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> but two-earner households are often also more economically fragile Can you elaborate on that? It doesn't make sense to me. When we were on a single income in

by cesarbs 11y ago

> but two-earner households are often also more economically fragile Can you elaborate on that? It doesn't make sense to me. When we were on a single income in my family, it felt a lot more fragile than now that we have two incomes.

bsder 11y ago
Most people on two incomes didn't decide to do so voluntarily. They did so because they couldn't afford not to. So, instead of having a household where you have one parent working to support the family and another parent who can occasionally add income but doesn't have to, now you have lots of people where they are fully tapped out and both parents are working full time.
cbo100 11y ago
Potentially a two income household allows it's expenses to grow to take advantage of both incomes to some extent. As a couple with two high incomes you actually have to try really hard not to let expenses get to the point where you can't live without both incomes. So in effect you now have 1 big income that you rely on. In terms of the fragility, there is more chance of losing 1 out of 2 jobs (i.e. 50% of the income) than there is of losing 1 out of 1 jobs (i.e. 100% of the income). (I hope I explained this right - but it's how my thinking goes).
such_a_casual 11y ago
It's explained in the book I mentioned. You would also need to educate yourself on personal finance by reading some other books to get a more holistic picture (The Millionaire Next Door is a good place to start). There's three things you need to understand about personal finance: 1. The first is that shit happens and most people don't plan for it (because they haven't been educated on personal finance). Most resources suggest that you keep an emergency fund of 6-12 months of living expenses saved up for when shit happens. We know that most people do not have this. I'm not even going to bother providing a source because there are so many sources on how Americans don't save. 2. The number one expense for any given household is going to be housing (whether owned or rented). 3. While you can cutback on many things, you cannot cutback on a mortgage. So if there are permanent setbacks to your finances: someone loses their job and gets another one that pays less, someone gets hurt and can't work for a while or ends up on disability, someone has to stay home to take care of an unhealthy relative, etc, then you can be pretty much shit out of luck unless you're house has equity on it and you can sell and downsize (although most people will just take a loan out against their equity lol). So these are the characters of our stage. If you get a mortgage based on 1 person's income and something happens, there is another person there to step up. This provides a powerful safety net for the family. If you get a mortgage based on both people's incomes, you are putting yourself at greater risk because if something were to happen to either person you would not be able to afford to keep your 15-30 year agreement. And the cost of getting out of that agreement is enormous (as we saw with the recent housing crash). I encourage you to read more on personal finance. It's incredibly fascinating.
- serge2k 11y ago
  You realize the reason people move to 2 incomes is because they can't afford to live off one? You realize that a lot of people don't have savings because they live paycheck to paycheck trying to survive?
  - such_a_casual 11y ago
    Both of your questions would be answered by reading the aforementioned books and by learning more about personal finance. Also: https://www.reddit.com/r/personalfinance https://www.reddit.com/r/personalfinance
    - serge2k 11y ago
      So no, and you will just continue with the condescending assumption that anyone questioning you doesn't know anything?
      - such_a_casual 11y ago
        I'm not sure how you would like me to answer false assertions? Especially since my post is clearly about people with a mortgage (as is the book I recommended). The best I can do is point you in the right direction to properly educate yourself.
        nommm-nommm 11y ago
        Personal finance books are often a lot of garbage with a little bit of wisdom thrown in that requires effort to extract. http://badmoneyadvice.com/2009/03/whats-wrong-with-the-millionaire-next-door.html http://badmoneyadvice.com/2009/03/whats-wrong-with-the-milli...
- rosege 11y ago
  For point 3 you might also be able to change your loan to interest only and thereby reduce the amount required.
nommm-nommm 11y ago
Two income households are usually households that depend on two incomes. In other words instead of basing your standard of living on one income you base your standard of living on two. So both incomes are required to pay your rent/mortgage/water bill/insurance/car payments/etc. It is more fragile because 1) it encourages living well beyond your means and 2) the odds of job loss/income reduction is now doubled and the stakes are higher as the second partner can't get a job to pick of the slack in the event of job loss. It goes back to the old observation that people living paycheck to paycheck on $30,000 tend to also live paycheck to paycheck if their income increases to $60,000. So if there is a hypothetical one income family making $40,000/year is unable to pay bills instead of reducing spending (who wants to do that?) the other partner starts working. Their lifestyle tends to rise with income and now they are just getting by with $60,000/year and put themselves in a more fragile place. This is how people tend to behave. Instead they could have reigned in on their expenses a bit and perhaps taken on a second income to save for a rainy day. The way to do two incomes (if at all possible) is to base your standard of living on just one. Use the other income to invest, save, or fuck around (travel, dinner, etc.). This type of two income house is much less fragile as savings and investments can accumulate, emergencies are easily taken care of, and spending can be reeled in in case of financial heartship. Either way with two incomes savings should be a very high priority to reduce fragility. So two income households certainly can be less fragile but often aren't in practice.
- cesarbs 11y ago
  Thanks, I guess I should have deduced that myself. In my case both my wife and I are software engineers making really good salaries, so we definitely don't need both of us to be working. We don't even do it on purpose but looking at our lifestyle it is definitely on a level that could be sustained with only one of our salaries :)
  - nommm-nommm 11y ago
    Its very easy for many families to increase spending to match income without realizing it. Suddenly every expense is a "need."

by cesarbs 11y ago

bsder 11y ago

Most people on two incomes didn't decide to do so voluntarily. They did so because they couldn't afford not to. So, instead of having a household where you have one parent working to support the family and another parent who can occasionally add income but doesn't have to, now you have lots of people where they are fully tapped out and both parents are working full time.

cbo100 11y ago

Potentially a two income household allows it's expenses to grow to take advantage of both incomes to some extent. As a couple with two high incomes you actually have to try really hard not to let expenses get to the point where you can't live without both incomes. So in effect you now have 1 big income that you rely on. In terms of the fragility, there is more chance of losing 1 out of 2 jobs (i.e. 50% of the income) than there is of losing 1 out of 1 jobs (i.e. 100% of the income). (I hope I explained this right - but it's how my thinking goes).

such_a_casual 11y ago

It's explained in the book I mentioned. You would also need to educate yourself on personal finance by reading some other books to get a more holistic picture (The Millionaire Next Door is a good place to start). There's three things you need to understand about personal finance: 1. The first is that shit happens and most people don't plan for it (because they haven't been educated on personal finance). Most resources suggest that you keep an emergency fund of 6-12 months of living expenses saved up for when shit happens. We know that most people do not have this. I'm not even going to bother providing a source because there are so many sources on how Americans don't save. 2. The number one expense for any given household is going to be housing (whether owned or rented). 3. While you can cutback on many things, you cannot cutback on a mortgage. So if there are permanent setbacks to your finances: someone loses their job and gets another one that pays less, someone gets hurt and can't work for a while or ends up on disability, someone has to stay home to take care of an unhealthy relative, etc, then you can be pretty much shit out of luck unless you're house has equity on it and you can sell and downsize (although most people will just take a loan out against their equity lol). So these are the characters of our stage. If you get a mortgage based on 1 person's income and something happens, there is another person there to step up. This provides a powerful safety net for the family. If you get a mortgage based on both people's incomes, you are putting yourself at greater risk because if something were to happen to either person you would not be able to afford to keep your 15-30 year agreement. And the cost of getting out of that agreement is enormous (as we saw with the recent housing crash). I encourage you to read more on personal finance. It's incredibly fascinating.

serge2k 11y ago
You realize the reason people move to 2 incomes is because they can't afford to live off one? You realize that a lot of people don't have savings because they live paycheck to paycheck trying to survive?
- such_a_casual 11y ago
  Both of your questions would be answered by reading the aforementioned books and by learning more about personal finance. Also: https://www.reddit.com/r/personalfinance https://www.reddit.com/r/personalfinance
  - serge2k 11y ago
    So no, and you will just continue with the condescending assumption that anyone questioning you doesn't know anything?
    - such_a_casual 11y ago
      I'm not sure how you would like me to answer false assertions? Especially since my post is clearly about people with a mortgage (as is the book I recommended). The best I can do is point you in the right direction to properly educate yourself.
      - nommm-nommm 11y ago
        Personal finance books are often a lot of garbage with a little bit of wisdom thrown in that requires effort to extract. http://badmoneyadvice.com/2009/03/whats-wrong-with-the-millionaire-next-door.html http://badmoneyadvice.com/2009/03/whats-wrong-with-the-milli...
rosege 11y ago
For point 3 you might also be able to change your loan to interest only and thereby reduce the amount required.

nommm-nommm 11y ago

Two income households are usually households that depend on two incomes. In other words instead of basing your standard of living on one income you base your standard of living on two. So both incomes are required to pay your rent/mortgage/water bill/insurance/car payments/etc. It is more fragile because 1) it encourages living well beyond your means and 2) the odds of job loss/income reduction is now doubled and the stakes are higher as the second partner can't get a job to pick of the slack in the event of job loss. It goes back to the old observation that people living paycheck to paycheck on $30,000 tend to also live paycheck to paycheck if their income increases to $60,000. So if there is a hypothetical one income family making $40,000/year is unable to pay bills instead of reducing spending (who wants to do that?) the other partner starts working. Their lifestyle tends to rise with income and now they are just getting by with $60,000/year and put themselves in a more fragile place. This is how people tend to behave. Instead they could have reigned in on their expenses a bit and perhaps taken on a second income to save for a rainy day. The way to do two incomes (if at all possible) is to base your standard of living on just one. Use the other income to invest, save, or fuck around (travel, dinner, etc.). This type of two income house is much less fragile as savings and investments can accumulate, emergencies are easily taken care of, and spending can be reeled in in case of financial heartship. Either way with two incomes savings should be a very high priority to reduce fragility. So two income households certainly can be less fragile but often aren't in practice.

cesarbs 11y ago
Thanks, I guess I should have deduced that myself. In my case both my wife and I are software engineers making really good salaries, so we definitely don't need both of us to be working. We don't even do it on purpose but looking at our lifestyle it is definitely on a level that could be sustained with only one of our salaries :)
- nommm-nommm 11y ago
  Its very easy for many families to increase spending to match income without realizing it. Suddenly every expense is a "need."