If I get cancer (as did one of my friends) then my life is going to fall apart. But I’m a very low cancer risk. So the existence of a risk doesn’t mean that I should diligently plan for every contingency without taking into account the planning costs.

If you plan for no cancer and no unemployment, when you have the broken arm you also didn’t plan for, the money you didn’t sock away for cancer or unemployment can’t be used to pay for the broken arm. The problem is … most people don’t plan anymore, they keep turning to the government or someone else for a bailout. Or they don’t actually plan for Dad to quit his job in 5 years when Sis and Junior aren’t in a nursery and Mom wants to get some workplace experience to increase her earning potential and get away from screaming kids.

6 months savings, socked away and earing 2% interest in a bank? Graduating college a couple of years late? Those choices carry their own (sometimes very expensive) sets of opportunity costs.

It can be and often is perfectly rational to go into debt, so long as it coincides with a better opportunity to make money. The main reason folks seem to be against it is that they adopt a MORAL (not rational) view that debt is somehow intrinsically “bad.”

If I get cancer (as did one of my friends) then my life is going to fall apart. But I’m a very low cancer risk. So the existence of a risk doesn’t mean that I should diligently plan for every contingency without taking into account the planning costs.

Sure, someone could look at me if I got cancer and say “dudw, you sure made some stupid decisions. You should have planned your life around the 1% chance of getting cancer, and it’s your fault” that person would be wrong.

It’s rather remarkably hard to put together a 6-month’s salary pile of cash when you have a debt already to pay off (college loans anyone?), and only two-and-a-half years to accumulate it in.

No thanks, I worked my way through college. It took me a few years longer that way, and I have some truly scary stories from working blue collar jobs to make ends meet, but I left college with no debt of any kind.

Today’s kids, in contrast, leave college with massive piles of debt that take years to work off. My point, in all of this, is that people have been trained to have debt.

Yep - that would be a large part of why my husband and I were up to our eyeballs in debt (and still are, but digging out slowly). Because despite being eminently employable, every job change meant a move, and every move meant debt. All it took was one company downsizing, followed by another going bankrupt, and a third cutting its entire engineering department (at about three year intervals) to snow us under. It’s rather remarkably hard to put together a 6-month’s salary pile of cash when you have a debt already to pay off (college loans anyone?), and only two-and-a-half years to accumulate it in.

This all assumes both found a job right after they graduated, that both are in the same field (or a comparatively similar field in terms of pay), that both graduated at the same time. It makes a lot of assumptions. Many people don’t find a job for years in their field, and when they finally do, they have years behind others who did find it early on.

There’s also jobs where experience matters little. For example minimum wage labor. You can have worked there for 20 years in a row and still be below 15$ an hour. At my last job, which was one of the few unionized warehouse job places; the 20 years veterans and the new employees were getting their pay evened out over a plan of 4-5 years (which started before I got the job).

There were 6 different scales of pay depending on year of entry, then it narrowed it down to 4, then 2, and would have continued to 1 if I stayed there.

So the one who made 13$ an hour and me who made 8.85$ an hour, 2 years later I was at 12$ an hour and them at 13.35$ an hour, 1-2 years later we would have all have been at 14.25$ an hour. So in that case experience was moot except for vacations. 1 year for 2 weeks, and 25 years for 5 weeks (there was a more scaled thing but I forgot the details, but yes there is a 3 and 4 week vacation).

“Similarly, if there’s an age difference between the couples, I’d guess that the woman is younger. However, as has been pointed out, this isn’t a large difference when it’s all averaged out.”

We’re not interesting in averaging it out. We’re talking about specific couples, and it is a large difference in these terms.

A two year age gap is nothing by anyone’s standards. But if you’re a 29 year old woman who finished her education at 21, then your 31 year old partner has 25% (!) more experience than you. That’s a huge advantage. Which is why the age-pay gap swamps the gender-pay gap for the couples in the situation Ampersand illustrates.

Bjartmarr Writes:
April 29th, 2008 at 1:17 pm

Sailor:
Most people who are in financial straits aren’t people with $200 in the bank, $10 in a deposit that may be a little late, and $210 in bills to pay. They’re people with $12 in the bank, $10 in a deposit that may be a little late, and $1700 of bills to pay. They’re not on the brink of disaster — they’re way, way, way past the brink.

A lot of those people come to my office.

What I was commenting on–apparently not in a clear fashion–was how astoundingly easy it is to start with “$200 in the bank, $10 in a deposit that may be a little late, and $210 in bills to pay” and get to “$12 in the bank, $10 in a deposit that may be a little late, and $1700 of bills to pay.”

Therefore, the situation you posited doesn’t happen all the time, because it’s far too rosy an outlook for most folks.

At least, that’s how I read it.

In my experience, people who criticize the poor for being financially irresponsible often vastly over-estimate the financial, emotional, educational, and temporal resources that the poor have. They might say, “all you have to do is A, B, and C; it’s easy!” without realizing that the reason it’s easy for them is because they already know how to do A, they have free time available to do B, and they’re not so worn out from their three jobs that they have the energy to do C.Those “small advantages” — education, time, energy — can make a huge difference in someone’s life, but they get ignored by (relatively) rich folks who take them for granted.

Sailor,

I doubt “it happens all the time”. Most people who are in financial straits aren’t that close to NOT being on the brink of disaster.”

I don’t get what the “not” is for; as a result, your sentence makes no sense to me. Can you explain?

I will say that a large number of people–perhaps even a majority–who get into trouble are acting perfectly rationally, in a manner we would ordinarily support, and taht the main reason we would even vaguely consider them to have been on the brink of disaster is 20/20 hindsight.

It is comforting to think that the people in Amp’s cartoon got there because of their insatiable lust for consumer goods, isn’t it?

Well…didn’t they, to some degree? Although I wouldn’t say lust for consumer goods so much as “unwillingness to be perceived as poor”. Middle-class Americans in 1960 lived a pretty decent life, and you can acquire that level of material comfort for pretty modest work in 2008 - certainly, two working parents who have non-crazy jobs can manage it together without having no choice but for one of them to do the 70-hour crazy job routine.

I wonder. To be sure, I expect the average American consumes more than he needs to to have a 1960s existence. But how much more? What’s a fair basis of comparison?

For example, in 1960, what percentage of Americans with nothing more than a high school diploma were covered by comprehensive health insurance? What level of education is needed today to achieve the same outcome? And how does the cost of achieving that level of education today compare with the cost of achieving it in 1960?

I don’t mean to compare the health care or educations available in 1960 to those available today. But I do mean to contrast the motives that people had for working longer hours in 1960 to the motives people have today. There was a much lower disparity in living standards in the 1960s, even when race relations are accounted for. If my kid got cancer in 1960, my social class would help determine the lavishness of the funeral. If my kid gets cancer today, my social class may determine the kind of treatment she receives, and therefore whether she lives or dies. I guess it’s possible to characterize such concerns as an “insatiable lust for consumer goods,” but I think it misses some of the nuance.

How is it that Europeans have a lower “lust for consumer goods,” as evidenced by their shorter work week, lower labor force participation rates, smaller houses and smaller cars? And is it merely a coincidence that a European’s access to education and health care is not influenced by the size of her paycheck?

I doubt “it happens all the time”. Most people who are in financial straits aren’t that close to NOT being on the brink of disaster.

It isn’t the number of small contingencies, like a sick kid and a new water pump for the car, that is “planning”, it’s planning for the single largest (and possibly second largest) contingency that is the difference between surviving disaster and not. This is why the common advice is “6 months savings” because the single largest contingency, for most people, is a period of unemployment. Yet, very few Americans can put their hands on 6 months of income, and so foreclosures begin after far fewer than 6 months of unemployment because they couldn’t operate the household for even a month without a job.

On that note–perhaps a topic for another post?–there is not only an impact of small advantages, but a HUGE impact of small DISadvantages. To the degree that people manage to avoid getting into trouble, they tend to overestimate how simple it is to do so.

Our nonprofit had run very nicely for many decades. but a bad month, combined with three totally random expenses, almost sent us completely under. We HAD planned for contingencies… just not three, at the same time. It would be easy to use 20/20 hindsight to suggest that we should have saved more in the contingency fund, but that’s not necessarily correct.

With people, it can be the same thing. You’re fine–until your car breaks and your sitter quits in the same week that your 2 kids get sick and can’t go to school. You have planned for all those things, or even two of them, but not for all three.

And maybe you even DO squeak by through that week, but hiring an expensive temporary sitter eats up all the money that you would normally save, so the NEXT time that your car breaks you can’t fix it. And then you’re screwed.

I see it all the time. You’ve got $150 in your account and you write a $100 check and a $60 check, thinking you’ll deposit $10 in a day or two. Then the $60 check bounces because you deposit the $10 two days late, and you get charged $20 for the bounce, but the notice takes 4 days to get to you in the mail so now you’ve got a -$10 balance and you don’t know it. So you make a $200 deposit (your new balance is actually $190, but you don’t know that yet) and write a couple of other checks, and those bounce too. So your budget which is just enough to pay your bills maybe doesn’t cover the new $100-300 in fees because the bank AND the companies are charging you every time they try to deposit a check–usually three times per check. So your account gets drained pretty fast: if you don’t happen to understand exactly what’s going on (and few people do, educated or not) then you may not realise it unti your monthly statement arrives.

And by that point it’s often too late to save you. Next thing you know you’re in default on your mortgage, you’ve got $1000 of accumulated late charges and bank fees, your credit cards are all charging 29% interest, and your life is pretty much gone, in a financial sense.

Happens all the time–because people make a deposit 2 days late.

Apparently you are unfamiliar with my view of American family economic stupidity. I will now explain it for you.

I hold the average American consumer, of all races, genders, and most socioeconomic conditions, universally in low regard based on their apparent inability to comprehend that one can purchase more with CASH than with CREDIT.

It is a mystery (no, it really isn’t — there are things about your writing that make your biases very obvious to me) how you concluded that I am anti-women when men and their bass boats and penis-substitutes, I mean, Giant Monster Trucks, are no less a part of the problem than women’s tendency to never pass by a sale.

Yes, it is true that the consumer makes the economy go ’round, but it is also the consumer who is greatly in debt who makes it crash and burn. I’d be happy to explain this to you, but you’d have to change your writing style so your bigotry doesn’t come screaming through all the time.

Oh — and if men didn’t need their penis substitutes, miracle of miracles, even men could sometimes decide to stay home with the kids. Any kind of real feminism means having the ability to make decisions that are feminist. Not some abstract desire, but decisions that are consistent with a feminist outcome.

And of course it’s always more fun to play defensive attribution and assume that anyone with financial troubles did so through prideful overspending–not like us, who are frugal and smart and therefore will never be in their situation.

Well…didn’t they, to some degree?

You can make up any imaginary “they” and project them as you like, I suppose. I didn’t see any iPods in Amp’s cartoon, but apparently FurryCatHerder is one of those who thinks any discussion touching on family/work issues is a reason to launch into a screed how women could contendedly stay home with their kids if they weren’t shopaholics.

It is comforting to think that the people in Amp’s cartoon got there because of their insatiable lust for consumer goods, isn’t it?

It’s actually quite disconcerting that our economy suffers the ravages of consumers who can’t say “No” to a credit card offer or “Interest Free” purchase.

The real source of the difference comes from husbands tending to be three years older, three years more advanced in their careers, and having gotten three extra years of pay rises and promotions. It’s something to do with the cultural dynamics of partner choice, rather than wage discrimination against women.

I don’t think so. The reality that is actually different than the cartoon’s portrayal, is that both spouses do work and in general the woman earns less under any circumstances than her male counterpart. That’s just how it is statistically speaking. Maybe it’s because usually it’s the woman who’s expected to pick up the kids after school, if they’re ill and need to be taken to the doctor, who cooks the dinner and does the laundry…? and therefore will miss more time from work than the male who isn’t expected to do these things.

At the same time (forgive me for this personal note) I remember in the early days of my work life, a man was hired several months after I was in almost the same position that I had when I started. I had already proven myself and been promoted twice in those months. One of the company’s policies was that we weren’t to discuss our salary and I soon found out why. When I argued with another female coworker that we were all given equal opportunity on this job, she let me know that the man who had been hired after I had been was making half again as much as myself. I found that hard to believe, so I asked him when I had the chance to do so discreetly, and he confirmed that his salary was what she said it was. Although this was several years ago, I don’t think that things could have changed that drastically.

Imagine Amp had drawn a lesbian couple in the cartoon, thereby eliminating the issue of gender disparity. Would the stay-at-home mom be any less “screwed”?

Probably not. Except I’ve yet to meet a lesbian couple with a stay-at-home mom. For a number of reasons: likely if there are children, one or both of them were working moms before they met; the pressures on a lesbian marriage are much greater than on a heterosexual one, so they both know they’ll need to support themselves whatever happens with the relationship; and finally because just one of their salaries would not be enough to support the family as might be possible in a heterosexual marriage with only the man working. (Because he earns enough to do so.)