I went to see Elizabeth Warren speak last summer, and after concluding that a) she was totally freaking amazing and b) she should totally be Senator Warren, I immediately picked up The Two Income Trap.
This book is amazing. It is eye-opening. And it will change your approach to marriage, to saving, to finances, and to your family. Basically, the premise of the book is that since women have started working, households have begun to require two-incomes to stay afloat, meaning that if one partner loses their income, the household is screwed.
Warren and her daughter Tyagi carefully deconstruct the ideas that are rampant about American families who declare bankruptcy - the myth of the immoral debtor, the idea that if they just had more money, families would be financially comfortable, that if deadbeat dads just paid their child support on time, families could stay afloat. They point out the way that creditors have changed the nature of the debtor-creditor relationship, making it nearly impossible to keep ahead of massive debt, and that there are very few ways for middle class families to save money. They point out millions of scary statistics, like how much more likely single mothers are to go bankrupt now than they were ten years ago.They also point out how many of us are house-poor versus twenty years ago, and how bad it can be for a family if most of their income is tied up in their shelter costs. They point out that Americans actually spend less on consumer goods than we used to, but somehow are also saving less than we used to, and point out all the places that money goes that it didn't used to - a house in a good school district, college, health care.
Coming from a public interest background, I have seen the symptoms that the book describes, but never really understood the root causes the way that the book explains them. For example, the bidding war for a house in a "good school district" has made property values in the area where I grew up skyrocket, and makes them crash in the neighborhoods where my clients live and then they can't sell their homes. It also disadvantages poor and middle-class families. In addition, some of the changes in the way creditors and banks are allowed to operate in the United States is pretty appalling. There are also some pretty large holes in the safety net of unemployment and disability problems. Warren also talks a lot about sub-prime lending, and how bad it is, particularly for women, and this was several years before the market crashed.
I think anyone who is young and trying to deal with the tricky art of navigating budgeting and expenses, as well as anyone who is living on a limited income, should definitely read this book. Even though it is really scary and depressing, it offers some very practical solutions and considerations, like how to make sure you are putting enough in savings to have an adequate safety net. It feels totally hopeless as you read it, but it's also encouraging for how to negotiate your life going forward. If you've never really thought about what your financial plan should be, or what your plan could or should be with regard to public schools and kids, it's definitely great food for thought. I'll be honest with you all, I'm not a big nonfiction person but I found this really thoughtful and engaging.