Financial insecurity is a reality for many people. Various survey questions over the years have tried to gauge its prevalence. The Federal Reserve began asking a question not long ago: how would you find $400 in an emergency?
It turns out that 47 percent of Americans would have to take out a loan or sell something, or else do not think they could find $400 at all. Some of these folks are the long-time destitute, living in poverty, but others appear to have fairly middle class lives. That at least is the story of Neal Gabler, whose much-read cover story for the Atlantic recently on “The Secret Shame of the Middle Class” talked about his own money woes. He confessed that he was one of the 47 percent, and told the saga of how he wound up there.
With any story like this, it is tempting to point out everything the narrator did wrong. Others have already written about certain irksome aspects of this narrative (I love Helaine Olen’s take down of the “sad, broke literary man” genre). Gabler’s daughters went to college courtesy of their grandparents, which meant that “there would be no inheritance when my parents passed on.” Sad, that. He also talks of not paying taxes in full on his book advance because he needed the cash, which is probably the excuse that just about everyone else who does not pay his/her taxes would use too, which is why the IRS takes a dim view of it. A publisher sued him to get an advance back because he did not turn in his manuscript on time. In parentheses, Gabler mentions that “book deadlines are commonly missed and routinely extended,” which may be the case, but why assume that the stipulations of a contract you sign don’t apply to you?
In any case, though, since Gabler and I share a profession, I would hate for any reader to take away the message that there is something in the nature of writing that lends itself to ruin. Even though it is a career with ups and downs, there are ways to increase the odds that you would be able to come up with $400 in a pinch.
Team up. Gabler became the lone paycheck for his family when his wife decided to stay home with their daughters. While I do know several writers — male and female — who are supporting their families on their own, there are upsides to trying to remain a two-income family. You can alternate who takes on speculative work or long-term work vs. steady paychecks. While I recognize that paying for childcare is hard, Gabler writes that his wife was unable to find work again after years out. This long-term cost of staying home is seldom fully built into the equation. Also, since writing is flexible, if one person is a writer it may be easier to be a two-income family than in the world where both parties are in 9-5 jobs with little give.
Done is better than perfect. Unfortunately, Gabler seems to have bought into the either/or fallacy that a book can be done quickly or it can be done well. (Another sneering parenthetical: “I tell the M.F. A. writing students whom I now teach, part-time, that anyone can write a book quickly: Just write a bad book.”) From what I can tell, there are plenty of bad books that took a while to write too! If you write a book every 5-8 years, it will be tough to make the economics work unless those books are by, say, Laura Hillenbrand. For most of us, every 2 years is a better time frame to shoot for. This is just math. If you get a $100,000 advance (which is actually a very good one) but it spreads over 5 years, that is $20,000 a year. Over 2 years it is $50,000 a year, and if it is over 18 months, it is the equivalent of $66,666/year. Very different experiences.
Don’t just write. Gabler mentions teaching part-time, which is good, though it tends to be on the lower-paying end of things people do to supplement writing. Other ideas: building a speaking business or running a small book editing practice. Both have to be developed over time, but the economics can be quite positive.
Get a regular paycheck. No, not a 9-5. I mean that most writers develop what we call “anchor clients” who you can count on for a certain chunk of work each month. Ideally this chunk can cover your base costs so anything else is gravy. But even if not, anchor clients minimize the amount of hustling you have to do repeatedly.
Save. This is Personal Finance 101, but it is probably the fundamental issue in this piece. Wise stewards of money pay themselves first. Even writers. Especially writers! Irregular checks do not all go to immediate wants and needs. You put away the appropriate percentage to cover the taxes, and then some chunk (10%? 15%? but even 5% is better than 0%) into savings. This is where the $400 would come from in an emergency. Having at least a small cushion is what keeps everyday woes from becoming disasters. An unexpected car repair bill does not mean you cannot pay the rent. To be sure, some lives feature a lot more woes and disasters than others, and some people wind up in a deluge. But at least some emergencies can be anticipated and prepared for, especially if you are making a decent income.
Find “overtime” clients. In some (not all, but some) hourly jobs, it is relatively easy to earn more by picking up extra shifts when colleagues are out or business is swamped. You can have this mindset as a writer too. You find a few clients that you do not necessarily write for all that often, but you do from time to time, and they take most of what you propose. Then, if you see some big expenses coming down the pike (say, that need for $400) you pitch up a storm and bank the extra cash. To be fair, it is possible Gabler is doing this. After all, I suspect The Atlantic pays decently, and this piece is enough of a talker that he will probably be asked to write about the topic more. Hopefully he does not take years to turn those articles or books around!
Photo: Blooming along the driveway now!
I read his article in the NY Times yesterday. Quite eye opening that so many Americans would have difficulty coming up with $400.
He did admit he didn’t make the best financial decisions. Another biggie was paying for his daughter’swedfing without securing his own financial situation first. Probably many people take out loans for weddings, which both horrified and fascinates me.
@Kim – the loans-for-wedding concept fascinates and horrifies me too. I think maybe in some circles it would be seen as so shameful not to have a big, over-the-top wedding that people would not even entertain the idea of a cheaper one. But yes, to me the idea of starting your married life in the hole because of the wedding, or worse, having your parents not be able to retire, seems pretty bad.
My parents paid less than $5000 for my wedding, many people said it was the most beautiful wedding they’d attended. I cannot understand a parent who would jeopardize their retirement to pay for a princess wedding. The kindest thing my parents have done for me in a very long time is when they told me they had purchased long-term disability insurance, paid off their house and amassed a nest egg. They’ll be 90 and I’ll still have teenagers at home, and it’s a HUGE relief to know they’ll be financially sound.
Perfectly timed – I read Gabler’s article and was inspired to start re-reading ‘All the Money in the World’ so it was nice to have your take on it. Important advice – and not just for writers. Full-time, 9-5, permanent jobs are rare in many sectors so it’s important to be able to manage swings and roundabouts.
Also thought you’d like this one:
https://sasconfidential.com/2015/11/25/80-hours/
@Lily- that post on 80 hour workweeks is great. Yep, it is generally exaggerated. There are some people working 80 hours on and off, but they’re the ones talking about their 120 hour weeks!
Hope you enjoy All the Money in the World. It’s been a while since I read it…
I read that very-long article over the weekend and had a few responses. The first, selfish, reaction I always have to articles about rampant debt is to feel a little bit better about our situation. Then, I feel really proud of our initiative to hustle and kill our debt once and for all.
As you say, the key is savings, no matter your occupation. Pay off debt and save. Careless spending is usually to blame for not having an extra $400 in the bank. Being a little more responsible with the money coming in can help prevent issues with too much money going out.
@Harmony – you should feel proud of your hustle. But, alas, “I climbed out of a lot of debt by working hard and making smart decisions” turns out to be less of a viral-type article than the “woe is me, the deck is stacked and it’s stacked against you too!” sort.
As a primarily personal finance blogger, I tend to take a dim view of those articles. They make out debt and lack of savings to be something that any and every average American can “expect”, as though attempting to normalize it and in the process, justify their mistakes. It’s not easy to create a solid financial position but it’s not just for the already wealthy, either.
If we make the less palatable, but wise, decisions, like to pay the taxes due on his advance and learn to live on what’s left after taxes and savings, it doesn’t seem all that glamorous does it? But it sure is nice when that work pays off later on down the road and you can choose to have both entrees instead of choosing the one you can actually afford.
I was once in a position where coming up with $400 would have caused me heartburn in the doing. I’m not in that position any more because I worked hard, saved harder, and was disciplined with every dollar. I can easily pay an unexpected $400 bill now, but I continue to be disciplined. Most anyone in any job that pays a decent wage can practice the same principles and come out ahead, barring systemic inequalities.
Now, your solutions? Those I can get behind 😉
@Revanche – it is always interesting to me how many people do view a lack of savings as normal. An acquaintance who got promoted not long ago mentioned that now he could finally start saving. This is someone who has earned six figures for a decade. Ugh ugh ugh.
Wow. I’ve long thought we should be teaching these topics in our schools. By 7th or 8th grade, kids should understand the power of compounding interest and the historical returns in index stock funds (and how they outpace almost all fund managers).
I agree with Revanche—it bothers me that these articles normalizing what is essentially financial idiocy get published WITHOUT the take-home message of “don’t do what I did, do THIS (xyz, as you thoughtfully and succinctly laid out)” instead. This is just a long & defensive complaint (“whoa is me, what could I have done? circumstances and such”) and misses the opportunity to actually be helpful to a lot of people who are in similar positions!
I don’t think every article/essay must teach a lesson, but I don’t find this story very compelling on its own.
@Ana – yes, this article doesn’t want to lay out solutions, because the thesis is that the deck is stacked. The truth is, there are many things people — especially the author — could do to find $400. Like write a cover story for the Atlantic! Or drive two days for Uber. Rent out that house in the Hamptons for 2 nights. Etc. The Atlantic likes to do think pieces. I suspect in some circles there is a tendency to view articles that spell out a problem and then list solutions as too self-helpy to be worth the time.
I decided to skip that Atlantic article once I read the one in Slate. I think there is a real problem with stagnating wages and financial insecurity in the US. But I don’t think a writer who was once able to buy a nice house in the Hamptons is the best face for that problem. I’m sorry for him, but it just feels off.
@Cloud – I think, reading between the lines, the issue now is big debt caused by compounding IRS penalties, and having remortgaged the house. Maybe that should be the public service piece coming out of this: pay your taxes and don’t use your house as a piggy bank…
What I found most interesting about that article was that it was trying to compare two different things. He first complains that it is economically harder now to succeed in the US than it was “in the past.” This may or may not be true, and it is worthy of additional exploration.
But then his example (himself) of this economic shift does not address systemic economic problems at all! He is where he is because of his own overspending. A house in the HAMPTONS? Lying to his wife so that she left the workforce? Cashing out a 401(k) for a wedding? Wife not taking *any* job because she can’t get back into the specific film industry? These are very poor decisions.
It sounds to me like he and his wife wanted to pretend they were wealthier than the were for decades, and are now up a creek.
@CNM – I think this conflating of two separate issues is what bothered me about the whole Anne-Marie Slaughter piece a few years ago. It took some legitimate issues — completely inflexible workplaces, maternity leave policies, the inability to afford daycare, inequitable relationships — but put a personal story on it that did not match: a woman who had not actually experienced any of those problems.
Lying to his wife betrays a character weakness: dishonesty, cowardice. This is “financial infidelity”, and I wouldn’t have let my husband get away with it. Married people should be partners in managing money no matter WHO is earning the bulk of it. The wife doesn’t get off free either, she was foolish to put her fingers in her ears and cry “la la la la”. Get involved woman, SAHM doesn’t mean you get to opt out.
Will and I have been talking about this piece since the Atlantic hit our mailbox a few days ago. It’s been great conversation fodder, but definitely sobering. I appreciate this analysis (and I’m still chuckling at the Laura Hillenbrand line!)
@Anne- yeah, she can pull off the once-every-decade mega bestseller! For the rest of us it’s more of a volume game, really. Since I had never heard of Neal Gabler before this, I suspect he’s in the pool with the rest of us.
I tried to ignore this article but all my favorite bloggers kept mentioning it, then I found myself transfixed by the comments! It seems everyone wants to either say the author is an idiot or put the blame on someone other than the person spending the money (the government, big business, “the economy”, illegal aliens, racism/whiteness, Democrats, Republicans, etc…)
The bottom line for me is that the only factor I can control is ME. Nobody is coming to save me so I had better do the right stuff so I can minimize the impact of stuff I CAN’T control.
My husband and I don’t earn as much as the author, but we just cut a check for $23,000 to Uncle Sam without too much sweat. I’m a stay at home mom with no college education, but I’ve been able to earn enough (after my divorce) to put a roof over my kids’ heads. I had no debt, but my second husband did. We buckled down, budgeted, held weekly Budget Meetings a la Dave Ramsey and paid the debts off (with a huge contribution from me, earnings from an ebook I wrote). We are frugal. We pay cash for late model cars. All our friends, who earn less than we do, go on cruises. We never have – vacation is camping or sharing a rented house on the beach with family, cutting costs, cooking at home. Being frugal in our hobbies and recreation, and TEACHING our kids. I swear my 15 year old has more financial savvy than the author of that article with his degrees. Recently at my behest the kids all transferred their savings to a local credit union that pays 5% interest until they’re 25 years old, away from an online bank that paid .5%. We talk money around here all the time. We can’t wait for the school system to teach our kids about finances, and anyone can learn about money for free using the public library, the great educational equalizer. I could go on and on and should probably write a post of my own. 🙂
@Carrie- yes, you should write a post! That was the thing about this article – it does get people thinking and talking, and it is easy to have an opinion. But I agree, it is a beautiful thing to be able to write a large check (as you did) and not sweat it. Not that it’s fun to write such a check, but it is good to not have it be scary.
Neal Gabler may want to consider (gasp) living in flyover country where the cost of living is lower. I realize the elite publishers are usually based in NYC, but a buck does go farther out here.