Beacon Broadside

Today’s post is from Nan Mooney, author of Not Keeping Up with Our Parents: The Decline of the Professional Middle Class. Mooney’s work has appeared in The Washington Post, Slate, The Daily News, The Daily Telegraph (UK), The Seattle Weekly, Women’s eNews, and various other publications. Her website is www.nanmooney.com.

These days, whether you’re a college student or a retiree, it’s pretty hard not to reside on the edge of a financial panic. After all, if mega-institutions like Lehman Brothers and AIG can’t weather our current financial storm, how is one middle class individual or family, struggling even before the you-know-what hit the fan, supposed to scrape by?

Though you can feel fairly confident that the government won’t be knocking on your door with a $700 billion check anytime soon (that money’s spoken for), as members of today’s struggling middle class it is possible to hang on to some control over our money and our future.

Get a financial education.

Read the interviews with people facing home foreclosure and all too
many of them admit that when they picked up a pen for those mortgage
papers, they had no idea what they were signing. These days, money is
simply too precious not to understand what happens with every penny.
Instead of relying on others to inform us about our financial state, we
need to become personally responsible for educating ourselves. We need
to learn how the mortgage industry and credit card companies truly
work. Ask questions, as many as it takes. Know and understand your
payments. Opt for the simplest, most straightforward financing options
then calculate how long it will take you to pay them off before you
sign on the dotted line.

Don’t just educate yourself. Educate your children. Financial
literacy isn’t more important than social or psychological literacy,
but we can’t afford to ignore it either. As parents and educators, we
can see to it that a high school and college education includes
teaching students about handling their money and instills in them
realistic expectations about the kinds of salaries and lifestyles they
can anticipate.

Don’t let debt, particularly credit card debt, get out of control. 

When money gets tight it’s tempting to pull out your credit card to
cover that gap where our paychecks used to stretch. And to some degree
— if your water heater conks out or your car breaks down — this is
probably unavoidable. But reserve those cards or loans for truly
essential expenses. Total U.S. consumer debt (excluding mortgage debt)
reached $2.55 trillion at the end of 2007, up from $2.42 trillion at
the end of 2006. And as we’ve seen reflected in the financial
powerhouses that used to rule Wall Street, once you get into a hole,
it’s extremely difficult to get out again.

Lower your material expectations.

Know your financial reality, and know the line beyond which you’ll
be in over your head. Having to curtail your expectations doesn’t mean
you’ve failed. It means that economic circumstances beyond your control
have changed and that, until they begin to shift back again, your
material life will reflect those changes. If you haven’t done so
already, now is the time to make a budget and stick to it. It may not
be glamorous, but it’s an essential financial survival skill.

Find your political voice.

This is an election year and the economy is a hot topic. What better
time to make your concerns known? As intelligent, articulate members of
the political system, we are in a position to demand more federal
support for education, housing, child care, health care, and
retirement. We are in a position to say that this is far more than just
a financial issue, it’s a moral issue about the shifting values and
priorities of a country where a staggering number of people cannot
manage to get by.

In America today, it’s not hard to figure out where the money is. It
lies with the top one percent of the population, those making over
$348,000 a year, who now receive their largest share of national income
since 1928. One of the most effective moves we could make would be to
push hard for more progressive tax laws, milking an increased
percentage out of the wealthy so there’s more to go into the
discretionary spending pot. Eliminating just a quarter of the tax
subsidies provided by the current tax code would free up $180 billion a
year that could be directed to improving education, expanding
healthcare, or any of the numerous other areas where middle and low
income families struggle now.    

Most important of all, don’t buy into the "you are what you make" value system.

Begin thinking about what you can do to grow comfortable in your
current financial insecurity, to believe — and pass on that belief —
that identity equals more than money and to stretch and to fill your
life in non-material ways. If you’re to find any financial peace, it’s
essential you truly believe that you, your family and your future are
all worth something more.

 

You might also be interested in Nan Mooney’s previous post on Beacon Broadside about economic inequality, her appearance on NewsHour discussing the financial crisis, and this video of Kai Wright discussing the subprime meltdown’s impact on black America.