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Middle class families are going broke

Now that I'm about to start my first Real Job, I've been looking at expenses and all that. Here's an excerpt on MSNBC from a new book called "The Two-Income Trap". In short, a ridiculous number of middle class families with children are filing for bankruptcy. Both parents work in most of these families. It's just not who you'd expect to be in financial trouble. Today's two-income family generally has less in savings and disposable income than the one-income family of before!

The book points out a major cause: As these families make more money, they spend it all on a bidding war for houses in good school districts. The costs of providing their children "a middle-class upbringing" are getting jacked up. In any case, middle class families who are paying for few luxuries are still going broke.

I think it's interesting how in poor areas, people have children to save money, to have cheap labor, essentially. But in richer areas, the costs of raising children are bleeding families dry.

Oh.. and here's an NYTimes article about the same book. It has more numbers: Adjusting for inflation, the 4-person family today pays 70% more for housing than the 1973 family, while the houses are only about half a room larger. The Times article also has some criticisms of the book, mostly about how it excuses middle class families for not buying cheaper cars and cheaper day care. Still, fascinating stuff. I mean, who knows where I'll be myself in another ten years, eh?

Comments (1)

One thing that Professor Warren mentioned in class this week, is the idea that bankruptcy is the "insurer of last resort." It has become a way to deal with the inadequacies of the American health care system. She cited a statistic that half of the families file for bankruptcy after they suffer a serious health problem. Essentially, they have no insurance, or the insurance won't cover the treatment, so they take out the $50,000 to cover the costs, and then they can't pay back the debt. Her point was "Bankruptcy subsidizes health care."

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LEAVE THIS FIELD BLANK. IT IS HERE TO TRAP ROBOTS.

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LEAVE THIS FIELD BLANK. IT IS HERE TO TRAP ROBOTS.

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This page contains a single entry from the blog posted on September 11, 2003.

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