Leaping life's financial hurdles

There's a saying in America: The only two certain things in life are death and taxes.

It's no easier in Korea. Each generation faces financial hurdles: courtship, credit-card debt, marriage, mortgages, raising kids, saving for retirement, caring for parents. As well as taxes.

The good news: Most college-educated people are paying their bills and pocketing some cash. The bad: The bills, like taxes, never stop.

J-Talk interviewed a group of university graduates (most with advanced degrees) to learn how they're bearing (and beating) the costs at different stages in life. Every person in this article is real; their names have been changed to protect their identities.

20s Single: Gimme shelter

Rents just keep rising.

Lee Kyeong-hee moved to Seoul three years ago to join an IT venture. At the time, she was proud of her monthly salary of 1.5 million won ($1,250), which offered a fair amount of freedom -- although not enough to pay the 55 million won it cost for the jeonse, or rent deposit, on her studio apartment in Jamsil. Her dad pitched in so she could live on her own.

"Housing here is ridiculous. With the incomes that most young people make, I don't think it's possible to get by without family support," says Ms. Lee, 25, who holds a degree in bioengineering.

Her lease ends this year and she's realizing that -- due to inflation -- the 55 million she'll be getting back isn't worth as much as it was when she handed it over. Even though she'd like to find a bigger, nicer apartment, she says it's just too difficult -- and embarrassing -- to again ask her dad for help.

The cost of clothing for work, cosmetics, management fees, utilities and food -- not to mention gas and repairs for her Hyundai Avante -- consume Ms. Lee's paycheck. There's little left for savings.

But she isn't in debt. And she's attractive. Like most young Korean women, marriage is on Ms. Lee's mind. "Money isn't everything," she says, "but realistically I can't help but consider (the man's) income as I begin looking for a husband."

20s Married: Two mouths, one income

Young couples living south of the Han River are generally believed to be better off than people in other parts of the city. Expensive cars fill Gangnam's apartment parking lots. Trendy restaurants line the streets.

But Kim Jin-ho and Lee Jeong-hyun, aged 28 and 27, say they have to scrimp to save even though their parents have covered some of life's biggest expenses.

"Most parents give young couples living in the Gangnam area an apartment and a car as a wedding present. After that, it's up to the couple to maintain an above-average home and car -- on an average income," says Ms. Lee.

The couple, who married in June 2001, own a 112-square-meter apartment worth 450 million won in a quiet neighborhood west of Apgujeong-dong. They drive a spiffy Hyundai sports utility vehicle worth 19 million won.

Ms. Lee, who holds a masters' degree in home management from Ewha Woman's University, isn't working. That puts the financial burden on Mr. Kim, a Yonsei University graduate, who has a stable job at LG-EDS Systems earning 30 million won a year, or 2.5 million won a month.

Utilities, phone and apartment management fees eat half of Mr. Kim's income. Gifts for friends take another big chunk. The couple is at the age when practically all their friends are either marrying or having a first child.

The biggest burden, though, is saving for graduate school in the United States. Ms. Lee plans to pursue her PhD. and Mr. Kim wants to get his master's degree. The couple expects their schooling to cost 100 million won a year -- even with scholarships.

Ultimately, the only way to finance their education is to sell their SUV and their apartment. Which means they'll return from the United States degree rich and house poor.

Compounding the pressure is their desire -- and their parents' pressure -- to have two children. "We'd like to have a child before going abroad, but the cost of raising children is frightening," says Ms. Lee.

30s Married: On the baby track

Park Ji-sook can list a half-dozen short-term goals, but she isn't sure how she's going to fund them.

The 34-year-old housewife, who holds a master's degree from Ewha Womans University, wants to move from Jongam-dong in northern Seoul to Gangnam in southern Seoul where she believes the schools are better for her two children, who are aged 3 months and 4 years old. She's already saving for their college education. And she's salting away funds to buy a commercial building, which she hopes will provide income when she and her husband retire.

Ms. Park and her husband, Lee Beon-seok, are planners and have been since they were married five years ago. Mr. Lee, a researcher at a leading state-run think tank, earns 2.5 million a month.

"Making ends meet every day is killing us," Ms. Park says. "We pay 500,000 won to the bank for principal and interest on our debts, 200,000 won to help our parents-in-law and about 150,000 on eating out." Then there are the pre-school fees for their 4-year-old daughter, along with management fees, utilities and food. "Still, we manage to save about 800,000 won each month," Ms. Park says.

The couple has savings: 140 million won in jeonse on their apartment and another 100 million in bank savings. But they also have 20 million won in debt, which they are slowly paying off.

Ms. Park knows they have enough money to buy a new apartment in northern Seoul. But they're waiting to buy a similarly sized three-bedroom apartment in Gangnam. "It's all a matter of location for me," says Ms. Park, convinced the Gangnam premium is worth it.

40s Married: Learning lessons
"We run up about 2.5 million won in living expenses, and our biggest budget squeezer is none other than private lesson fees for our two children," says Kim Cheol-su, 43, who holds a doctorate in linguistics and has been married for 16 years to Chang Sun-yi, who holds a master's degree. Ms. Chang was a schoolteacher, but now is a homemaker.

The couple have two children, a 14-year-old boy, Seon-jin, who's in the ninth grade, and an 11-year-old girl, Seon-yu, who's in the fourth grade. Seven days a week, Seon-jin goes to an after-classes cram school to study math, English and advanced Korean. Seon-yu takes English, math and piano lessons. The monthly bill for extracurricular schooling: 800,000 won.

That doesn't break the bank, but it squeezes savings for college. Mr. Kim hasn't calculated the cost of his kids' university education; he knows his savings don't come close.

Mr. Kim and Ms. Chang have 20 million won in cash and 10 million in stocks. They have no debt.

But Mr. Kim has the sinking feeling that he isn't getting ahead.

Even though he earns 50 million a year at the Ministry of Culture and Tourism, and life isn't terribly expensive in Ilsan, Gyeonggi province -- jeonse is only 110 million won for his family's 105-square-meter apartment -- he hasn't been able to save enough to buy a house, let alone stash cash for his retirement.

50s Married: Starting from scratch

Jeong Jung-chul and Lee Pil-ja were slammed by the financial crisis.

In December 2000, after three decades in bank management, Mr. Jeong was forced to take early retirement from what is now Woori Bank. His bride of 29 years, Mrs. Lee, lost six kilograms during the ensuing two jobless years which consumed 40 million won of their savings.

"I haven't made a single major purchase during the past two years -- not a single piece of clothing," says Ms. Lee, 52, a wisp of a woman, sitting next to Mr. Jeong.

A few months ago, the couple got a 50 million won bank loan and opened a pork cutlet restaurant in downtown Seoul, part of the Mecha Cucha chain. They now work side-by-side from 10 a.m. to 10 p.m. in their tiny, marble-and-wood eatery.

Mr. Jeong, 53, held a family meeting before investing in the franchise. His children were concerned about the risk, but agreed he should follow his instincts.

"It's a new start. I feel like I'm 20 years old again, heading my own business," Mr. Jeong says. The restaurant opened in July. It broke even in October and has made a monthly profit of 2 million won since November. Mrs. Lee is salting away 450,000 a month.

There still are plenty of pressures. In addition to the restaurant loan, the couple still have two children in college.

Wisely, the couple used Mr. Jeong's severance package of 230 million won to pay off the mortgage on their three-bedroom apartment in Yangjae-dong, southern Seoul.

Retirement savings? Forget it. Mr. Jeong expects the restaurant will carry them until he's eligible for a pension in seven years. "Once the business is on track, we'll adjust our monthly expenditures," he says.

60s Married: Twilight zone

Life will be a breeze, Kim Yong-su thought when he retired in 1997 after three decades at a Seoul bank. He had invested wisely and had no debt. With his wife, Lee Young-ja, he owned a four-bedroom apartment worth 430 million won (purchase price: 80 million won), a three-story commercial building worth 1.1 billion won and an apple orchard in the southeast that generated 20 million won annually.

The commercial building generated a monthly income of 4 million won, enough to support the couple, who had put a priority on retirement savings.

Then Mr. Kim made a mistake. A few months after retirement, he took a 300 million loan and invested 150 million of his own cash to buy a fish import-export business.

The 1997-98 financial crisis struck, interest payments ballooned and revenues plummeted. The company went broke. "Those were panicky years. If we didn't pay the interest, our creditors would have frozen our assets and repossessed everything we owned," recounts Ms. Lee, who handles the family finances. The couple sold their securities, the orchard and their apartment, and moved to a smaller apartment on the outskirts of Seoul.

They still have about 20 million won in debt, which they say is manageable with their 4 million won monthly income from their commercial property. "The past several years have been tough," Ms. Lee says. "But things have stabilized. At this point, I just hope that my children and grandchildren do well."

by Kim Ji-Soo