Growing up middle class-ish
2007 middle class core, my parents' financial downfall, the Great Recession, and why gen z finds itself in a similar economic malaise today
I was eight years old, and after overhearing my parents listening to The Secret, I learned that a mansion was something worth wanting. When I walked into our newly built house and saw the spiral staircase and chandelier, I thought we were suddenly rich.
But it wasn’t The Secret’s law of attraction that brought us a portion of the American dream; it was a subprime mortgage that financially ruined them. In the early to mid 2000s, big banks used bad loans to fast-track home ownership for millions who falsely believed they could afford it. You could get a mortgage with no income, no job verification, a low credit score, and no down payment. It was paradise until the Great Recession hit in 2007.
My parents eventually made it to that ill-fated paradise, thinking it was the fruit of all their decades-long labor for a better life. They grew up poor in Colombia and moved to the US in 1987 to start our family’s American chapter. They started a travel agency in the same parking lot as a Pollo Loco and served well-to-do Latino families who traveled up and down the Americas. They bought their first home in California for $343,000 in 2001. Business was good. From 2001 to 2006, they witnessed their surrounding neighborhood attract developers, lenders, and buyers; all of whom had seemingly limitless capital to build massive homes and hand out mortgages to anyone with a pulse. So when the newest development caught their eye, they had every reason to believe that their American fortune attracted the opportunity to purchase a $1M+ house with seemingly favorable loan terms.
That was the beginning of my family’s financial downfall.
Waking up to class differences
It was our first Christmas in the new house. In keeping with the Colombian tradition, we opened presents at midnight (still technically Christmas morning). I unwrapped my long-awaited Xbox 360 and stayed up until 3AM playing it. My parents made sure I never took things like this for granted by reminding me of their less fortunate upbringing. In our family, any hint of entitlement was swiftly eviscerated. I knew better than to ask for new toys all the time, because I was raised to believe we had enough.
Until I met the kid my age who lived next door. Let’s call him Montana. We lived in the same cul-de-sac, but that was the only thing our families had in common. He represented everything I thought I wasn’t: athletic, handsome, and confident. I was a shy kid, the kind who didn’t mind talking to girls but couldn’t stomach the idea of flirting with them.
He introduced me to the mischief of an American boyhood powered by entitlement and high fructose corn syrup. He always got what he wanted, with little regard for how much it cost or whether he actually needed it. Christmas mornings were an annual confirmation of our class differences. A new Nintendo DS was one of his dozens of gifts, whereas that’d be revered as the only gift in our household due to its cost.
For the first time ever, I felt that I didn’t have enough, because someone else who vaguely resembled me had more. Something didn’t add up in my 9-year old brain: how is it that we lived in this massive house, in a gated community with a country club, but my parents bristled whenever I asked for something that cost more than $20?
The subprime mortgage allowed my parents to feign one feature of American wealth in the form of owning a big house, but Montana’s family had every feature of wealth. Financially speaking, we should’ve never been neighbors.
When it came knocking on our door
In the early 2000s, pretty much anyone could get a subprime mortgage on a home. You could swap in “subprime” with “terrible “ or “ticking time bomb” and it’d mean the same thing. These loans had adjustable rates, meaning that they’d start with a low interest rate, but after a period, they’d increase by as much as 50% or more and render your mortgage payments unaffordable.
No one read the fine print. You’d get a few years of blissfully low monthly payments, before getting kneed in the stomach with high interest rates. Millions of Americans found themselves gasping for breath in the second quarter of 2007, when several of these mortgages’ variable interest rates adjusted upwards, and record-breaking delinquencies followed. People suddenly couldn’t afford their mortgages.
Our neighborhood devolved into a ghost town. Every other house went up for sale or auction. But no one was buying. Montana and I played in the backyards of hollowed out mansions and built forts at abandoned construction sites. I was blissfully unaware of the fact that there were hundreds of other neighbors in the same position as my family, and it was only a matter of time before our house emptied out.
My parents’ mortgage started out at $3800/mo in 2006, and by the time they foreclosed on the house and declared bankruptcy in 2012, it had ballooned to $6000/mo. Over those years, I learned to make every effort to make my parents’ lives less expensive. Meanwhile, Montana’s parents had NFL season tickets and he regularly got new, expensive toys. He was so nonchalant about these things that I considered ultra luxuries. I felt poor. But I didn’t know how to reconcile that with the fact that we lived in a million dollar mansion. I escaped into Call of Duty and my iTouch and made these comforts last as long as I could. I knew my parents were trying to outrun something terrible.
We’ve seen this film before
The banks succeeded by preying on the naivety of the masses, who unknowingly signed their economic death warrants thinking it was their key to the upper/middle class. Tragically, they were punished with financial ruin for themselves and their offspring. No one would’ve taken out subprime mortgages if they knew better, including my parents.
I’m afraid that a similar dynamic is emerging among Gen Z today. We have unfettered access to consumer loans through Buy Now Pay Later platforms like Klarna and AfterPay. It’s another form of frictionless access to bad debt, but repackaged into slick user interfaces and pastel colors reminiscent of a millennial escapism that never got the wealth it was promised.
And it’s getting worse. Gen Z credit card debt is on a steady rise, the youngest among us (22-24) have higher debt and delinquency rates than millennials did at the same age, and 15% of us have maxed out credit cards. BNPL platforms are just the tip of a market catering to the insecurities of a financially disillusioned generation. I’m not talking about those of us going into debt to avoid skipping a meal; I’m talking about the slightly more fortunate who are a few missed paychecks away from that and still decide to go on a shopping spree.
We’re kidding ourselves again. We’re earnestly attempting to make our wages go further than they can through the same financial instruments that destroyed the generation before us. In the 2000s, home ownership was accessible to much of the middle class through loans that turned out to be too good to be true. But then housing got too expensive, so we replaced them with consumer goods—the next best thing that’s somewhat accessible to the masses.
It’s no surprise we ended up here. Our culture is governed by algorithms that idolize consumption. Many of us will never be able to afford the features of wealth displayed on our feeds, but with a few swipes, we can finance a few of them. It’s that easy. In exchange, we squander our ability to accumulate any real wealth. We can’t resist the dopamine-fueled voyeurism of rich influencers’ day-in-the-life videos. And for each one of us who writes them off, there are a million who worship them. So our culture isn’t going to change, no matter how many movements like #blockout2024 spring up from the rage of a few hundred thousand people.
It’s easy to ridicule our generation’s financial mistakes, but I have grace for those that finance their Sephora hauls in the name of self-care. We’re doing the best we can, with what we have left, in a media environment where it’s almost impossible to not feel envy, lust, or financial dysphoria1.
(Cheap) champagne problems
Growing up with the features of wealth without real wealth was a type of malnourishment that I’m still recovering from. It’s a miserable lifestyle: You feed a delusion with morsels of luxury you can’t afford in hopes it’ll give you the satisfaction you long for. But it never works. And you get stuck in a liminal existence where you deny your true position as a low-income debtor and embrace the illusion that you’re a high-income earner. You never feel that you have enough.
I’ve needed to remind myself that I have enough ever since my rich neighbor made me feel like I didn’t. I mean, we had enough in the sense that food was always on the table, and a roof was over our heads. But we were in a debt spiral that imbued everything with a malaise that scarred us. My parents went bankrupt and it took them over a decade to recover enough savings to (somewhat) retire. To this day, they’re still working, even though they’re in their sixties.
It was a privileged type of suffering—the kind of suburban tragedy where its heroes are left wanting for sympathy when you remember they did this to themselves while living among the top 10% wealthiest population in the world. Many of us are earning enough to be considered wealthy in parts of the world where the US dollar has a multiple on its buying power. But we’re dealing with a uniquely American malaise that prevents us from flourishing: stagnant wages, unaffordable housing, coupled with our own propensity to will the lifestyles we were promised into a debt-fueled existence (BNPL platforms, credit card debt). For many of us, our environment made it especially difficult to be as well off as our parents were at the same age.
Deciding you have enough
I cope with my bouts of financial shame by deciding I have enough.
“Enough” is a gentle redirection away from the lifestyle I’m tempted to want (i.e. the full frontal displays of wealth we lust after or hate-watch on our weaker days scrolling the For You Page.)
Deciding I have enough clarifies the value of what I do have and makes cultivating gratitude much easier. Jealousy eventually disappears. And sometimes grief nurses me along the path to accepting that, while I may never be “rich”, I will always have enough.
The best part: Hurriedness goes away. It’s difficult to feel behind in life when you’ve decided you have enough. And no, this isn’t a woo-woo descriptor of complacency. I’m still working my ass off, in hopes of funding a lifestyle where I have an abundance of time for my loved ones and favorite hobbies. But I’m doing so patiently, with the conscious effort to never compare myself to others. It’s better than striving for the vacuous dirge of affirmations from people who don’t care about you. Your life is as fleeting as a cloud of smoke. You might as well do your best to avoid debt that enriches a market hellbent on you never realizing that none of it matters in the end.
That feeling when your sense of financial wellbeing is skewed by your TikTok feed.