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Originally Posted by liamona  I can see why you think this, and some people probably have overdone it by maxing out their credit.
A good book about this is The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, co-written by law professor Elizabeth Warren (who recently chaired the Congressional Oversight Panel created to oversee the implementation of the Emergency Economic Stabilization Act last year).
According to her research, the majority of family income is eaten up by the purchase of an "average" home in an area with a good school district (we know what a disaster that's been lately), health insurance, a second car to get Mom to work, child care, and taxes. She was interviewed by Mother Jones about her book: MJ.com: Even so, there still seems to be this perception that families are only going bankrupt because they're splurging on frivolities.
AT: [Laughs] Yes, there's this great myth out there that we call the "Over-consumption Myth," which goes: If you earn a decent income, and you're in trouble financially, it must be because you're blowing all your money at the Gap, and TGIF. The myth is so powerful, it almost seems like heresy to question it. But when we actually looked into the data on what real families actually spend, it's just not true. An average family of four actually spends less on clothing than their parents did a generation ago, adjusted for inflation. That includes all the Tommy Hilfiger sweatshirts and all the Nike sneakers. How does this work? Well we forget all the things we don't spend money on anymore -- how many kids have leather shoes for Sunday school anymore? How many people dress up in wool suits for work everyday?
The point is that families today are spending their money no more foolishly than their parents did. And yet they're five times more likely to go bankrupt, and three times more likely to lose their homes. Families are going broke on the basics --housing, health insurance, and education. These are the kind of bills that you can't just trim around the edges in the event of a downturn. I can tell you as someone who loves vintage clothing, there is a vast difference in the quality of clothes made in the 50s and 60s and the sweatshop crap you get from Wall Mart now. The "average" 100% cotton or wool dress from that time would probably cost hundreds of dollars to make now (especially if you got it made in the States, which almost everything was back then).
I don't know if you're a parent or not, but even the quality of children's shoes has gone done just in the last five years. It's virtually impossible to find shoes, even dress shoes, that don't have a velcro strap. Let me tell you, active children wearing shoes held together with velcro straps destroy them quite quickly. |
I think this illustrates my point. The research you quoted states that the majority of family income is eaten up by the purchase of an "average" home, health insurance, a second car, child care and taxes.
Most families in the 50s and 60s only had a single car and did not have to pay for child care. So two of the expenses listed are directly related to having a two income family. It is very possible to avoid both of those expenses in a single income home.
The average home of today is bigger and more expensive than in the 50s and 60s. As a society, we have created a demand for bigger, and therefore more expensive homes. The same is true with cars. These things are expensive because we allow them to be. If people suddenly decided they were not willing to pay more than $20k for a car, it would not take long for prices to adjust themselves to what the consumers demanded.
I completely agree with you regarding the lack of quality of many of today's goods. I think this is a major problem. People would rather buy cheap, low quality goods than pay more for quality items. Again, this is something that consumers have created the demand for. If people were to start demanding high quality items, then eventually the quality of goods in the markektplace would improve.
I think that too many people feel like victims and believe they are trapped in a situation where they must have two incomes to survive. I try to put out the word that that simply is not true. Think about how much money a family could save if they were to live a lifestyle more like the single income families of the 50s and 60s.
Think about how much it costs to have a bigger house than is really required, a second (and sometimes third) car, cable/satellite, high-speed internet, and cell phone. Most people could live in a smaller, simpler home and save $500 or more per month. Only having one car could save most people $300 or more. Not having cable/satellite, high-speed internet and a cell phone could save another $200 or more. Just by looking at those things, it is easy to show that most families have more than $1000 in extra expenses. Add to this the extra cost of child-care, clothing, dining out, etc required by a spouse who works and its easy to see how those costs add up quickly.
I am not saying there is anything wrong with wanting a bigger house, extra car, cable, internet and cell phone access. I am only trying to point out that if a family wants to be a single-income family it is entirely possible. Most families choose to be a two-income family so they can have these "extra" things. That means that those families can choose to simplify their lifestyle and material requirements and survive on a single-income if they really want to.
My wife and I have no kids, but were still a two income family for a number of years. Two years ago, however we decided that the extra money that gave us was not worth the things that we were giving up for the dual incomes. We have been a single income family since then. We are working towards decreasing our financial requirements even further, so that eventually we need only a single part-time income to survive.
When we had a dual-income household we actually had
less money than we do now. We were both working long hours to support a lifestyle that did not particularly make us happy. We were slaves to our materialism. I wish that more people would realize that often they are simply making the choice for both partners to work so they can have more stuff, most of which isn't necessary and often does not really make them happy.