[alloysteel]

Something else is at work here. It is like the lottery winners, especially of huge jackpots, going broke within a couple years. The relatively high income that results from both partners working, builds an expectation that the increase in income will continue to rise forever, and obligations are incurred that exceed the growth in net income. Even without income drop, the margin is eaten up, and the working couple is just living in poverty at a higher level.

It is rather like the dieter who has taken out every bit of fat from diet, and still continues to gain weight, because the exercise portion of the regimen was not implemented.

[backhoe]

...like the dieter who has taken out every bit of fat from diet, and still continues to gain weight, because the exercise portion of the regimen was not implemented.

Good analogy- I'll keep that one in mind.

[Cincinatus' Wife]

The relatively high income that results from both partners working, builds an expectation that the increase in income will continue to rise forever, and obligations are incurred that exceed the growth in net income.

In the Sixties, a family with an income of $10,000 was doing well. Now a family with an income of $100,000 is struggling to pay their bills. I have to agree, that not having a good downpayment required on a home is a good source of money problems. Now-a-days new home buyers take out loans to pay in the 20% to avoid mortgage insurance. Without having to put much down they get into bigger homes. Then they have to furish it, landscape it, heat and cool it, pay taxes on it, etc, etc. The sad part is both parents are working their tails off to pay for all this stuff and the kids are raising themselves in this big, empty house.

[tdadams]

You're exactly right. People ratchet up their spending commensurate with their income. When their income takes a hit, they're thrown into crisis.

It needs to be said over and over... live below your means. It brings you a lot more comfort and security than any new car or big screen TV.

[varon]

Even without income drop, the margin is eaten up, and the working couple is just living in poverty at a higher level.

Well stated.

[fortaydoos]

or like an Administration spending half a TRILLION bucks more than it collects in taxes in one year, on the assumption that magical growth will return one day, some day, but never today, to balance the budget?