Money in the Media #1

Happy Monday All! I’m starting a new series of posts that will come out every Monday. This series is called “Money in the Media.” I plan on taking an article on an important money related issue/topic and adding my perspective to it. I look forward to the conversations that I know will result from these posts.

Photo by Hugh Kretschmer

This week’s article is called “The Secret Shame of the American Middle Class” from The Atlantic. This famous article reviews a study concluding that 47% of middle class American families cannot come up with $400 in an emergency. The defining feature of this article is that these are middle class families. These aren’t those who are earning less than the poverty level; just your everyday average folks.

Where the Problems Start

The author of the article begins with saying that he knows what it is like to be down to literally his last $5 and have to borrow money from his adult daughters to pay for heating oil. Now, being in that situation is unarguably horrible and not really the true problem expressed here, although it definitely feels like it in the moment. Here, is part one of a two pronged problem:

You wouldn’t know any of that to look at me. I like to think I appear reasonably prosperous.

The inherent need to “appear reasonably prosperous” is a BIG problem. Many people spend a lot of time and money trying to keep up with the Joneses.

And here is part two:

And you certainly wouldn’t know it to talk to me, because the last thing I would ever do- until now- is to admit to financial insecurity or, as I think of it, “financial impotence,” because it has many of the characteristics of sexual impotence, not least of which is the desperate need to mask it and pretend that everything is going swimmingly.

From here, Neal goes on to describe many other intimidating statistics that show that the majority of middle class Americans worry about not just emergency expenses, but everyday expenses. This has caused an overall drop in net worth for the lower 60% of the population over the past 30 years ranging from 85.3% to 25.8 percent as you move up in wealth. Showing that it’s not just the current day to day that’s at risk of falling with one emergency, the future looks bleak as well.

All of this is terrifying, but the fact that this is happening all over the country and STILL no one talks about it is the real tragedy. It’s as if everyone were suffering from the same disease, but no one says anything and so everyone suffers in silence alone.

Find the Wiggle Room

To address the first problem, the majority of those who have credit card debt usually cannot remember what they even spent the money on; I know that I couldn’t. It was a small, slow leak over time. The fact that the vast majority of middle class folks are in the situation where they’re overspending and living paycheck to paycheck is proof that spending based on values is not being practiced.

The study by Lusardi, Tufano and Schneider found that nearly one-quarter of households making $100,000 to $150,000 a year claim not to be able to raise $2,000 in a month.

There is a saying that no matter how much money you make, you can find a way to spend it all. The survey mentioned above proves this to be true. So what can be done about it now? The best thing to do is to find your wiggle room. Even if that wiggle room is just $5 or $10/month to start out. It will be a catalyst for action in order to give yourself the opportunity to work out from under that debt.

If you’re thinking, “At that rate, it’ll take me 20 years to get it all paid off…”, then to that I say:

Even if getting back to square 1 takes 20 years, wouldn’t you be better off to pursue it anyway? Where would you rather be in 20 years? Still living paycheck to paycheck or finally being debt and stress free?

Talk It Out

The other fix to this systemic problem is to talk about it! Many of the systems in place are there because companies have been getting away with making huge profits off of encouraging and providing people with the means to take on debt. Unfortunately, nothing will happen to fix these problems unless we talk about it!

No resolutions, be they on a personal and immediate level or on a systemic and long term level with policy changes, can come about if everyone suffers in silence. Discussing mutual issues is how we all improve as a group. The two heads are better than one cliche has roots in legitimacy. Bringing ideas and creativity together can improve lives on a daily basis by ridding everyone of the feeling that they’re the only one suffering under the weight of their financial burden. Even better, it can start the larger conversation to change the systems to prevent others from falling into this situation in the future.

Personally, I know that being honest with my friends about our debt payoff and savings goals has been the best method to keep us on track. It allowed us to forego the need for excuses not to expensive things. Instead of going out to an expensive restaurant, we will have a potluck and board game night at one of our homes. Saving in time, cost and allowing us a more intimate environment to catch up.

Wrap It Up

The first step is to figure out where you currently are with your finances and then to take radical personal responsibility for your budget going forward. This will help you to create the wiggle room needed to attack the debt and improve your overall financial picture.

In addition to this, talk to your friends, family and coworkers about finances. You don’t necessarily have to come clean that you have thousands of dollars in debt that you can’t even remember on what this money was spent, but just open up the conversation to remove finances off of the taboo topics list. Nothing will ever change if the problem is forever kept in the dark.

What are your thoughts on this article? Did or are you suffering your financial burden along? Has talking with friends and family helped or hurt your financial journey?

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