The Two-Income Trap - Elizabeth Warren [55]
The single mothers who file for bankruptcy are not some distant group imprisoned in a far-away ghetto. By every social measure we can assemble, these women are a solid part of the middle class. They are not strangers; they are our neighbors. They have flown higher than any earlier generation of women, only to discover that they fall farther.
Continuing Fallout from the Two-Income Trap
Although Gayle Pritchard had almost everything else going for her on the day her husband moved out, there was one big black mark against her: her family’s balance sheet. In 1999, the Pritchards had cashed out their savings, sinking it all into what the couple hoped would prove to be a wise investment, their first home. At $105,000, the three-bedroom ranch in suburban Houston would undoubtedly make the family “house poor,” but Gayle was determined. “I wanted my children to have a place to call their own, to have a yard, to know their neighbors. . . . I grew up in a house, and I wanted my kids to have the same experience.”
The Pritchards had a simple financial plan. Brad’s salary was to “maintain the family” and Gayle’s was to pay the mortgage. Now that Brad’s paycheck was gone, Gayle was stuck. Her paycheck maintained the family, but there was nothing left to pay the mortgage. “I got three months behind on the mortgage because I was just trying to keep my family fed. It was just so damn hard.” When the foreclosure notice arrived, she filed for bankruptcy and worked out a repayment plan with the mortgage lender. Gayle reflects, “I knew that I was at the lowest point in my life. . . . I went ahead and filed but it was done very, very reluctantly. I mean, I couldn’t keep asking people like my mom to bail me out again.”
The relief provided by the bankruptcy courts was only partial. The monthly payments for her home actually increased when she filed. Gayle now had to pay off an additional $10,750 in late fees and past-due interest that her lender had tacked on—and that extra money had to be paid within three years, not over the thirty-year life of her mortgage. At the time we spoke with her, Gayle’s expenditures on property taxes, mortgage payments, and utilities claimed nearly three-quarters of her take-home pay.25 She couldn’t expect much help from child support, either. Brad still owed child support to his first wife, so he was due to pay Gayle only $350 a month, less than one-quarter of the family’s housing expenses.
Gayle often thinks about giving up her home, but she is deeply reluctant to do so. “My kids had already gone through so much instability with the way that their dad left. I needed them to feel some stability. . . . My oldest son said, ‘Mama, if I have to get a job to help you, I will. I don’t want to move again.’ . . . He was only ten.” Gayle pauses while she thinks about her oldest child. Barely past bed-wetting, still sleeping with a night-light, he has taken on the solemn worries of adulthood. Gayle added quietly, “I felt I owed it to him to hold on to this house as long as I can.”
If we took the typical approach to analyzing the economic difficulties facing single mothers like Gayle Pritchard, we would start our investigation on the day her husband walked out. We would pose the usual set of queries: Did the divorce court treat this woman fairly? Did the judge order enough child support and alimony? Did the ex-husband follow through on his legal obligations?
The problem with the usual approach is that it focuses attention far too late in the story. Like so many single mothers, Gayle’s financial problems started back when she was married, when she and her husband stumbled