What do you think about the idea of a two income trap? - Page 2

[That Is Nice]

Originally Posted by cappuccinosmom

I agree.
I worked with a woman once who said "Oh, I'd *love* to stay home with my baby but we want to buy a house and we could only afford a shack on my husband's salary". There were no shacks in that town, and plenty of nice, well-cared-for homes that were easily affordable to even local factory workers, *if* they were smart with their money.

I think expectation and change in lifestyle is a big part of today's culture. But where I live there are no small houses built in the 1950s that are affordable. In fact, those homes that my grandparents could have easily afforded are way out of our reach. They are at least $400,000. Taxes are about $7k on that.

It's depressing. My grandparents had zero college education and one income. We have college educations and for most of our marriage two incomes. Everything is so expensive.

The only houses that are less than $200,000 where I live are in terrible shape, in terrible neighborhoods. They probably are not even up to code, and would require $50k in investments to fix problems before they would be ok to live in.

Cost of living is a huge factor in major metro areas.

[lifeguard]

Just_lily - what a great point about the homemaking (for both traditionally women's & men's roles). Most people do a lot less for themselves now then ever before. It is something we have been trying to make a concerted effort to change in our house - but we are having to learn a lot of the stuff from books & trial & error.

That is Nice - I guess the decision to live or not to live in a major metro area is part of each families priority. We purposely live just outside of the city because of this situation. It means more driving but even with gas costs it still means we need a lot less to live on.

[That Is Nice]

Originally Posted by lifeguard

Just_lily - what a great point about the homemaking (for both traditionally women's & men's roles). Most people do a lot less for themselves now then ever before. It is something we have been trying to make a concerted effort to change in our house - but we are having to learn a lot of the stuff from books & trial & error.

That is Nice - I guess the decision to live or not to live in a major metro area is part of each families priority. We purposely live just outside of the city because of this situation. It means more driving but even with gas costs it still means we need a lot less to live on.

I don't know if I agree with this.

On the first point, when I compare myself to say, my grandmother and great grandmother, the difference I see is that they owned land (purchased on one salary, their husbands'). Both owned over 10 acres their whole lives. They had room for a garden large enough to feed the family and livestock.

I do not have that room. I can't have a garden where I live, and you can't feed the family easily with contain gardening in a small space. And I certainly do not have any space for livestock.

Granted I have job skills that bring in more money than homemaking could ever save, but even if I wanted to be a homemaker like my grandmother, it is not logistically possible.

On the second point, it's not simply each families' priority where they live. Much of that decision is at the mercy of the job market and dependent on what career you are in. Certain careers are confirmed to certain geographic areas, a lot of times.

Wher I live, the price of houses and land just outside the metro area (or with an hour communte) are exorbitantly expensive. Just in the metro area, one could expect to pay $400k for a 1950s fixer upper. For any amount of land outside the metro area it would be $500k on up.

Also, coming from the background I came from, and paying for college all on my own, the amount of student loans I had necessitated getting a job right away and jobs were in a metro area with a high cost of living. Without a degree, though, I'd have been SOL.

[YesandNo]

On the second point, it's not simply each families' priority where they live. Much of that decision is at the mercy of the job market and dependent on what career you are in. Certain careers are confirmed to certain geographic areas, a lot of times.

Wher I live, the price of houses and land just outside the metro area (or with an hour communte) are exorbitantly expensive. Just in the metro area, one could expect to pay $400k for a 1950s fixer upper. For any amount of land outside the metro area it would be $500k on up.

This is our experience. My husband is a design engineer, it's pretty specialized to a few specific regions. We live outside Boston in a non-hoity-toity suburb in a 2 bedroom 1950 Cape that we got for a steal at $375,000.

[camprunner]

I can't help but make comments in this one.

Disclaimers: didn't read the entire thread; haven't read the book; I do work from home.

All of the above being said, before I started working at home I was spending $900 per month on gas and child care. Add to it that we didn't have to eat out as much as we were. We were paying on two other loans that we worked hard to pay off.

Yes. We were trapped. We felt that we absolutely NEEDED my income to live. We are so much better off now that I am at home and I believe that if I am no longer able to work at home, we may still be better off. We are prepared this time with the other two loans being paid off. There are not benefits either to my current job or being a SAHM mom (as in retirement and health insurance; being with the kids is a priceless benefit!) but over all it is making life easier with out all of the stress and early mornings.

[dflanag2]

Originally Posted by lifeguard

I find the part about people being able to do it a generation ago interesting because I think one of the biggest things that has changed is our expectations. It seems everyone now expects to be able to buy a large, brand new house as their first house. Look at the homes of our parents & grandparents - for the most part they were MUCH more modest. Perhaps our generations standards need to be re-evaluated?

We certainly seem to 'need' to buy more stuff that those in past generations.

What I recall from reading the book is that the two-income trap was when the family got used to living a lifestyle that required two incomes, and discovered they were 'trapped' if anything happened to disrupt the dual income. The safety net provided when a family could subsist on one income wasn't just financial (in that someone was available to go to work and bring in additional income if needed for an emergency situation), but also provided a person available to run the family, including caretaking for elderly or ill family members, and other unexpected crises.

I know a two-income family who for years has barely been hanging on as far as paying their bills each month, yet they continue to buy new cars, move into bigger homes on AR mortgages, and take expensive vacations. I also know a single mother who has lived with breast cancer for 10 years. She works part time yet has paid off hundreds of thousands in debt, owns her own modest home, and still makes ends meet for herself and her teen son. I am fascinated that the two-income family is no better off financially than the single mother working part time while living with cancer. Their standards of living aren't drastically different (in fact the single mother is better off in some categories such as nutrition and leisure time) and they are both lacking a safety net should anything go wrong in their financial situations, which to me meets the book's definition of being trapped.

As for the cost of homes, yes, homes in metropolitan areas can be expensive. Often people move further away from the metro area to find homes they think they can afford, so I have trouble seeing two income living as mandatory even in metropolitan areas.

A friend of mine lives 45 minutes away from me and her brand new garage townhome is larger than my home, and cost less than half the value of my home (well, the land my home sits on, really). Her husband has a longer commute than before when they rented an apartment, but it is under an hour and she is able to stay home with their young children.

We live in one of the most expensive areas in the country, yet young families can still make choices such as this. I think what has changed is people's perception of what they can afford, and how many lifestyle sacrifices they are willing to make in exchange for material consumption. I think people can get by quite comfortably on much less than they think they can.

[That Is Nice]

Along the lines of this thread I posted a while back, I wanted to share a really good book title that I am reading.

It's called, "Opting Out? Why Women Really Quit Careers and Head Home" by Pamela Stone, published in 2007.

I'm about a quarter of the way through and it's fascinating. The title is a bit misleading...the subject is very similar to the content in the book, "The Price of Motherhood" by Ann Crittenden.

It's really interesting to me because I've been a stay-at-home parent, I've been a working parent. It's interesting to see in sociological terms how other women are grappling with and balancing these choices...it makes me feel encouraged about my own balancing act.

[Leta]

DH and I both read this book, and it had a profound impact on us. It spurred us to move to our current location, and shaped many of our choices after that.

Basically, we wanted to be able to live on one income- for all sorts of reasons, financial security high among them. So we moved to area with a low COL and bought a fixer upper. We paid $31,000 for our 1700 sq ft house in 2005. The minimum wage here is $7.50, so we figured, worst case scenario, we could work opposite shifts to avoid child care expenses, and still make our mortgage payments. This was intentional on our parts.

Luckily, DH has a good job, that provides much security and very good health care. The pay is not great, but it is enough to live on, at least here.

I think there are areas of the country where the two income trap is very real. Luckily, we dodged that bullet.

[That Is Nice]

Originally Posted by Leta

DH and I both read this book, and it had a profound impact on us. It spurred us to move to our current location, and shaped many of our choices after that.

Which book did you read? The "Opting Out" book or the "Two Income Trap" book?

I really liked the former, but not so much the latter.

I should read them aloud to DH. He'd never read them on his own, but he'd really benefit from hearing the discussion.

[Leta]

The Two Income Trap. I haven't read Opting Out.

I can't say I liked the Two Income Trap, but they made their point, IMHO.

[That Is Nice]

Originally Posted by Leta

The Two Income Trap. I haven't read Opting Out.

I can't say I liked the Two Income Trap, but they made their point, IMHO.

Yeah, that would be my review of the Two Income Trap, too. I didn't really like it, but it was food for thought.

I like Opting Out. I'm about 1/4 of the way through and I really like it.

[QueenOfTheMeadow]

This thread has been moved from SAHPing to frugality and finances.

[bobandjess99]

I haven't reaqd everything, but I think a HUGE reason why many families can't get by on one income is due to the fact that so many families have divorce/support issues whereby one person isn't supporting 1 family, but 2 or 3 or even more families....
for example, when I met dh, he had 2 seperate previous families he was paying support to..his first ex-wife for his 2 kids with her, and his third exwife, for his 3 kids with her.
Now, of cours,e this is all based on choices and things that happen, but quite frankly, the vast majority of women my age (30s) that I know, have a spouse who is paying child support, to either a previous wife or "babymama", such that his 1 income is supporting more than just 1 household. On the other end, of the women I know have money coming into their household fom someone other than their dh.... most of their dh's are paying out support as well, so at best it tends to be a wash, but usually it seems like they get less in than the dh is required to pay out...so you have these "families" where there is money coming in and going out all over the place, but the old concept of one single, nuclear family is a lot less common.
for a long time, we joked that the best way to make our family financially stable would be to get me knocked up by someone other than DH, such that we could get some child support rolling into our household budget. Crass, but true.
Also, families such as mine often aren't eligible for any help/benefits, because programs look at gross income before deductions. SOm even though yoiur family income and mine might be equal in actuality, my family income looks a lot bigger on paper, because it includes the money dh pays out in support that our family never even sees, so *my* kids aren't eligible for any of the help that so many families take for granted ( state health insurance, wic, reduced lunch at school, etc) because on paper, it looks like we are a family of 4 making $40K a year...when in reality, it is a family of 4+3(half the time) making $30K a year.
HUGE difference.
Anyway..I really think the fact that society has changed in terms of the composition of families, the huge rise in divorces, and the child support/alimony issues, are all serious issues to look at, that play into the changes just as much as other factors.

[faerierose]

I read "The Two Income Trap" and I really felt what the authors were trying to point out was the trend of two income families created the higher cost of living. As more families had two incomes and therefore more money to spend on housing, preschool, college, the prices of these things went up essentially creating the NEED for two incomes in order to stay in the middle class.
The second big point I remember was that a SAHM is a sort of safety net, a person available to care for a sick family member, the kids when they are young, and or to pick up some extra income when it's needed. That safety net isn't there for families with both parents in the work force.

I thought it was a good book even though it didn't really apply to my life, I have no interest in reaching or staying in the all mighty "middle class".

[PenelopeJune]

We were doing just fine on one income until about a year ago. We live in a low income area, with low taxes, in a modest house, and only have one car. We don't spend a lot of money frivolously, but one income just wasn't enough to pay just our basic bills.

We did a lot of talking and thinking about it, and my husband took a second job, rather than me taking one. He makes more per hour than I could, and he decided he'd rather work an extra full-time job than be a stay at home parent while I worked. (Because we wouldn't have done day care, I would have worked opposite shifts.)

I hadn't thought of us as a two-income family until you posted this. How dumb is that? But really, we are, it's just that one person in this house works two full time jobs.

[westernskies]

Originally Posted by That Is Nice

But, I have fundamental issues with the premise in the book that living on one income is attainable for many couples, or that you can learn to live on one income.

And my second problem is that I do not think having a SAHP in reserve helps a household. I think it actually does the opposite. A SAHP who has been out of the workforce for some time, in reserve, will not have very good employment prospects when the reserve needs to be tapped.

Oh dear.

I haven't read the book.

But I have to respond to your above statements. I believe that living on one income IS attainable. I know it can be done- my husband, six kids and I are living proof. Neither my DH or I have a college degree or work in a "professional" career. We live a very comfortable lifestyle and are truly blessed to be able to do so... I am not meaning this in a we are better than you sort of way, I just KNOW that it CAN be done.

As for your opinion of having a SAHP in reserve not helping out a household. Wow. Where do I begin? Every single day every single second of time I am spending with my children is molding several little lives! This is time spent with my babes that I feel cannot be replaced. Each day that I spend tending to my hubbys castle is a day that I add value to our lives and home. The money that I save and the bargains I find because I have and choose to take the time to seek them out is literally money in the bank for our family. My "goal" is not to seek out a career or a high paying job. My goal is to raise our children spending as many precious moments as possible with them as I am given.

I think the "trap" is not essentially a trap to begin with, but having a 2 income family that learns to rely on the 2 incomes has the potential to be devastated financially just as easily as a family living on one income. When the employment is gone and there are bills to be paid- its obviously a problem. I think it all boils down to the choices we make and if we make choices to have 2 car payments, a morgtage, a boat payment, and thousands of dollars of credit card debt- then we have to WORK to pay that off.

[lil_earthmomma]

I think that sometimes it isn't possible to live on one income. I think I need to go to work, because if I don't, we won't be able to live anywhere.

My dh is a teacher, and his income is well below the approval rate for a mortage, even for a trailer.

We save, don't have credit cards, debt or fancy cars. We cook everything from scratch and stock our pantry and freezer.

What exactly are we doing wrong? We have come from extremely poor families, so maybe that makes the difference. We are low class trying to become middle class, and struggling.

We are well educated individuals, and so far we haven't found a way...

We have many friends who order out lots, go on vacations 4 times a year, etc. we don't want that. We want to have food on the table and a place to lay our heads.

[That Is Nice]

Explanation of the phrase "parent in reserve"

Originally Posted by westernskies

As for your opinion of having a SAHP in reserve not helping out a household. Wow. Where do I begin? Every single day every single second of time I am spending with my children is molding several little lives! This is time spent with my babes that I feel cannot be replaced. Each day that I spend tending to my hubbys castle is a day that I add value to our lives and home. The money that I save and the bargains I find because I have and choose to take the time to seek them out is literally money in the bank for our family. My "goal" is not to seek out a career or a high paying job. My goal is to raise our children spending as many precious moments as possible with them as I am given.

I need to post the meaning of the phrase "parent in reserve" because I think it was taken out of context. I want to be clear "parent in reserve" does not mean or imply that a SAHP does not contribute to a household.

That phrase "parent in reserve" is from the book, and means basically that a SAHP is in reserve to get a job and support the family financially when needed if the sole breadwinner's income is lost (lay-off, death, etc). There was additional meaning that the "parent in reserve" also could care for elderly or ailing family members should the need arise, but that was secondary to the discussion of the two-income trap.

Personally, I do believe in the value of a SAHP, and believe a SAHP contributes in many valuable ways. I wouldn't have made the decision to be a SAHP myself if I didn't share the opinions about SAHP involvement in childrearing that you stated above.

I just wanted to point out though, that the concept of "parent in reserve" is much different than SAHP contribution to the household in terms of raising children. Very, very different! There was a big discussion in this thread, and the related thread, about how a parent in reserve for years and years likely would not have current job skills ready and available to secure a job that could support the family, or replace the breadwinner's income to get the family through the interruption. The idea of career and resume obsolescence was discussed, but that it might be able to be overcome depending on fortitude, luck, and keeping skills up to date, but that at the very least it would be a very challenging thing to do while raising a family.

Hope that helps frame the discussion a little better!

[That Is Nice]

Originally Posted by lil_earthmomma

I think that sometimes it isn't possible to live on one income. I think I need to go to work, because if I don't, we won't be able to live anywhere.

My dh is a teacher, and his income is well below the approval rate for a mortage, even for a trailer.

We save, don't have credit cards, debt or fancy cars. We cook everything from scratch and stock our pantry and freezer.

What exactly are we doing wrong? We have come from extremely poor families, so maybe that makes the difference. We are low class trying to become middle class, and struggling.

We are well educated individuals, and so far we haven't found a way...

We have many friends who order out lots, go on vacations 4 times a year, etc. we don't want that. We want to have food on the table and a place to lay our heads.

Yes. You summed up very well a lot of what was discussed, and my own personal feelings on this.

I too was born into poverty and so there were a lot of things that I needed to do doubly fast in order to catch up to the economic status of others born in to a higher degree of wealth and assets. For one, I paid entirely for my college education myself, and therefore, I spent years paying off that debt and making it manageable. That is just one example.

I think the big factors are this: cost of living in the location you live (big, big factor that can vary greatly from state to state, and country to country), good choices early on, and luck.

[That Is Nice]

Originally Posted by westernskies

Oh dear.

I haven't read the book.

But I have to respond to your above statements. I believe that living on one income IS attainable. I know it can be done- my husband, six kids and I are living proof. Neither my DH or I have a college degree or work in a "professional" career. We live a very comfortable lifestyle and are truly blessed to be able to do so... I am not meaning this in a we are better than you sort of way, I just KNOW that it CAN be done.

As for your opinion of having a SAHP in reserve not helping out a household. Wow. Where do I begin? Every single day every single second of time I am spending with my children is molding several little lives! This is time spent with my babes that I feel cannot be replaced. Each day that I spend tending to my hubbys castle is a day that I add value to our lives and home. The money that I save and the bargains I find because I have and choose to take the time to seek them out is literally money in the bank for our family. My "goal" is not to seek out a career or a high paying job. My goal is to raise our children spending as many precious moments as possible with them as I am given.

I think the "trap" is not essentially a trap to begin with, but having a 2 income family that learns to rely on the 2 incomes has the potential to be devastated financially just as easily as a family living on one income. When the employment is gone and there are bills to be paid- its obviously a problem. I think it all boils down to the choices we make and if we make choices to have 2 car payments, a morgtage, a boat payment, and thousands of dollars of credit card debt- then we have to WORK to pay that off.

Yes, it can be done, of course (living on one income) but it is certainly not doable for every household.

Cost of living, which varies greatly state to state, and country to country, is a big determining factor.

Also, I think there is a fair amount of luck involved. But, yes, of course personal choice and personal responsibility is part of the equation, too. It's very complex and multi-layered, which is why it is not attainable for every household and not unattainable for every household.

Also, I wanted to let you know that I just posted two or three posts back that the concept of "parent in reserve" has a different meaning than saying a SAHP does not contribute to the household, which is not something I believe or agree with.