This was an absolutely fascinating read and its one of the few books that we truly recommend, especially to those with families. The main premise of the book is that our current system of having to have two incomes to make ends meet is what is driving individual family economic meltdowns. How can more money end up being a bad thing?
Warren, who is a professor of economics at Harvard, and her daughter Amelia, a business consultant, present a very strong case, backed up by numerous statistics that show we really are in trouble as a society, but it’s not our fault. Instead of falling back into the old line of complaining that American’s are overspending and dripping in debt, the two show that it’s not that at all.
According to the Warrens, it is what we’re spending that second income on that is the problem. The main case in the book is that the push to send our children to good schools has led to an incredible jump in real estate prices, especially near the best schools. In order to get into those schools, hefty tuitions must be paid. This system is perpetuating itself and creating a problem that many families cannot break away from.
Who wants to send their kid to a bad school, right? They claim that in the past, Mom was the financial “safety net,” where as now, most of her salary is going towards inflated house payments, car payments, and school tuitions, instead of into savings or investments as it should be.
With 80% of Americans living paycheck to paycheck right now, this book raises some very valid concerns. Unfortunately, there really is not a solution, barring sending your kids to public schools as avoiding pricey neighborhoods. However, if more families did that, it would free up more disposable income that could be spent freely.
We would have liked to have seen the book focus more on having “Mom” work on developing passive streams of income that would replace the need for that second salary, but overall, we found that the book was a refreshing and thought provoking read. If you are one of the millions of families that is struggling to make ends meet on two salaries, it is well worth the read.
It is rare to find a personal finance book that doesn’t encourage over-frugality, or get rich quick schemes that never work. We found this book to be hard hitting, filled with all the right facts (that were verifiable) and certainly well worth the time spent reading it. It may just open your mind up to some new ideas and help you develop a plan to break free of that trap, start creating a more passive stream of income and figure out how to get your family’s finances back on the right track. All of this boils into a lot less stress and financial hardship and that is something every one of us can use.
Originally posted 2008-08-01 05:10:36. Republished by Old Post Promoter
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But having kids (especially more than one or two) is a luxury, and a good education for (all of) them is a luxury. An oversized house and car for (all of) them are luxuries. Health care is a luxury. These are not “necessities”. The middle class has just been conditioned to think that they are entitled to these things. The middle class is in fact entitled to nothing. Nada. This is how it’s been for millennia. The main problem I see is too many middle-class families pretending to be upper class.
I also read and reviewed this book on my blog. I’m not as impressed. Other than making the readers feel good about it’s not their fault, the book is not actionable. It actually encourages inaction because “it’s not our fault.” If people live paycheck to paycheck with no savings, by definition they are overspending. It doesn’t matter _where_ they are overspending.
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