Our burdensome dwellings and vehicles

Elizabeth Warren wrote a book called The Two Income Trap.  I have to confess that while I have listened to Elizabeth Warren lecture, I have never read the book.  But since I have listened to the lectures, I can bet I know what the book is about.  It is about couples who buy into a house that they can afford with their two incomes but lacking either one or the other income, they can't make the payments.  It is a trap.  The odds of one of two losing a job, getting sick so that he/she can't work, dying or otherwise being incapable of earning a paycheck is much higher than the odds of a single earner doing the same.  In a single wage earner's household, if the wage earner cannot bring home a paycheck the other can go out and find work to keep the house going.  If one of the two wage earners loses a job, there is no plan B. 

Today, we make the situation worse.  The two earner family is shoehorned into a house using teaser rates, negative amortization loans, loans of 110% of the home's value, all with the promise that rates won't rise until later when they can either sell the house, or being such wonderful people will have risen in income to where they can afford the house at the higher market rate.  Hey, bankruptcies happen.  But listening to Elizabeth Warren's lectures, they happen because we move into housing that we really can't afford.  And the system allows us to do so.  It all boils down to rule 4.  Burdens and debt in particular ruin economies.  Couples all over the nation are learning the hard way, watching their home ruin their personal economies. 

Unfortunately, it seldom stops there.  I have seen people who are shoehorned into these homes that are realistically beyond their means go out and buy the car or the truck that they feel fits their personality.  The truck bed may be immaculate without a mark that indicates it has ever carried a load and none of the passenger seats in the SUV may have been sat in, but this vehicle is what they are and it says it.  And just like their home, it is more than they can afford and more than they need.

It happens to couples making $50,000 a year and it happens to couples making $200,000 a year.  There has to be a gaping hole in the American education.

The Economic Rules


These are economic rules that apply to the everyday.  There are others and as they are needed, I will add them to the list.
1. A dollar spent is a dollar taxed
2. To consume you must produce
3. The law of supply and demand still applies even if you are the government
4. Education, infrastructure, production, efficiency, trust raise the economy. Burdens such as commitments, promises, debt, crime, security issues and overhead lower the economy
5. Savings takes money from the now and moves it into the future. Borrowing takes money from the future and moves it into the now.