Anya Kamenetz Generation Debt

In the last few weeks, three of my friends have showed off their new iPhones. This device is a beautiful, shiny, multifunctional object of techno-lust.

For me, it would fulfill the functions of an MP3 player, a digital camera, and a personal digital assistant, none of which I currently have. But I won't be getting an iPhone any time soon.

Count Me Out

It's not a straight-up question of affordability. I could probably dip into my savings and/or a credit card to come up with the approximately $2,000 to $6,000 (!) the new phone and a new contract cost over two years. (Even after the recent price drop, the monthly costs are far more than the phone).

The thing is, I got a new phone back in March that works just fine, so I can't justify getting a new one.

This got me thinking about the kinds of financial choices that can help or hurt Generation Debt.

Living on the Cheap

Those of us in this coveted 18-to-34 demographic are constantly bombarded with targeted ads. Like a lot of people, I want to wear trendy clothes, check out the latest bands and movies, and adopt the newest gadgets. But combined with a basic lack of financial knowledge, these temptations help lead 20-somethings to spend 16 percent more than they make and run up a household average of $4,538 in credit card debt.

I believe we can do better than that. My husband and I aren't frugal fanatics or obsessive budgeters, but we do make some simple choices that limit our spending while actually adding to our quality of life.

Here are some things I do in seven basic spending categories. Check them out and see if you can do the same. I've also added links from money-saving stars around the web, and I hope you can add some ideas of your own in the comments section:

1. Saving: Do It

Controlling spending starts with saving. I deposit 10 percent of each freelancing check into a savings account, on top of funding my IRA and setting aside money for taxes.

If you have credit card debt, pay it down out of your first paycheck of the month. When you pay yourself first, you don't have that money around to be tempted to spend on other things.

2. Food: Cook It

I started cooking for my family at age 11. These days, my husband and I cook dinner at home most nights. Two of my favorite cheap and easy meals since college are black beans and rice with an avocado and spaghetti with freshly made tomato sauce (both of which cost less than $2 a serving). Cook ahead on weekends and freeze it if you don't have time during the week.

Feel totally clueless about cooking? Try the fun, easy cookbook "Help! My Apartment Has a Kitchen."

3. Clothing: Buy Used

I have a blue, button-down Ann Taylor shirt, which I paid about $7 for at the Salvation Army, that I've worn on TV a number of times. That always gives me a laugh.

Another great way to get new looks for free is to hold a clothing swap with your friends. Also, in general, I stay out of name-brand boutiques and department stores unless it's a really big occasion. Instead, I browse in discount stores when I need a shopping fix.

I don't really see a terrific quality difference between the two -- my winter coat came from H&M and cost $100, and it's heading into its fourth winter. I also repair my clothes and hand-wash most things instead of sending them to a dry cleaner.

One of my friends, who's a shopping maven, paid down $12,000 in credit card debt. She browses catalogs, magazines like Lucky, and sites like Bluefly all month long, clipping, saving, or bookmarking stuff she likes. At the end of the month, she sifts through the list and buys maybe one item from it. It's still fun, but better prioritized and way cheaper.

4. Shelter: Live Cheap

We've always kept rent to the recommended 25 percent of our gross pay. At different times, that meant sharing a 3-bedroom apartment with 5 people and living for 2 years in a 275-square-foot walkup.

Depending on your circumstances, of course, affordable housing can be hard to find no matter what compromises you're willing to make.

5. Furniture: Salvage It

We only purchased two new items in our apartment for over $100: the bed and a floor-to-ceiling shelving system/desk.

My desk is from Target; the desk chair and kitchen table are from Ikea. Everything else we either bought used through craigslist or inherited, and several of my favorite items were scored from off the street.

6. Media: Just the Basics

Since January 2005, we've had cable Internet, Netflix, and cell phones. No land lines or cable TV. No television, in fact -- we watch movies on my husband's computer. When the Oscars or the Superbowl come on, we go to a bar or a friend's house to watch.

My husband also uses a service called LaLa that lets him find and legally trade CDs with people from all over the country for $1 a pop, plus 75 cents for shipping.

7. Entertainment: Go for Free

Looking at my calendar for this past summer, I see only one event (a party and live show on the Fourth of July) where the tickets cost over $20. We also paid $35 each to camp overnight and use some hot springs. The rest of the fun included free outdoor concerts, free outdoor dance parties, free house parties, and barbecues.

Summer makes it easier, but there are free events all year long. We caught a couple of movies, met friends at a bar (one or two drinks, $15 per person), had group dinners out (usually about $20 to 25 a person), and made dinner for friends a couple of times.

So when you're looking to save money on entertainment, abide by the budget of your most-broke friends. And if you're someone's most-broke friend, speak up! There's nothing worse than getting stuck splitting a big group check at Chez Expensive.

More Tips from the Masters

Here are some more saving tips I've found on the web. There's a whole galaxy of people our age out there who give advice and inspiration on living better for less:

• Don't buy stuff unless you initiate the transaction.

• Stop buying crap (written by, and for, 20-somethings)

• Before you buy, ask the right questions.

• Learn how to buy nothing.