Earlier this month, I read two articles that were somewhat eye-opening to me about various Americans’ views and actions on income, spending, and saving.

One, which got a lot of play, was Neil Gabler’s piece in The Atlantic, “The Secret Shame of Middle-Class Americans,” about how badly he has done financially despite a relatively healthy income: he never gives the income number and so it’s hard to say. The other is a set of interviews by David Walters in Esquire. Walters, in “4 Men with 4 Very Different Incomes Open Up About the Lives They Can Afford,” interviews 4 people whose annual incomes, respectively, are $1 million, $250K, $53K, and about $20K. He asks about their incomes, spending, etc.

One surprising thing in the Gabler piece was this:

the study by Lusardi, Tufano, and Schneider found that nearly one-quarter of households making $100,000 to $150,000 a year claim not to be able to raise $2,000 in a month.

Who knows if it’s true? But even the reasonable probability that it might be true was surprising.

By the way, if not for the credit line on my house, there would be some months in the year–probably at least 6–in which I could not raise $2,000 quickly. I would have to not pay off one or two credit cards. So you could argue that I’m one of those people who lives paycheck to paycheck.

Although that’s literally true, it misses the fact that my wife and I save about $30K or so a year and have done so in most years since about 1995, except when my daughter was in college. (Those years, we saved “only” about $15K.) We do it, though, in 403(b)s, SEP-IRAs, and Roth IRAs. In other words, it’s all tax-sheltered. That’s why we live paycheck to paycheck.

But that’s not Neal Gabler’s problem. He really did make bad decision after bad decision. Refreshingly, he’s not asking for sympathy or blaming anyone else. I did get the impression, though, that he still doesn’t realize just how bad some of his decisions were.

Try this from Gabler:

And then, on top of it all, came the biggest shock, though one not unanticipated: college. Because I made too much money for the girls to get more than meager scholarships, but too little money to afford to pay for their educations in full, and because–another choice–we believed they had earned the right to attend good universities, universities of their choice, we found ourselves in a financial vortex. (I am not saying that universities are extortionists, but … universities are extortionists. One daughter’s college told me that because I could pay my mortgage, I could afford her tuition.) In the end, my parents wound up covering most of the cost of the girls’ educations. We couldn’t have done it any other way. Although I don’t have any regrets about that choice–one daughter went to Stanford, was a Rhodes Scholar, and is now at Harvard Medical School; the other went to Emory, joined WorldTeach and then AmeriCorps, got a master’s degree from the University of Texas, and became a licensed clinical social worker specializing in traumatized children–paying that tariff meant there would be no inheritance when my parents passed on. It meant that we had depleted not only our own small savings, but my parents’ as well.

The most telling part of that paragraph? The term “earned the right.” Really? Just because your daughters were your daughters and, presumably, had done well in high school, they earned the right to go to Stanford and Emory?

Megan McArdle, in an excellent piece on Gabler’s piece, responds:

Untold generations of human beings have lived to adulthood without the blessings of a brand-new minivan, a travel soccer trophy or a Harvard education. Modern children raised without them will probably also be fine.

Here’s another stunning Gabler decision:

We have no retirement savings, because we emptied a small 401(k) to pay for our younger daughter’s wedding.


Now to the Walters interviews. First, I think Walters should have probed a little more. Maybe he did but didn’t report it.

But consider this question he asked: “Looking at your current ca­reer prospects, how much money do you think you’ll be earning in ten years’ time?”

Not one of the 4 men interviewed answered it. The guy making $1 million a year stated a net worth goal but didn’t answer what he thought his income would be. The guy making $250K a year stated an income goal but didn’t say that he thought that’s what his income would be. The guy making $20K also stated an income goal, an ambitious one that made me wonder.

At least they stated a goal.

The guy making $53K a year stated a wish.

The overall impression I get from the Gabler piece and parts of the Walters interviews is that many people just aren’t willing to think clearly about their financial lives. I’m blessed because I had so little growing up that I learned to appreciate ads on TV for various things for the dreams I could have about them: it didn’t even occur to me to buy them. I couldn’t. That carried over to my adulthood. I love going to car dealers and looking at the cars. I buy a car once a decade. My motto has been to live below my means and invest in index funds. It has worked.