Digging out of Debt: For Gay People, Especially 20-Somethings, Getting Ahead Financially Can Be Painful. Here Are Three First Steps

By Ryan, Benjamin | The Advocate (The national gay & lesbian newsmagazine), March 30, 2004 | Go to article overview

Digging out of Debt: For Gay People, Especially 20-Somethings, Getting Ahead Financially Can Be Painful. Here Are Three First Steps


Ryan, Benjamin, The Advocate (The national gay & lesbian newsmagazine)


At first glance, openly gay New Yorker Jason Courson, 26, rakes in a pretty good living: $42,000 per year at a design job that's boosted by an extra $15,000 from bartending.

But he can count on sizable expenses that come with living in one of the world's most expensive cities: an $800per-month Brooklyn apartment and more than $100,000 in student loan debt. And as with most 20-somethings, his social life is a must. He routinely shells out upward of $200 a week on drinks for himself and friends. "I really have no idea what condition my finances are in," says Courson, who has no assets and no credit cards. He can't qualify for plastic thanks to a dismal credit rating following a charging binge during college. He paid off the debt a few years ago.

He's not alone. Todd Rainey, author of Money Talk: A Gay and Lesbian's Guide to Financial Success, says gay men and lesbians may not be as fiscally focused as their straight counterparts. They may be less likely to think ahead and plan for children or a wedding. It's an uphill battle for financial advisers to make money talk sexy for 20-somethings who have a difficult time even imagining their lives after 30. Let's face it: No one in their 20s spends their time at a club talking up some hottie about their retirement plan.

But listen up. It's time to put down that drink and start squirreling away some financial security. A little cash set aside can add up amazingly fast without ruining a budding social life. According to Phillip Parkerson, a financial planner in San Francisco, a 20-year-old who stashes $2,000 each year ($166 a month) to an individual retirement account for 10 years, then leaves it alone until he or she is 65, will reap (with a conservative 8% return) about $460,000. Someone who waits until age 30 and deposits $2,000 annually until the age of 65 will end up with $375,000.

With tax time upon us, The Advocate has collected a few financial pointers for those of you who may be thinking of blowing your tax refund check on a trip to South Beach. (By the way, Courson expects to receive $2,000 back and will put it toward a new apartment rental.)

Automatic Investing

For personal investments that, unlike 401(k) plans, don't carry a penalty for withdrawal before age 55, David Edwards, president of New York City's Heron Capital Management, recommends you stay disciplined by treating contributions to a mutual fund as a regular bill payment. He advises setting up an account with Charles Schwab, Fidelity, or Vanguard that will automatically deduct money, maybe $100 a month, from your checking account and put it into a mutual fund. By year's end, after the money appreciates, that's a net of 200 bucks, and it will keep snowballing from there.

It's easy to sock away some moolah without forgoing a night on the town.

Pay off your plastic

"Credit cards can be 15% to 20% interest rates; money markets right now are paying 1%. …

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