See Part 1 here
In this long-awaited (yeah, right!) post, I will address the argument about Mom being the safety net that was put forward by the authors in Two Income Trap. The basic premise is that when there is only one income, couples buy house based on that, and since mom is a safety net, if dad loses the job, mom can go into the work force until that time dad gets another job.
There are three (broadly) reasons why moms stay at home while dad goes to work.
1. Religious reasons
2. Lack of education, so no good job choices
3. Educated, but prefer to be home with the kids
I think choices 1 and 2 are self explanatory and so I am just going to focus on the 3rd choice. There is an argument that is commonly put forward for moms staying home which is that if they go out to work, the family have to pay for child care, gas and maintenance on the second car, clothes, and all the trappings that come with a second job. I recently read somewhere that the mom needs to make at least $50,000 annually to make a contribution to the family finance. It sounds reasonable since many jobs do require all of the above. So many of the families who keep Mommy home do think of this. The cost benefit analysis show that it is better financially that a Mom remains home since for some jobs it takes money for her to be in the workplace.
So let us consider such a family. Jane is reasonably well educated, has 2 kids, never worked. John has a good job which brings in $50,000. They manage the home with that. She is frugal, watches the pennies, they don't eat out, do not go for vacations. She sends Junior 1 to public school and Junior 2 who is a toddler stays home with her. Now the economy turns bad (not hard to imagine now, is it?) and dad loses the job. Now, according to the book, this is when mom steps into the work force and rescues the family until Dad finds a job. Maybe I am being naive here, but I don't think there are a lot of employers out there offering anyone a $50,000 job with no experience, is going to be there only until the husband finds a job. (which could be one month to 6 months or maybe even more) A good job is not something you walk in and out of. And it is not rocket science what happens when putting an inexperienced mom suddenly into a work situation. In majority of the cases, she cannot hack it.
So John's and Jane's situation has changed. Jane is working at store X as a a clerk. The economy which cost John his job is not kind to Jane either. That is all she got since she has no experience and is not there for the long haul. She needs new formal clothes, she can't get home until late evening, so they need child care. John has interviews to attend and jobs to apply, so he cannot look after the kids while Jane is at work. Jane is tired coming from work, and looking after children, so she has no energy to cook, clean or pinch pennies. Expenses are more, and she brings in nowhere close to what John used to bring. I don't really think there is any hyperbole in the situation that I presented. It is a very possible outcome of such a situation.
Another problem I had with the book was that it does not give really good solutions as to how to get out of the Two Income Trap, a lot of families find themselves in. The book is good reading to understand how people get into saddening life situations, but I feel it doesn't do much good for a family already there. The overwhelming feeling I got after reading the statistics that the book provided was sadness. The answer to a crisis such as Dad losing the job is not to send a Mom who has never worked before into the workplace. I don't think it will work in real life for the reasons stated above.I am not saying I have the answers. But there are some things which I believe are good tips for a couple starting out in life.
1. If both husband and wife work, buy a house with a mortgage+utilities which you can afford to pay with one income. If you cannot afford to do that, you are not financially ready to buy a house. The book touches on this about keeping your fixed expenses below 50%.
2. Live WAY below your means. It means different things to different people. But you know where you are. Save well.
3. Don't worry about what other people are making or not making or emulate their lifestyles. Look at successful people and learn what they are doing right. Take control of your OWN finances.
4. Learn about investing. E.g. A car is a depreciating asset and is not a wise investment choice.
5. Above all, don't forget the source of every blessing.
Since I cannot say it any better, I leave you with Amy's words. If you are poor, let it be becasue the Lord wills so, and not becasue of your foolish choices.
8 comments:
I agree... However, is situations like death, divorce, disability, paycuts, the concept of 'safety net' might play out differently, don't you think?
My parents are an example of the 'safety net' working. My mom was out of the workforce for 20 years, but when my dad's back was injured -- severely limiting his ability to work, and working at all keeps him in significant pain -- she went back into the workforce part-time to supplement his paycheck, and she makes the ends meet. If their fixed expenses had already been her paycheck + his paycheck, they couldn't have survived financially. That, I think, was the point of the book.
Unless dad is some kind of executive, if a family has fixed expenses of less than 50%, there's a good chance mom could make enough to get by, and something often works out for childcare with grandparents, etc... And if dad was an executive, he should have had no problem buying all kinds of insurance and saving for rainy days. :)
So my personal conclusion is basically that you should live on what either adult could make. I can't make as much as Jonathan, so I think our fixed expenses shouldn't be more than I could earn. But of course this isn't feasible for every family. The point of life isn't to create multiple safety nets -- you can't possibly prepare for every contingency -- so much as to be wise and trust the Lord for the rest.
Like you, I found the book very sad. It reminded me of several women I know who were abandoned and struggle to keep food on the table in a world that prices everything based on two-income families.... They just can't compete. I think they're the saddest result of the "two-income trap"....
I agree, there are situations where it might work. For example, if the kids are older, or if there are parents available. But like she mentions several times in the book, misfortune never comes alone. I just felt that Mom as a safety net option was not a very well elucidated option from their side. I think the better thing would have been to stress the importance of living on one income, no matter what.
Hubby makes more than I do, but when we bought the house, we bought one where we could get by with my income. Our criteria was that it will allow us to live comfortably even if in the future I decide to stay home (children etc.) Then again, we can make sensible decisions, but the Lord directs. So all our careful planning and saving could very well be useless.
One potential problem with your scenario is assuming that mom has never worked. Steven and I are a good example of how that could work out just fine. I still have my foot in the educational door with subbing and tutoring. I would likely have to wait until the next school year to have a full-time teaching position, but I could supplement until then with subbing and tutoring. There's even a need for subs in summer school.
Many women worked before making the decision to stay home, so they often do have work experience. And many still keep a foot in the professional door for various reasons.
I will acknowledge, though, that Steven and I wouldn't have a childcare issue, which would present a serious problem for others. I know that when Steven has been laid off in the past, he spent his days working hard at home on his resume, making and taking phone calls, going on interviews. If we had a child, he wouldn't be able to just start watching the kiddo while I worked because that would seriously impede his job search. So you are dead on with that particular point.
I have read that book, and while it would have been nice for the author to include some advice for getting out of the trap, I do think the problem itself is well presented. What it boils down to is that the American Dream has turned into a perceived right to have every luxury available, and people have bought into the lie that they're unsuccessful if they don't have it all. It's led to couples working themselves ragged and spending every dime they make, plus some they haven't even earned yet.
Anne Marie, See there is no issue if you do not have children. The basic problem as presented in the book is that couples who have children move to high priced mortgages to get good schooling for their children. They are the one caught in the 2-income trap. Wives who stay at home can always have the flexibility of working when the need arises. But moms? Especially with small children? They are a high risk group. You can keep your foot in the professional door, but I am guessing once you have children, I believe there would be very few women who would continue doing that. If all the mommy-blogs I read are true, once you have kids you don't even have time to shower :) Maybe some savvy women would do that, but then if they are smart enough to do that, they would be smart in a lot of other things too and would have ways out during rainy days.
I guess I'm basing my opinions here off of the moms I know in real life. Those who stay at home with their kids do still have their professional contacts, have continued their own schooling, and/or have kept themselves employable in some way. But you're right; that is pretty different from what I read around the blogosphere.
I agree, there is a big difference that I see in people in real life and the blog world. I guess blog world moms write blog post instead of keeping up with/improving their career options. But then you can always make a blog career off of being a Titus 2 woman even if you are only all of 25 years old. :)
My husband and I are on the Dave Ramsey financial plan (www.daveramsey.com). He's a radio talk show host and author who advocates a simple plan for getting on track financially. It's simple, but it requires sacrifice, which is why so many people don't do it. One of the things he advocates is that people who are not currently homeowners should not purchase a house until three conditions are met: (1) you are otherwise debt-free; (2) you have an emergency fund that will meet 3-6 months of expenses in case of job loss, medical emergency, or any other unexpected "must pay" expense; and (3) you can purchase the house with a good down payment on a 15-year fixed-rate mortgage with a monthly payment that is no more than 25% of your take-home pay. If you are or want to become a stay-at-home mom, the take-home pay should be calculated using dad's income only. If you are and intend to continue as a 2-income family, the emergency fund will keep the household, including the mortgage going, while adaptations are made in the case of a job loss.
There's a series of "baby steps" that you can go through to get you to the point of being ready to purchase a house, and if you already own a house, that's worked into the baby steps as well.
All in all, I prefer Dave's attitude of proactive financial management over The Two-Income Trap's attitude of victimhood. And, as Dave closes his radio program with every day, in the end, "there's only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus."
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