Angry New Yorker

Sunday, September 28, 2003
It's difficult to know when things have tipped towards the long slide or conversely to sunny times of improvement. After all, there never was a golden age. There's only myth and nostalgia, and frankly, despite the pressures, cloudy futures, and knowledge that one can never own in the NYC the house one's parents did only a generation or two ago (without a massive amount of luck and some major financial aid), it's easy to lose sight of how far New York has come in two hundred years. Granted, NYC of 2003 is NOT NYC of 1954, when my parents came here from Europe, but neither is it the NYC of 1975. Still, when everything is weighed and the numbers crunched, I keep coming up with the distinct bottomline that a careful, planned and strategic retreat from New York to a handful of the other 50 states is perhaps the wisest course of action. But hope springs eternal.


September 28, 2003 -- THE picture-perfect family - where both parents pursue careers and earn good money - is a trap that's sending thousands of big-city couples toward financial ruin, a new book says.

They're making more money than their parents did, but are having a much harder time paying for what experts call the single biggest "luxury item" of the 21st century: children.

Today's two-income families earn 75 percent more that their single-income counterparts of a generation ago - but have less disposable income, according to "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke." [See MSNBC book review here.]

Co-authors Elizabeth Warren, a Harvard Law School professor specializing in bankruptcy law, and daughter Amelia Warren Tyagi, a former staffer with consulting powerhouse McKinsey & Company, derived that alarming statistic from three decades of stats from the U.S. Census Bureau and Bureau of Labor Statistics.

Their research also shows that families with kids are now twice as likely to file for bankruptcy as families with no kids.

If this trend continues, the authors say, one out of every seven couples with children will go bankrupt by the end of the decade.

Even many dual-income professional couples are just treading water.

Here in the Big Apple, where the cost of living is skyscraper-high, it's enough to make an otherwise well-off family go to extreme lengths to make ends meet.

Shirley Zaragoza is a business professor at City University of New York. Her husband, Gregory, is a lawyer and part-time actor who recently appeared in the Broadway revival of "Annie Get Your Gun."

Together, they earn more than $100,000 a year, an income that by average American standards should comfortably support a family of five.

But they have sacrificed dearly in order to raise their three kids in Manhattan - where the little ones attend public, not private schools.

The Zaragozas live in a one-room, 450-square-foot apartment in Greenwich Village.

They own the place, though they still carry a mortgage of about $1,000 a month. Tack onto that $1,000 more for maintenance, parking and other household expenses.

Then there's $3,000 a month to feed and clothe the kids, while covering a host of extracurricular actives like piano lessons, soccer and gymnastics.

IN ALL, Zaragoza estimates that she and her husband spend about 60 percent of their net income raising their children, who range from 7 to 13 years old.

"If you're not wealthy, your needs have to be pretty simple to make it work in this city," she told The Post.

Zaragoza said that, in addition to living together "in one tiny room," her family has gotten by not taking big vacations or taking out big loans.

Colleen Marsh has had no such luck.

Despite her annual household income of nearly $80,000 - about 90 percent above the average for New York City families - she feels impoverished.

After the credit-card debt, student loans, rent and private-school tuition, there's barely enough left to buy groceries.

"Right now I think we're poor," said Marsh, who is married with two children and lives in The Bronx. "We go to work every day. It's like, 'What are we working for?' "

The Marshes' dilemma is typical of the financial meltdown that's plaguing couples across the U.S.

Economists call it overconsumption. Elizabeth Warren calls it a trap.

"Everyone thought that a second paycheck would make their families more financially secure," Warren told The Post. "But that's not how things worked out."

Instead of padding their savings accounts, she writes, two-income families are finding their salaries absorbed by mortgages or rents for homes in good school districts.

Toss in the cost of daycare, preschool, a second car and health insurance - to say nothing of a high tax bracket - and the dollar quickly loses its elasticity.

Writer Ellen Freilich says she and husband Mark Packman, a music teacher at Montclair State University, have sacrificed home ownership in order to send their sons to school in Manhattan.

Once again, that's public school.

The couple lives in a two-bedroom, rent-stabilized apartment in Washington Heights and together earns about $100,000 a year. Half of that goes to raising 8-year-old Ben and 11-year-old Lev.

"We'd love the boys to have their own rooms, but buying a three-bedroom place would cost half a million dollars," Freilich said. "Even then, the monthly maintenance would run close to our current rent."

SHE also noted that there are a number of hidden costs associated with her sons' schools - like financial contributions and book purchases - that can exceed $1,000 per child per year.

Then there are swimming lessons, baseball camp, tutors and Hebrew school, which gobble up more than $10,000 a year.

"Working costs money because you have less time around the house," Freilich said.

"My mother darned socks. I throw them out and replace them."

Warren notes that this generation has had a 600 percent rise in consumer debt and a 400 percent increase in bankruptcies over the last generation.

The troubles usually start after someone loses a job, gets sick or divorces.

Evelyn Parkin, who owns an optometry shop with her husband in the Prospect Heights section of Brooklyn, nearly met such a fate after her son, the oldest of three kids, was diagnosed with a brain tumor.

Miraculously, her boy made a full recovery.

The experience, however, was frightening enough to make the couple - who own their house and earn about $85,000 a year - scratch their plans for a fourth child.

Phil Burnett, who lives in Union Square, is more optimistic.

"If my wife got pregnant tomorrow, we'd find a way to make it work," he told The Post.

This at a time when he has no Internet access in his rent-stabilized apartment because both family PCs recently died.

Burnett, a sound engineer, and his wife, Melanie, a sales associate at Wachovia Securities, have two sons.

LIKE the Zaragozas, the Burnetts - whose kids chew up about 45 percent of the household income - scrimp by taking shorter, cheaper vacations.

"We used to fly to places like California or Spain. Now we drive to Sesame Place [in Langhorne, Pa.], just for the weekend. We can't afford to take any days off from work," Burnett said.

Marsh says she'd rather file for bankruptcy than take her son, Hakeem, 12, out of private school. She is unhappy with the public schools in her neighborhood, and prefers to spend the $450 each month on tuition than pay off her credit card debt.

"I'll do what it takes to get the best education for him," she told The Post.

"The public schools are not meeting the needs for my son. If I have to pay until we move into the right neighborhood, that's what I have to do."

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