Via Columbia Journalism Review, Graham Summers has a fantastic post up at Zero Hedge, wherein he crunches the numbers on just how hard it is for the average American family, a two-child household, to get by.
Summers uses median income, average prices for houses and cars, and a pretty low health-insurance premium contribution to figure out how much wiggle room families have every month. The answer is, almost none. He otherwise assumes a relatively frugal household that got a good price for their home, has only one car, doesn't take vacations and doesn't have other debt. Any deviation beyond that, and it's impossible for the average family to not use credit cards.
Before the crisis, many wondered over how families could get themselves into such high credit-card debt. In 2004, consumer debt was about $18,000 per family. We now know that wages hadn't risen enough to keep up with the cost of living, and so families were relying on plastic or home-equity loans. But that doesn't stop people from moralizing and criticizing the average family for spending money they don't have. When families went into debt last decade, it wasn't immoral. It was completely rational, given the circumstances.
-- Monica Potts
