Why the Young Have A Love Affair with Bernie’s Socialism

“We must tell the economic elite who have hoarded income growth in America. No, you can no longer have it all.”

—Bernie Sanders

I ate a lot of Top Ramen during my college days. But I was poor and didn’t have a pot to piss in.

Around my junior year, banks started to flood my mailbox with credit card offers. “Congratulations, you’ve been pre-approved.”

Really? Now, not only was I poor, but I was young, dumb and sick of eating Top Ramen, so I signed up. A few weeks later, my first credit card showed up. It didn’t take me long to use up my $1,000 credit limit.

Super dumb, but in my defense, almost all my credit card charges were for groceries and restaurant meals. I was at least smart enough not to blow it on beer and girls.

Well, not all of it.

It didn’t take me long to figure out the perils of debt. And I’d like to say I’ve learned my lesson and gotten smarter over the years.

But I have four children between the ages of 22 and 36, and all but one of them has at one time got in over their head with credit card debt.

The BOD (Bank of Dad) bailed them out. But not without a bit of a dressing-down. One of my even children said, “if I knew I’d have to listen to a decade of your finance lectures, I would have never taken any money from you.”

My kids have LOTS of company. And I’m not just talking about Gen Z and Millennials living in their parents’ basement. I’m talking about Gen Z and Millennials with good jobs that pay well.

51% of Millennials report that they are in credit card debt. For older Gen Z individuals 18 to 24 years old, the average credit card limit is around of $5,700. But utilization of credit for that age group is 31%. Good credit utilization would be around 10% or lower.  

And while Millennials aged 25 to 34 owe have a higher average credit card limit at $11,000, they’re only doing slightly better, with an average utilization of 24%.

And what do these kids put on their cards that sends balances so high? Well, many put car payments on their cards. And since younger buyers on average have a higher auto loan balance than older age groups, this eats into their credit utilization.

And while not all Gen Z or Millennials put their cars on their cards, most do struggle with student loan debt. This demographic owes a collective $10.5 billion in student loans, with an average individual owing $21,000.

And all this debt is causing a lot of stress. About half of all Millennials with car loans or a mortgage payment say their debt is a significant source of stress.

That percentage jumps when talking about credit card debt or student loan debt. About 68% and 72%, respectively, claim these as significant stressors.

It’s not hard to make the conclusion that this crushing debt burden is behind the surging popularity of Bernie Sanders. His is a vision for the U.S. economy that is totally opposite of that of Donald Trump and Ronald Reagan.

I get the sentiment, but I’m not behind the execution.

Sanders proposes to completely wipe out all $1.6 trillion of student loan debt currently owed by 45 million Americans, half a million of whom are Gen Z and Millennials and owe about 44%.

The over-indebted and over-stressed younger generations are simply in love with Sanders’ promise of debt forgiveness. The presidential hopeful has said:

Millions of graduates have had to take on life-long debt for the ‘crime’ of getting the education they need. For most, this debt will take many years to repay, which not only impacts their career choices, but also their ability to get married, have kids or buy a home.

If student loan debt forgiveness isn’t enough, Sanders also plans to make public colleges FREE.

In the richest country in the history of the world, everyone who has the desire and the ability should be able to get a college education regardless of their background and ability to pay.

I am discouraged to say that three out of my four children plan on voting for Sanders. I closed the Bank of Dad a few years ago and my kids look at Sanders as its second coming.

Fortunately, I have 10 months to slap some sense into their heads. Wish me luck!

Best wishes,

Tony Sagami