The Parent Trap

Want to be "middle class"? Don't have kids.

Lately my dearest friend has been wrestling with whether to have kids. Wanting like crazy for her to have everything life has to offer, I've tried my best to talk her through all the usual fears. That she might not be a great mom. That it might wreck her relationship with the prospective daddy. That she'll never again possess the mental stillness to write.

"I dunno," she said the last time we had The Exchange, "I think the truth might be that we just can't afford it, financially."

I'm not positive, but I think I mumbled something about not letting money dictate such a big choice, and how there were all kinds of ways to work things out. Whatever the precise soporific, I went home feeling like a big fat fraud. The truth is, they probably can't afford it. Not really, not unless they're willing to live like misers, pray that nothing goes wrong, and jettison the idea of ever being able to retire.

I can't talk my friend out of this particular fear. My household income is a lot higher than hers, yet I complain constantly about the costs of raising two kids. I used to feel guilty about the gulf between our incomes, but these days that shame seems naive. Instead, when we set aside our discomfort about talking about money, it becomes clear that the real problem is that both our perches in the middle class are increasingly insecure.

She and her sweetie earn almost exactly the annual income recent studies say it costs to meet the basic needs of a family of four with two working parents in Hennepin County: $51,684. That amount is far more than the federal poverty level of $18,400, but still provides a pretty meager living, according to the St. Paul-based nonprofit JOBS NOW Coalition. There'd be no room in my friend's budget for savings or debt payments, a down payment on a house, vacations, big-ticket purchases like a washer or a refrigerator, or an evening out.

And it's not just her, or folks at her income level. Given the skyrocketing cost of childcare, housing, and health insurance, families making far, far more than my friend are just one layoff or major illness away from bankruptcy court. In fact, having a child is the single biggest predictor of financial collapse, according to a recently published book, The Two-Income Trap: Why Middle Class Mothers & Fathers Are Going Broke. If my friend doesn't have kids, she reduces her chances of going bankrupt by 65 percent. Among the other statistics compiled by the book's authors, bankruptcy expert and Harvard law professor Elizabeth Warren and her daughter, Amelia Warren Tyagi: The parents of more than 1.8 million children will file for bankruptcy this year. That's more kids than will experience a parent's divorce.

My friend and I sat back down the other night and revisited our math and our apparently prosaic notions about having it all. In the end, all we came up with is a question: Since when is a kid a luxury item?

 

As for much of the country, 2001 was a pivotal year for my household. Having budgeted and saved and refinanced our way comfortably into the black, my husband and I were expecting a second child. And then September 11 occurred, and faster than you can say "shot to hell," corporate America retrenched for a recession. Both our employers froze wages, and my husband survived two rounds of layoffs. His company stopped contributing to 401Ks and announced that benefits would no longer be offered to employees' spouses if they were eligible for health care elsewhere. A memo followed a couple of weeks later announcing that as a consolation prize, the day after Thanksgiving was becoming a paid holiday.

With the recession obliterating jobs left and right, kvetching felt so unseemly. There was no getting around it, though--on New Year's Day, we'd be more than $700 a month poorer. Bye-bye budget line for daycare expense #2. We went back to the drawing board, rationalizing decisions that would send even a novice financial planner into an incoherent spasm of fear. We found the money.

But then, a few weeks ago, I sat down to look over some paperwork my husband brought home. It was open enrollment time for his company's health care program and we needed to figure out whom we wanted to insure him next year. We did a little math, only to discover that this year our family of four is paying almost as much for health care as we are for our mortgage--not counting the cost of prescription medications. If rates rise 25 percent next year as projected, we'll pay more for health care than for our house: upwards of $825 a month between premiums and co-pays.

Add to that a similar amount for our mortgage, almost $1,800 a month for daycare, plus other unavoidable, fixed expenses like taxes, utilities, homeowners' and car insurance, and, well, you can see where this is going. Before we can even contemplate such niceties as food, we need to bring in more than $60,000 a year. (We pay more for childcare and for health insurance than the JOBS NOW's average family, but less for housing.)

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