Note: rare rant alert.
I was reading an article in the Sunday newspaper where the financial situation of a family of 5 were described in-depth, asserting that the middle class is in a downfall. The family lives in the Virginia suburbs of Washington, DC. They have a nice house, one car and one truck, and a $90,000 per year income between both adults. The kids, ages 8, 10, and 13 are enrolled in a good public school system.
One would think that on that income, they would be able to live comfortably. Perhaps not be able to buy all the latest toys, go out for entertainment often, or drive the latest snazzy yuppie-mobile, but they’re doing okay.
The story, however, revealed that this family claims that they are barely making ends meet and last month, were late or didn’t pay the bills for utilities such as electricity because they had to reallocate resources to buy a used car to replace one that died. Now their credit rating is taking a nosedive.
How can it be that they are in such a financial mess?
Because, in my opinion, their priorities are screwed up.
They had no emergency fund. The story spent quite a bit of time describing what they did when their old car died and it was unrepairable. Granted, a car is a necessity in the suburbs as it is not possible to use public transit to do the daily activities of life (get to work in different locations, purchase groceries, and so forth.) They scrimped and reallocated their paycheck-to-paycheck funds to buy a used car to replace the one that died.
They are not paying some bills, they have no savings for their children’s college education, and are concerned about their children not being able to get involved in extracurricular activities like music and sports because they say that they can’t afford to pay $100 registration fee or $90 for a musical instrument.
However, they insist that all five of them have smartphones and pay over $300 each month for service to enable their devices to have unlimited talk and data. An 8-year old, 10-year old — with a smartphone? Really? The story also explained that they are paying for wifi at home since the Dad works from home sometimes and requires it. Okay, I understand that, but I was further concerned when the story stated that each child has both a computer in his/her bedroom AND a tablet (i-pad).
What’s wrong with this picture?
Granted, I do not have children. However, I have observed my own nieces and nephews work through similar situations. They first reorganized their budget by paying the essentials (utilities, mortgage, food.) Then they forced themselves to create a small but important emergency fund to cover major expenses that happen in life. They even began to save some money for their children’s college education. Not much, but a little bit each month. They turned off or gave up things that cost money that they didn’t have to spend — went from everyone having smartphones to only the parents having a clamshell, basic cell phone. Kept wifi at home but shared two laptop computers.
Their credit scores are good, and their children are not lacking for food, clothing, and a roof over their heads. Yeah, their kids complain that “everyone else” has a smartphone. But really, is that so absolutely necessary that you wouldn’t pay the electric bill and get behind on the mortgage?
I want to take a moment to give a shout-out of praise to a friend who I know regularly reads this blog. He shared what he went through to determine costs for an important home renovation, how he reallocated finances, and was able to have enough money to replace a car unexpected that was involved in a deer-strike collision, totaling the vehicle. Insurance didn’t cover replacement. My friend has his priorities straight: no smartphone, his children don’t have mobile devices, and no internet at home. He is saving both for retirement and children’s college education. He and his family are managing well. Good for them!
Life is short: hang up and reprioritize what is important.
I didn’t see the article, but suspect – based on the profile you presented – they also have cable TV, premium channels, Netflix and spend a large amount on fast food. I write this because many of my co-workers are in similar situations.
The children are doomed to repeat this because they will model their parents’ financial behavior.
I am incredibly fortunate that my “depression era” grandparents taught my parents the art of frugality. I’ve never been one to “keep up with the Jones’s” or to have the newest of anything.
Thus, I was able to shift to working just part-time in my 50s, living a debt free (and substantially stress free) life.
Like you, I have no children – but I fear for the younger generation as they approach a financial world which is unparalleled and which they are sadly unprepared to face.
As for priorities … when I am in the “old folks home” will my caregiver’s priority be giving me my proper meds or tweeting the latest celeb gossip?
Rick, you made an observation that I wanted to bring out — perhaps describes why I feel the way I do about what I consider to be misaligned priorities. I am a child of parents who lived through The Great Depression. My family grew up living frugally. Not “doing without” but not “demanding more,” either. We learned to appreciate what we had — and grow our own vegetables, too 🙂