Tuesday, July 19, 2005

Making "needed" or "wanted" Ends Meet?: Looking at the WSJ story on family income

Today's WSJ has a story on how some families are finding it hard to stay financially "afloat". They profile a two income, 2 parent family (Annual income of 63.2k, U.S. Median is 62.4k), which just changed from 1.5 income, 2 parents (Annual income of 60k), in order to cope with rising expenses. Without judging these folks; let's look at some of the choices they have made and see if they seem reasonable for others to follow and/or avoid.

Family Facts:

1. Husband works for Comcast, earns $19.10 an hour. Is unionized, and hasn't had a pay raise in three years due to contract dispute between Union and Comcast.
2. Wife works as a secretary for an eye doctor at $10/hour. Was working 24 hours a week, just moved to 38 hours a week. Only benefit is free in-house vision care "insurance".
3. Two teenage boys.

Ok, so now onto the trade offs. + or - given, with commentary after.

A. Mother has turned to coupon clipping. +
B. Mother balances savings from coupons & driving shorter distances vs. longer drive & gas milage of driving to nearest Walmart. +
C. Family sold its camping trailer and currently uses a tent. +, although what were they doing with a camping trailer to begin with?
D. Father remains unionized. If he weren't unionized, he would have received wage increase averaging between 6-12% over the last three years. -, albeit he might not have a choice as to whether to leave the union or not. Some states effectively force one to stay in a union; other states allow you to opt out. If I remember correctly, PA (where these folks live) is a Union state and has no right to work laws.
E. Family raided their 401(k) plan for $5k to pay bills. Generally, this a big -. Individuall cases vary, but this will really hurt their retirement.
F. Mother urges family members to take shorter showers to save on water bill. +, although the water bill really isn't that much, I guess every penny counts. I like the conservation/environmentalism though.
G. Family has started a garden in their backyard to cut on grocery expenses. +++. Hm...this doesn't sound like familiar advice, does it?
H. Family tries to drive vehicles less; and sold 1 of their two vehicles. +.
I. Family carries 6k in credit card debt. -.

Sum: The story talks about how inflation hurts those htat have a more or less "fixed" income. With Gasone prices up 55%, bread 10%, meat 18%, milk 14% and electricity 11%...static wages are problematic.

Is there a solution for this family? What say ye? What would/wouldn't you do in this situation?

2 Comments:

Blogger Clark Goble said...

I'd be looking for different jobs. Come on, it might take a while, but they aren't *that* hard to find.

11:58 AM  
Anonymous Anonymous said...

Clark: interesting point. However, is that realistic? Minority "specialists" say that many blacks, hispanics, etc. have stayed poor not only because they can't get an education, but because they can't even "imagine" getting a better job or doing other than what they are currently doing.

While I don't buy this...I think it might be more difficult that we might imagine for folks to change their work in order to advance. And that isn't even discussing risk acceptance vs. avoidance.

lyle

8:19 PM  

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