Started reading "The Two Income Trap"

[Anonymous]

I just started reading The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke by Elizabeth Warren (mother) and Amelia Warren Tyagi (daughter). Elizabeth Warren is the Harvard Law professor who appeared in Maxed Out. Her daughter Amelia is a Wharton graduate. The book is easy to read, easy to follow, even if the ideas take more than a few pages to lay out, and it has an extensive list of referenced material in the bibliography (apparently today called a Notes section in many books).

OMG!

This book will quickly disabuse you of the notion that credit and debt issues, including rising BKs, are the result of people overconsuming and living beyond their means. I'm almost a third done just from reading on the bus to and from work the last 2 days. I can hardly put it down.

If you're one of the finger waggers who believes that people today are irresponsible, living beyond their means, and need to just embrace the past prudent practices of their parents and grandparents, I invite you to pick up a copy at the library.

If you're one who feels the guilt that you've lived beyond your means, got yourself into trouble with debt and credit, and need to "downsize", I think you need this book. Some things, and rightly so, are not going to make you happy. The hard data confirmed to me that we are headed further and further down the road to plutocracy. But the book also just might tell you that there's a whole lot more that's beyond your means to control, and give you some emotional relief that you are being wronged.

[Anonymous]

Yup, I read this one a while ago and thought it was quite good.

[Anonymous]

Cool, thanks. 

[MidnightVoice]

Are they going to write a sequel called the one income trap? 

[Anonymous]

Like most other situations, I think it's a case of "your mileage may vary."

Yes, there are certainly a lot of folks out there on the fruited plains whose noses are to the grindstone, who are making decent to good money management decisions, and who are still treading water.

There are also many people spending far beyond their means on things they don't need.

Also, many people confuse needs with wants. You probably need a car, but you don't "need" a $17,000 car. You need to eat, but you don't "need" to eat out ten times a week. You need clothes, but you likely don't "need" a $79 shirt or $129 pair of shoes. And so it goes.

I do believe reform is needed in three key areas: housing costs, health care, and overall wealth distribution. The market seems to be taking care of the first, but I think some government action is needed to bring down health care costs, and to moderate--a little--the skewed distribution of wealth in America today. Note that I said "a little" because I'm definitely not in favor of socialist redistribution-of-the-wealth schemes.

We also need government to live within its means. The government should lead by example.

[Anonymous]

Oooh- you said something that makes me very nervous: Wealth Distribution.

 I do agree with what you are saying here - I know first hand that some people live beyond their means - and thus cannot pay me the money they owe me. And as for me - yeah. Been there. Done that. But one day I opened my eyes and realized that my discontent had nothing to do with material goods. And I got over it. Now I just want to make as much money as I can,pay off my debts, and bank a chunk.

[Anonymous]

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@Anonymous wrote:

Oooh- you said something that makes me very nervous: Wealth Distribution.

I do agree with what you are saying here - I know first hand that some people live beyond their means - and thus cannot pay me the money they owe me. And as for me - yeah. Been there. Done that. But one day I opened my eyes and realized that my discontent had nothing to do with material goods. And I got over it. Now I just want to make as much money as I can,pay off my debts, and bank a chunk.

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I think the increasingly lopsided distribution of wealth in America isn't so much a cause of our problems as a symptom. The middle class is shrinking, and as any social scientist can tell you, that's bad for the country. A strong middle class, accessible to the lower class, is a cornerstone of stability and security for any industrial society or modern state. We're losing that, and we lose that at our peril.

My prescription for improvement would be re-engineering and revitalizing the education system (in short, to slash bureaucracy and demand results), a Constitutional amendment forcing the government to run a 2% surplus every year (no more budgetary games and robbing Peter to make Paul look financially sound), and replacing the income tax with a national sales tax. No loopholes for the rich, and no more chicanery to get around paying taxes. I would also replace free trade with FAIR trade, so America can have a manufacturing sector again. No more U.S. workers competing with slave labor.

[Anonymous]

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MidnightVoice wrote:

Are they going to write a sequel called the one income trap? 

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The authors do address both single and dual incomes, past and present. Lotta meat in the book.

[Anonymous]

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TheNewWorldMan wrote:
You probably need a car, but you don't "need" a $17,000 car. You need to eat, but you don't "need" to eat out ten times a week. You need clothes, but you likely don't "need" a $79 shirt or $129 pair of shoes. And so it goes.

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Authors crunched a lot of hard data, and I think most of us have anecdotal experiences.

There were areas where they saw consumer spending had risen, but lots of areas where consumer spending had dropped and significantly and for a variety of reasons. But overall, consumers have less discretionary income.

Cars, clothes, food, appliances, and a host of other areas have been addressed thus far.

I'm only on page 78, chapter 4, the Myth of the Immoral Debtor.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Oooh- you said something that makes me very nervous: Wealth Distribution.

I do agree with what you are saying here - I know first hand that some people live beyond their means - and thus cannot pay me the money they owe me. And as for me - yeah. Been there. Done that. But one day I opened my eyes and realized that my discontent had nothing to do with material goods. And I got over it. Now I just want to make as much money as I can,pay off my debts, and bank a chunk.

---

I think the increasingly lopsided distribution of wealth in America isn't so much a cause of our problems as a symptom. The middle class is shrinking, and as any social scientist can tell you, that's bad for the country. A strong middle class, accessible to the lower class, is a cornerstone of stability and security for any industrial society or modern state. We're losing that, and we lose that at our peril.

My prescription for improvement would be re-engineering and revitalizing the education system (in short, to slash bureaucracy and demand results), a Constitutional amendment forcing the government to run a 2% surplus every year (no more budgetary games and robbing Peter to make Paul look financially sound), and replacing the income tax with a national sales tax. No loopholes for the rich, and no more chicanery to get around paying taxes. I would also replace free trade with FAIR trade, so America can have a manufacturing sector again. No more U.S. workers competing with slave labor.

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You know, right before I posted that, I edited out my Pro-Fair Tax rant. How ironic.