit Cards are a Suckers Game

This give me new hope that Gen Y may be doing a great job once they eventually get out of their parents homes.

The authors' research suggests that GenY is so frugal that they might take their fear of debt too far, and avoid even good investments such as college, home purchases, and small business start-up costs. "Many young people, especially those from lesser means, see the price tag [of college tuition] and think, 'Oh my god, I can't possibly take that on.' They could be shortchanging themselves,' says Ray, since college is an investment that pays off.

"They've heard Suze Orman loud and clear. That's part of the reason they move home--to save money," says Ray. She's started her post-recession interviews for a follow-up book, and found that her interview subjects meticulously avoid credit card debt.

The problem this author doesn't understand is that most colleges charge too much for a degree and keep raising their tuition through the roof. I mean some private colleges have the audacity to charge $30K+ a year a some degree in a major leads to a job that barely pays that much per year.

I feel that getting a loan to a private college is only worth it if you are studying the hard sciences, engineering, or business. With those majors you would be able to earn enough money to pay off that loan in a reasonable period of time. Anything else and you are behind and would take years to pay back the money.  Maybe a rule of thumb should be the tuition should be less than half (or maybe a quarter) of the median salary of the job the major is supposed to lead to.

That second part about meticulously avoiding credit card debt is 100% awesome if it is true. I hate credit card debt because generally all they do is pull purchases forward from a later date. For that privilege the bank will charge you 16-20%+ interest if you carry a balance. If you are paying the balance off every month then you should just be using a debit card and cutting out the middle man.  About the only thing that is worth it about credit cards is fraud monitoring and that still isn't worth a 20%+ haircut on the borrowed money.

The only real value I see with a credit card would be good for is an emergency where you would just max the thing out in order to get out of some jam. Let's say you get into a car accident and you have to pay a huge chunk of copay. $10,000 worth of instant purchasing power would go a long way toward keeping you afloat until you can pay that debt down. Other then that Gen Y knows that credit cards are a suckers game.