diff --git a/go.mod b/go.mod
index 6159ef70..d7b9cb4f 100644
--- a/go.mod
+++ b/go.mod
@@ -12,9 +12,9 @@ require (
 	github.com/hashicorp/go-multierror v1.1.1
 	github.com/itchyny/gojq v0.12.15
 	github.com/joho/godotenv v1.5.1
-	github.com/mauromorales/xpasswd v0.3.1
+	github.com/mauromorales/xpasswd v0.4.0
 	github.com/moby/moby v24.0.9+incompatible
-	github.com/mudler/entities v0.0.0-20240611135956-f8f11ba52c2f
+	github.com/mudler/entities v0.0.0-20240625130751-3d7f84082f3a
 	github.com/onsi/ginkgo/v2 v2.17.1
 	github.com/onsi/gomega v1.33.0
 	github.com/pkg/errors v0.9.1
diff --git a/go.sum b/go.sum
index 7455a260..93ee445b 100644
--- a/go.sum
+++ b/go.sum
@@ -138,8 +138,8 @@ github.com/mattn/go-colorable v0.1.1/go.mod h1:FuOcm+DKB9mbwrcAfNl7/TZVBZ6rcncea
 github.com/mattn/go-colorable v0.1.2/go.mod h1:U0ppj6V5qS13XJ6of8GYAs25YV2eR4EVcfRqFIhoBtE=
 github.com/mattn/go-isatty v0.0.5/go.mod h1:Iq45c/XA43vh69/j3iqttzPXn0bhXyGjM0Hdxcsrc5s=
 github.com/mattn/go-isatty v0.0.8/go.mod h1:Iq45c/XA43vh69/j3iqttzPXn0bhXyGjM0Hdxcsrc5s=
-github.com/mauromorales/xpasswd v0.3.1 h1:mVPGISfzN/WaCUjYRFiDgIREb2NMfwgPSj3LS6QMm0Q=
-github.com/mauromorales/xpasswd v0.3.1/go.mod h1:Z3+aY19mhNfcGi3st0+RAVSz2vC+pyoju2S/FPN8kEg=
+github.com/mauromorales/xpasswd v0.4.0 h1:Jf6mfA8lwQsYzwgfQADPDGV7l/liAvRrnG+nQTPy0j8=
+github.com/mauromorales/xpasswd v0.4.0/go.mod h1:Z3+aY19mhNfcGi3st0+RAVSz2vC+pyoju2S/FPN8kEg=
 github.com/mgutz/ansi v0.0.0-20170206155736-9520e82c474b/go.mod h1:01TrycV0kFyexm33Z7vhZRXopbI8J3TDReVlkTgMUxE=
 github.com/mitchellh/copystructure v1.0.0/go.mod h1:SNtv71yrdKgLRyLFxmLdkAbkKEFWgYaq1OVrnRcwhnw=
 github.com/mitchellh/copystructure v1.2.0 h1:vpKXTN4ewci03Vljg/q9QvCGUDttBOGBIa15WveJJGw=
@@ -149,8 +149,8 @@ github.com/mitchellh/reflectwalk v1.0.2 h1:G2LzWKi524PWgd3mLHV8Y5k7s6XUvT0Gef6zx
 github.com/mitchellh/reflectwalk v1.0.2/go.mod h1:mSTlrgnPZtwu0c4WaC2kGObEpuNDbx0jmZXqmk4esnw=
 github.com/moby/moby v24.0.9+incompatible h1:Z/hFbZJqC5Fmuf6jesMLdHU71CMAgdiSJ1ZYey+bFmg=
 github.com/moby/moby v24.0.9+incompatible/go.mod h1:fDXVQ6+S340veQPv35CzDahGBmHsiclFwfEygB/TWMc=
-github.com/mudler/entities v0.0.0-20240611135956-f8f11ba52c2f h1:5x1OeWl4gSW3L9KzntvWphjrcHASXq3gI351BgBbXjs=
-github.com/mudler/entities v0.0.0-20240611135956-f8f11ba52c2f/go.mod h1:TXMcB82+CBF3fEQhIch/gFSuWVcItz4BdTfomYGW1jg=
+github.com/mudler/entities v0.0.0-20240625130751-3d7f84082f3a h1:IeKeUwMeqfGYblesrk7Gu72z1xsJrceiIDDES4Rj3+U=
+github.com/mudler/entities v0.0.0-20240625130751-3d7f84082f3a/go.mod h1:7bNIR64mpm7ld4bnDQ+LjHBPhUDAqoBQuv4aK53UGSs=
 github.com/nxadm/tail v1.4.4/go.mod h1:kenIhsEOeOJmVchQTgglprH7qJGnHDVpk1VPCcaMI8A=
 github.com/nxadm/tail v1.4.8 h1:nPr65rt6Y5JFSKQO7qToXr7pePgD6Gwiw05lkbyAQTE=
 github.com/nxadm/tail v1.4.8/go.mod h1:+ncqLTQzXmGhMZNUePPaPqPvBxHAIsmXswZKocGu+AU=
diff --git a/pkg/plugins/user.go b/pkg/plugins/user.go
index 76a74a3d..555db44e 100644
--- a/pkg/plugins/user.go
+++ b/pkg/plugins/user.go
@@ -18,7 +18,7 @@ import (
 	"github.com/twpayne/go-vfs/v4"
 )
 
-func createUser(fs vfs.FS, u schema.User, console Console) error {
+func createUser(l logger.Interface, fs vfs.FS, u schema.User, console Console) error {
 	pass := u.PasswordHash
 	if u.LockPasswd {
 		pass = "!"
@@ -69,8 +69,11 @@ func createUser(fs vfs.FS, u schema.User, console Console) error {
 	}
 
 	primaryGroup := u.Name
-	gid := 1000
 
+	l.Debugf("dimitris - primaryGroup: %v\n", primaryGroup)
+	l.Debugf("dimitris - u.PrimaryGroup: %v\n", u.PrimaryGroup)
+
+	gid := -1 // Automatic by default (-1 instruct entities to find the next free id and assign it)
 	if u.PrimaryGroup != "" {
 		gr, err := osuser.LookupGroup(u.PrimaryGroup)
 		if err != nil {
@@ -78,32 +81,36 @@ func createUser(fs vfs.FS, u schema.User, console Console) error {
 		}
 		gid, _ = strconv.Atoi(gr.Gid)
 		primaryGroup = u.PrimaryGroup
-	} else {
-		// Create a new group after the user name
-		all, _ := entities.ParseGroup(etcgroup)
-		if len(all) != 0 {
-			usedGids := []int{}
-			for _, entry := range all {
-				usedGids = append(usedGids, *entry.Gid)
-			}
-			sort.Ints(usedGids)
-			if len(usedGids) == 0 {
-				return errors.New("no new guid found")
-			}
-			gid = usedGids[len(usedGids)-1]
-			gid++
-		}
 	}
 
+	l.Debugf("dimitris - gid outside: %v", gid)
+
 	updateGroup := entities.Group{
 		Name:     primaryGroup,
 		Password: "x",
 		Gid:      &gid,
 		Users:    u.Name,
 	}
-	updateGroup.Apply(etcgroup, false)
+	err = updateGroup.Apply(etcgroup, false)
+	if err != nil {
+		return errors.Wrap(err, "creating the user's group")
+	}
+
+	// reload the group to get the generated GID
+	groups, _ := entities.ParseGroup(etcgroup)
+	for name, group := range groups {
+		l.Debugf("dimitris - checking group: %v , against: %v", name, updateGroup.Name)
+		if name == updateGroup.Name {
+			updateGroup = group
+			gid = *group.Gid
+			l.Debugf("dimitris - found group: %v , with gid: %v", name, *group.Gid)
+			break
+		}
+	}
+
+	l.Debugf("dimitris - gid after apply: %v", *updateGroup.Gid)
 
-	uid := 1000
+	uid := -1
 	if u.UID != "" {
 		// User defined-uid
 		uid, err = strconv.Atoi(u.UID)
@@ -123,9 +130,16 @@ func createUser(fs vfs.FS, u schema.User, console Console) error {
 				return errors.Wrap(err, "could not get user id")
 			}
 		} else {
-			uid = list.GenerateUID()
+			// https://systemd.io/UIDS-GIDS/#special-distribution-uid-ranges
+			uid, err = list.GenerateUIDInRange(1000, 65533)
+			if err != nil {
+				return errors.Wrap(err, "no available uid in the range 1000…65533")
+			}
 		}
 	}
+	if uid == -1 {
+		return errors.New("could not set uid for user")
+	}
 
 	if u.Homedir == "" {
 		u.Homedir = fmt.Sprintf("%s/%s", usrDefaults["HOME"], u.Name)
@@ -135,6 +149,7 @@ func createUser(fs vfs.FS, u schema.User, console Console) error {
 		u.Shell = usrDefaults["SHELL"]
 	}
 
+	l.Debugf("uid = %+v\n", uid)
 	userInfo := &entities.UserPasswd{
 		Username: u.Name,
 		Password: "x",
@@ -144,6 +159,7 @@ func createUser(fs vfs.FS, u schema.User, console Console) error {
 		Shell:    u.Shell,
 		Uid:      uid,
 	}
+	l.Debugf("dimitris - user gid: %v\n", gid)
 
 	if err := userInfo.Apply(etcpasswd, false); err != nil {
 		return err
@@ -162,7 +178,7 @@ func createUser(fs vfs.FS, u schema.User, console Console) error {
 		os.Chown(homedir, uid, gid)
 	}
 
-	groups, _ := entities.ParseGroup(etcgroup)
+	groups, _ = entities.ParseGroup(etcgroup)
 	for name, group := range groups {
 		for _, w := range u.Groups {
 			if w == name {
@@ -192,6 +208,7 @@ func setUserPass(fs vfs.FS, username, password string) error {
 }
 
 func User(l logger.Interface, s schema.Stage, fs vfs.FS, console Console) error {
+	l.Debugf("dimitris - running the user plugin\n")
 	var errs error
 
 	// Order users so they get the same UID on each run
@@ -206,10 +223,12 @@ func User(l logger.Interface, s schema.Stage, fs vfs.FS, console Console) error
 		r := s.Users[k]
 		r.Name = k
 		if !r.Exists() {
-			if err := createUser(fs, r, console); err != nil {
+			l.Debugf("dimitris - about to create user: %v\n", r.Name)
+			if err := createUser(l, fs, r, console); err != nil {
 				errs = multierror.Append(errs, err)
 			}
 		} else if r.PasswordHash != "" {
+			l.Debugf("dimitris - user existed, setting pass\n")
 			if err := setUserPass(fs, r.Name, r.PasswordHash); err != nil {
 				return err
 			}
diff --git a/pkg/schema/loader_cloudinit.go b/pkg/schema/loader_cloudinit.go
index a129bca2..0e16c881 100644
--- a/pkg/schema/loader_cloudinit.go
+++ b/pkg/schema/loader_cloudinit.go
@@ -40,6 +40,7 @@ func (cloudInit) Load(s []byte, fs vfs.FS) (*YipConfig, error) {
 	users := make(map[string]User)
 	userstoKey := []string{}
 
+	fmt.Printf("cc.Users = %+v\n", cc.Users)
 	for _, u := range cc.Users {
 		userstoKey = append(userstoKey, u.Name)
 		users[u.Name] = User{
@@ -104,6 +105,8 @@ func (cloudInit) Load(s []byte, fs vfs.FS) (*YipConfig, error) {
 		stages = append(stages, Stage{Layout: *layout})
 	}
 
+	fmt.Printf("stages = %+v\n", stages)
+	fmt.Printf("users = %+v\n", users)
 	result := &YipConfig{
 		Stages: map[string][]Stage{
 			"boot": stages,
diff --git a/pkg/schema/schema.go b/pkg/schema/schema.go
index d38854d2..539e5318 100644
--- a/pkg/schema/schema.go
+++ b/pkg/schema/schema.go
@@ -103,6 +103,7 @@ type User struct {
 
 func (u User) Exists() bool {
 	_, err := user.Lookup(u.Name)
+	fmt.Printf("Exists() err = %+v\n", err)
 	return err == nil
 }