The two-income trap : why middle-class parents are going broke

From Publishers Weekly Warren, a law professor at Harvard (The Fragile Middle Class) and her daughter Tyagi, a former McKinsey consultant, have joined forces here to argue here that the two-parent middle-class working family is on the brink of financial disaster. The number of families declaring bankruptcy or receiving a foreclosure against their house has shot up dramatically. Presenting carefully researched economic data to support their arguments, the authors contend that, contrary to popular myth, families aren't in trouble because they're squandering their second income on luxuries. On the contrary, both incomes are almost entirely committed to necessities, such as home and car payments, health insurance and children's education costs. When an unforeseen event such as serious illness, job loss or divorce occurs, families have no discretionary income to fall back on. The authors recommend a number of useful societal solutions to get families out of this trap, such as legally prohibiting credit card companies from charging grossly unfair interest rates and exposing banks that employ a loan-to-own strategy that steers minority customers to higher mortgage rates with an eye to future foreclosures. Warren and Tyagi point out that families buy homes they cannot afford in order to live in a neighborhood with better schools. Their proposed solution, however-to institute a public school voucher system with wider choice-is less carefully thought out. Overall, however, this is a needed examination of an emerging social problem. Copyright 2003 Reed Business Information, Inc. Review "A startling account of the elusiveness of the American Dream." -- \*- \*\*Time Magazine\* "Makes a good case that the epidemic of bankruptcy is not about people being irresponsible." -- \*- Paul Krugman\* "You should read this book!" -- \*- Dr. Phil\* In this revolutionary exposé, Harvard Law School bankruptcy expert Elizabeth Warren and financial consultant Amelia Tyagi show that today's middle-class parents are increasingly trapped by financial meltdowns. Astonishingly, sending mothers to work has made families more vulnerable to financial disaster than ever before. Today's two-income family earns 75% more money than its single-income counterpart of a generation ago, but has 25% less discretionary income to cover living costs. This is "the rare financial book that sidesteps accusations of individual wastefulness to focus on institutional changes," raved the Boston Globe . Warren and Tyagi reveal how the ferocious bidding war for housing and education has silently engulfed America's suburbs, driving up the cost of keeping families in the middle class. The authors show why the usual remedies-child-support enforcement, subsidized daycare, and higher salaries for women-won't solve the problem. But as the Wall Street Journal observed, "The book is brimming with proposed solutions to the nail-biting anxiety that the middle class finds itself in: subsidized day care, school vouchers, new bank regulation, among other measures." From Senator Edward M. Kennedy to Dr. Phil to Bill Moyers, The Two-Income Trap has created a sensation among economists, politicians, and families-all those who care about America's middle-class crisis. Describes The Economic And Social Impact Of The Two-income Family, Explaining Why Sending Mothers To Work Has Made Families More Vulnerable Economically, Pointing To The Intense Bidding War For Housing And Schooling In America's Suburbs, And Presenting An Innovative Series Of Solutions. Just The Way She Planned -- The Over-consumption Myth -- Mom: The All-purpose Safety Net -- The Myth Of The Immoral Debtor -- Going It Alone In A Two-income World -- The Cement Life Raft -- The Financial Fire Drill. Elizabeth Warren, Amelia Warren Tyagi. With A New Introduction By The Authors--cover. Includes Bibliographical References (p. 193-244) And Index. " ... provide ... evidence that the culprit is not "over-consumption" ... they point to the ferocious bidding war for housing and decent schools that has quietly engulfed America's suburbs, driving up the cost of raising children in the middle class"--Jacket flap Describes the economic dilemmas facing families who depend on two incomes, presenting a series of solutions on how to get the middle class back on financial track.