Last week, 3 different friends sent me a link to what has apparently become a viral article: The Secret Shame of Middle-Class Americans. The article was written by Neal Gabler, a man who by all reasonable accounts has had a successful career as an award-winning published author, journalist, television writer, teacher, and lecturer. The article came with an eye-grabbing sub-header,
“Nearly half of Americans would have trouble finding $400 to pay for an emergency. I’m one of them.”
That stat may ring familiar, as I highlighted it last year in an ode to the importance of an emergency savings fund.
As I read Mr. Gabler’s personal account I found myself having very mixed feelings and felt compelled to critique the article here.
Mr Gabler is clearly a husband and father that wants the best for his family, which is admirable. But, therein lies the rub. What Mr. Gabler has determined is best for his family sounds like a life-long quest to “keep up with Joneses”. His family’s financial blunders include the following (among others):
- Advanced degrees in film and culture.
- Choosing to be a writer (a job with very inconsistent income) and live in New York City – one of the highest cost of living cities in the nation.
- Buying a house in the Hamptons (smh).
- Refusing to lower the price on a house and pay two mortgages at the same time.
- Racking up credit card and other significant debt.
- Poor tax planning with big book advances and no tax-sheltered retirement contributions.
- Mortgaging his 401K for his daughter’s wedding (I know the average wedding cost is ridiculous, but WTF?).
- His wife quitting her job to stay at home (and never going back to work, at his request, even when the kids moved on).
- Insisting his children go to the best private schools and then two of the most expensive out-of-state universities in the country (in Stanford and Emory), and then relying on his parents to pay their tuition.
Any one of those decisions alone should require significant cutbacks in other areas, but that didn’t happen. Financially speaking, life should be a series of OR choices. Where things get dangerous financially is when you look at it as a series of AND additions. Mr. Gabler is an AND man.
I won’t fault the Gablers for having 2 children in the first place, but that was also a choice that requires significant change in spending habits.
Mr. Gabler talks about some of the sacrifices he’s made in recent years – no more credit cards, very sparse dining out, driving a 1997 Toyota Avalon with 160,000 miles on it, etc. – but sacrificing on the small stuff while consistently royally f’ing up the huge stuff just doesn’t cut it. He does publicly own up to his family’s mistakes, but claims that he didn’t know any better and just expected his income would grow to levels that would take care of everything. It hasn’t (note: data shows that income doesn’t grow after age 35). He also tries to deflect a lot of the blame to the economy and social norms:
“Many middle-class wage earners are victims of the economy, and, perhaps, of that great, glowing, irresistible American promise that has been drummed into our heads since birth: Just work hard and you can have it all.”
I do believe that the middle class is suffering (mostly due to macroeconomic trends and corporate practices), but Mr. Gabler’s personal account mostly serves as an account of what happens when there is a complete absence of personal responsibility and an entitled attitude that you can (and should) be able to have it all. Mr. Gabler may have made a middle class income, but in every possible way tried to live a financially elite lifestyle. He’s not alone. This is what happens when people blindly work their ass off for income, but then don’t invest in personal finance at all, and exercise relentless self-entitlement. With the Gablers, it absolutely boggles my mind that two very intelligent and well educated individuals (now in their mid 60’s) kept repeating these huge financial blunders and then claimed to not know any better.
You (the reader), on the other hand, can no longer claim the same ignorance. ;-)
You had me at “life is about choosing ors, not ands.” Loved that bit. Plus the victim mentality of Gabler is sickening…more people need to read this article instead of his😀
“I won’t fault the Gablers for having 2 children in the first place, but that was also a choice that requires significant change in spending habits.” I’d love to see an article from you about more of this. To have children at all or to have more children are very much (or should be) financial issues, and very few couples seem to take into account how they’ll actually pay for kids. It’s the “another potato in the pot” mentality.
Yes, I would love to read GE Miller’s thoughts on the economics of having children in America. I live in Washington, DC where the average annual cost of daycare is over $30,000. My partner and I want kids, but we don’t know how we’ll afford them unless we move away from DC, a city that has great jobs and opportunity for us. By any standard, our income is comfortable, (>$100k combined) but we don’t feel financially ready for a child at an age (29 and 30) that many of our friends are having children.
I come from a different culture where the Jones’s were not as apparent and the class system a little less egregious. I still pinch myself when I watch my US raised friends spend. The pinch is a reminder that just because we’ve two kids, doesn’t mean we “need” to have a mini-van. Sure, it would be easier and I would love one but fiancially it wouldn’t be prudent. Same for houses, vacations, clothes, toys, both adult and kiddie. Children are not the burden unless you are either unlucky, or uncreative. My wife is a Unitedstatian and I have to tread carefully around these topics. She wants to spend, she wants to take that bonus and put it towards replacing a car that is already paid for, works great, has good mileage, but is 10 years old and climbing into the 150K mark. My background, the skills passed to me by my father and learning about how to set life goals, one of them being financial, pushes back and puts the money against debt, against a mortgage, into investment. Not because I don’t think that today is not worth living, but because I want to OPTIMISE the tender towards all the goals, not just the immediate ones.
Websites like this support me and actually help to keep my mind on the goal, my hand on my bank account and a reference to help use in reasoned debate over how our income should be leveraged.
thanks G.E. Miller and fellow contributors.
Life is about choices. I grew up poor, and thus I have a hard time finding empathy for people who complain they can’t retire but earned good money yet spent all their money. I know all about going without and choosing to do certain things. Nothing was handed to me, and I’ve learned so much from that experience. There is a difference between wants and needs. People need to realize this difference.
Firstly, I agree with your summary. It seems as though Mr. Gabled is trying to reason his way out of an (in his case) inexcusable thing; lack of personal finance planning. But I do think it is unfair to fault him for living in the hamptons. I’m from Long Island- you cannot find a cheaper cost of living around NYC. You can fault him for not wanting to move to the middle of Ohio if you want, but please don’t think of the hamptons as being only filled with the rich and famous. A lot of people that live out there do so and commute a ridiculous distance into the city because it is all they can afford.
FYI — we moved to Ohio (my spouse is from NY) and never looked back!
There is also a FatWallet thread about the article at https://www.fatwallet.com/forums/finance/1493582/
if you want to read more comments.
I think this blog is spot on. Excluding the people who have had catastrophic / hardship events through no fault of their own, there are people who live re-actively and don’t make thoughtful choices.
What alarmed me is how he kept silent even with his own wife — item #8. I don’t understand why his wife didn’t re-enter the work force even if it meant some short-term sacrifices to re-earn a living. I had to retrench my career when we had to move; I had to work hard but did it even with a young family.
I think that this is a wake-up call for people to make time to learn personal finance management and get whatever help they need to get there. Secondly to homemakers– make sure you keep a career in your back pocket for emergencies.
I hope people can learn from his experiences and get their act together before it is too late!
Beautiful rebuttal to a crazy article.
I know people living paycheck to paycheck because they more or less have to (though they could get better jobs I guess).
Not because they are financing over $400K in education / weddings.
Really bothers me that stuff like this blows up but you and MMM don’t.