You might recall Neal Gabler from when he replaced Roger Ebert on PBS’s Sneak Previews program when Siskel and Ebert left PBS. He’s a well-known writer, published in various prestigious newspapers and magazines.
Recently, Mr. Gabler garnered a certain amount of attention by confessing in an article for Atlantic that he was living hand to mouth:
Since 2013, the federal reserve board has conducted a survey to â€œmonitor the financial and economic status of American consumers.â€ Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. 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.
Why can so few people seem to save any money? The number of people scraping along from paycheck to paycheck is astonishing; surveys routinely find that somewhere between a third and half of all Americans donâ€™t have the savings to fund ordinary emergencies — a moderately large repair, a month with no income. These are not the kind of astonishing runs of bad luck that no one could realistically expect to cover, like a $100,000 medical bill, or a multi-year illness that makes it impossible to work. Theyâ€™re just the normal vicissitudes of regular life, and somehow, Americans are unprepared.
These are the questions that Neal Gabler tackles in an article for the Atlantic. The answer he arrives at boils down to: we need to keep up with the Joneses, only our incomes arenâ€™t growing, or even stable in the face of inflation, and meanwhile, access to credit enables us to live, for a while, as if that last part weren’t true. The result is a recipe for disaster. Or at least, for Neal Gablerâ€™s disaster.
Most of the responses have been sympathetic. Many have praised his bravery for stepping forward.
I’m understanding but not particularly sympathetic. As a friend of mine’s mother used to say “You lay in your bed—now make it!”
In the article he acknowledged the choices that he made which—at least from his viewpoint—inevitably led to the situation in which he found himself. Why does he live in New York? (He’s a native Chicagoan.) Why is he a writer? Why did he send his daughters to expensive private universities (Stanford and Emory)? One daughter is in medical school. Another is a clinical social worker. In both of those cases they could well have gone to a school in their state’s public university system and gotten into medical school or graduate school.
I think it’s pretty obvious that he’s hunting for status.
Maybe it takes some courage to reveal that you’ve been living a lie. You know what takes real courage? Living within your means no matter what the neighbors think.
When I was a kid my family followed some simple rules. Live below your means. Don’t pay interest if you can possibly help it. In my second job in which I had to travel a great deal, when I needed a credit card for travel I went to our banker, an old family friend. She was somewhat surprised at my request, blurting out “Your family is a non-credit type family!” A week later I had an American Express Gold Card. Things were different 40 years ago.
But I don’t think that the rules of saving are that much different.
What I think has happened in the United States is that wages haven’t kept up with expenses particularly educational expenses. That blow was cushioned somewhat by the feeling of increasing wealth that people had as their homes gained rapidly in value, especially during the Aughts. It’s not something we experienced here in Chicago but we read the newspapers here in flyover country, too. People learned to extract the unearned equity from their homes.
And they got used to living beyond their means.
In Mr. Gabler’s particular case I also wonder whether he has had the experience of being truly poor?
Meanwhile, I think that Tyler Cowen put it well: we’re not as rich as we thought we were. We need to get our heads around that and start living within our means.