Secret Shame Of The Middle Class
This is a pretty sobering piece by Neal Gabler, a well-known and respected writer of serious books, who confesses that he and his wife are pretty much broke. And they aren’t alone. Excerpts:
The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
Well, I knew. I knew because I am in that 47 percent.
I know what it is like to have to juggle creditors to make it through a week. I know what it is like to have to swallow my pride and constantly dun people to pay me so that I can pay others. I know what it is like to have liens slapped on me and to have my bank account levied by creditors. I know what it is like to be down to my last $5—literally—while I wait for a paycheck to arrive, and I know what it is like to subsist for days on a diet of eggs. I know what it is like to dread going to the mailbox, because there will always be new bills to pay but seldom a check with which to pay them. I know what it is like to have to tell my daughter that I didn’t know if I would be able to pay for her wedding; it all depended on whether something good happened. And I know what it is like to have to borrow money from my adult daughters because my wife and I ran out of heating oil.
You wouldn’t know any of that to look at me. I like to think I appear reasonably prosperous. Nor would you know it to look at my résumé. I have had a passably good career as a writer—five books, hundreds of articles published, a number of awards and fellowships, and a small (very small) but respectable reputation. You wouldn’t even know it to look at my tax return. I am nowhere near rich, but I have typically made a solid middle- or even, at times, upper-middle-class income, which is about all a writer can expect, even a writer who also teaches and lectures and writes television scripts, as I do. And you certainly wouldn’t know it to talk to me, because the last thing I would ever do—until now—is 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 everything is going swimmingly. In truth, it may be more embarrassing than sexual impotence. “You are more likely to hear from your buddy that he is on Viagra than that he has credit-card problems,” says Brad Klontz, a financial psychologist who teaches at Creighton University in Omaha, Nebraska, and ministers to individuals with financial issues. “Much more likely.” America is a country, as Donald Trump has reminded us, of winners and losers, alphas and weaklings. To struggle financially is a source of shame, a daily humiliation—even a form of social suicide. Silence is the only protection.
Gabler goes on, in great detail, to describe how he and his wife got to this place. It’s well worth reading, because a lot of it will sound very familiar to many people. To summarize the main points specific to Gabler:
1) He chose to live in New York, which is one of the most expensive places to live in the country;
2) He chose to be a writer, not the most lucrative and stable career;
3) He and his wife chose to put their kids in private school, something they felt was necessary in their Brooklyn neighborhood, but an expense they could have avoided or dramatically lessened had they lived in another part of the country (they eventually moved to the Hamptons to get out of paying that tuition);
4) He and his wife believed their two children had “earned” the right to go to very expensive universities, and they spent everything they had, and the inheritance his parents planned to leave for him, on educating the girls;
5) They got caught in the housing crash and had to sell a Manhattan apartment they owned at fire sale prices;
6) Given the way his income as a writer is structured, taxes were a bitch (as a writer, trust me, this is true).
Gabler’s is not a case of good-paying jobs (e.g., industrial manufacturing) disappearing. His, as he readily acknowledges, is a problem that he caused for himself. And that gets to the more important part of the piece:
Choice, often in the face of ignorance, is certainly part of the story. Take me. I plead guilty. I am a financial illiterate, or worse—an ignoramus. I don’t offer that as an excuse, just as a fact. I made choices without thinking through the financial implications—in part because I didn’t know about those implications, and in part because I assumed I would always overcome any adversity, should it arrive. [Here he lists some of this choices] But, without getting too metaphysical about it, these are the choices that define who we are. We don’t make them with our financial well-being in mind, though maybe we should. We make them with our lives in mind. The alternative is to be another person.
This is interesting. He felt that to choose otherwise would have made him inauthentic, untrue to himself. He felt that he deserved the life he had, and could not choose otherwise without betraying himself. I think this must be an extraordinary thing, in terms of history: people who spend recklessly to give themselves the lives they think they deserve. If you think about it, though, our culture, which valorizes Authenticity, encourages this.
So that was stupid of him, but it’s an error many of us would be subject to. If for some reason the market for my writing dried up, and I had to take a job doing something else to support my family, I would do it. But I would probably resist it for as long as I could, because it’s very hard for me to separate my sense of identity from my writing. Still, bills have to be paid, and I would hope that I didn’t hold out for long. But as we know, human nature is such that we don’t see what we don’t want to see until we have no choice.
This part of Gabler’s piece struck me as deeply true:
So who is at fault? Some economists say that although banks may have been pushing credit, people nonetheless chose to run up debt; to save too little; to leave no cushion for emergencies, much less retirement. “If you want to have financial security,” says Brad Klontz, “it is 100 percent on you.” One thing economists adduce to lessen this responsibility is that credit represents a sea change from the old economic system, when financial decisions were much more constrained, limiting the sort of trouble that people could get themselves into—a sea change for which most people were ill-prepared.
He goes on to talk about how contemporary America is built on consumer credit, and the mentality that goes along with it:
Part of the reason credit began to surge in the ’80s and ’90s is that it was available in a way it had never been available to previous generations. William R. Emmons, an assistant vice president and economist for the Federal Reserve Bank of St. Louis, traces the surge to a 1978 Supreme Court decision, Marquette National Bank of Minneapolis v. First of Omaha Service Corp. The Court ruled that state usury laws, which put limits on credit-card interest, did not apply to nationally chartered banks doing business in those states. That effectively let big national banks issue credit cards everywhere at whatever interest rates they wanted to charge, and it gave the banks a huge incentive to target vulnerable consumers just the way, Emmons believes, vulnerable homeowners were targeted by subprime-mortgage lenders years later. By the mid-’80s, credit debt in America was already soaring. What followed was the so-called Great Moderation, a generation-long period during which recessions were rare and mild, and the risks of carrying all that debt seemed low.
The difference between the way my father’s generation and my generation regard credit is a conceptual chasm. My father regarded credit cards as at best a necessary evil. Me, I couldn’t live without them. But they are terrible things, because by deferring the cost of things, they lull you into thinking that you are better off than you are. I use my debit card whenever I can, but even that can be misleading. There is something psychological about handing cash to the merchant; it feels more real. Do you find that? If I go to the ATM and get $200 out, I find that I am a lot more thoughtful about spending it than if I just slide the debit card.
Anyway, Gabler’s overall point is that we Americans are doing less well than we think we are, and that we continue to shield ourselves from this reality because we have this ineradicable hope that it’s just about to be morning in America (“Gatsby believed in the green light…”). Please, read the whole thing.
I have a couple of thoughts. One, when Gabler says that he and his wife are “financial illiterates,” he could just as well have been talking about me and my wife. Fortunately, my wife realized this about a decade ago, and contacted a financial advisor, one who specializes in working with artists and writers. I don’t know where we would be without Chris Currin’s help over these last years. Unquestionably a lot less secure than we are today, because he has helped us invest wisely, to stash a lot away for retirement, and to save bigtime on taxes. I’ve had some very nice income years since we moved back to Louisiana and I started writing books, but if we had not had Chris there to impose discipline on us, I would have foolishly spent a lot of the money that’s now sitting in a 401(K). I don’t think this is because I’m a bad person, necessarily, but rather that I am someone who has a totally unrealistic sense of money. (Me: “Hey, it would be nice to have a nice bottle of wine with dinner tonight. I’ve got $2,000 in the checking account. Why not?” That is an incredibly stupid way to think about money, because you end up nickel-and-diming yourself to death.)
So, my advice to you is this: if you can afford it, get a reputable financial advisor. Really, it’s the smartest thing we have ever done. Julie and I recognized our weakness in this area, and sought help. It has made a tremendous difference.
The other thing I want to point out is how incredibly difficult it is to overcome the force of culture. People do what their neighbors and peers do. When we got ready to buy our first house, back in 2005, a number of our friends were skeptical of the little house we bought in a transitional neighborhood, for $165,000. We could have afforded a bigger house in a nicer neighborhood, but we were really scared about taking on a lot of housing debt, and besides, we loved that little house. It was big enough for us.
We had to sell it in 2010 when we moved to Philadelphia. The housing crash was still a big thing in Dallas. We had to pay the mortgage on that house for six months before it sold, and in that time we watched our nest egg wear away. The anxiety was so intense that it no doubt contributed, along with my sister’s terminal cancer diagnosis, to my developing chronic mono in that period. When the house finally sold, it was for precisely what we paid for it. But we lost over $50,000 in the deal, because we had spent heavily on fixing the house up. Still, we were lucky. Had we done what most people in our income bracket had done, the losses might have wiped us out.
The point is that to live a more financially stable life in America today requires the ability to be strongly countercultural. It requires fighting the tendency within oneself to believe that one deserves to live in a certain manner, because to do otherwise would be inauthentic. You may think there’s safety in numbers, because everyone is doing it, but the thing our mamas used to tell us when we were little kids is still true: if everybody was jumping off the cliff, would you do it too?
The trick is being able to see that everybody is jumping off the cliff, not simply jumping for joy at being able to live in the manner in which we believe we’re entitled.
I was talking the other day to a man who owns a small landscaping business. He said his biggest problem is with labor. “People don’t want to work,” he said. “They watch TV and think that they should be able to live a certain way, but they don’t want to work for it. I’ve got more work than I can handle, but I can’t get people to stick with it. They want it handed to them. It’s crazy. It didn’t used to be like this.”
No, it didn’t. He’s talking about a degraded working class ethic, but we middle class people have our own version of this. We are willing to work; that’s the easy part. We aren’t willing to live within our means. Doing so is very, very hard. I’m as implicated in this as anybody else.