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Young dream-seekers strapped by debt

School loans, soaring house prices, low wages, and too-easy credit are keeping 20- and 30-somethings from making financial headway.

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Tamara Draut and Stuart Fink didn't expect it to come to this. After eight years of marriage, the couple found themselves with less than a dollar and with three days until the next paycheck. Seated on the living room floor, they sorted through their compact discs, choosing ones to sell.

"We never imagined we'd be peddling our wares for food money at the age of 30," Ms. Draut says. A combination of graduate school tuition, meager salaries, unemployment, a career change, and the cost of setting up housekeeping had drained their modest resources.

Straitened circumstances are becoming more familiar to those in their 20s and 30s as they try to get a foothold on the American Dream. Student loans, depressed wages, rising healthcare costs, and soaring housing prices are creating new economic realities. Sixty percent of young adults between 18 and 34 are struggling for financial independence, says Draut, now the director of the economic opportunity program at Demos, a think tank in New York. She is also the author of a new book, "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead."

"What made the transition to adulthood somewhat less bumpy 30 years ago was that we had an economy that lifted all boats," she says. "When productivity was increasing, so were wages. We don't have that today. Wages certainly aren't keeping up with the cost of things like healthcare and housing."

Then there is the high cost of college. A bachelor's degree has become the equivalent of a high school diploma - essential for basic status in the middle class.

Michelle Wingate, who is in her mid-20s, holds an entry-level position at a public relations firm in Raleigh, N.C. She is paying off student loans. "When you graduate from college, you think, 'This is great. I'm going to be able to pay off all my debts,' " she says. "That's just not the case. My salary looks good from afar, but once I get my money I'm sending it directly to the people I owe it to. That creates a whole other problem. When you owe money, you can't save it."

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