The credit cards that once empowered many Canadians are now allowing people to bury themselves in debt they can’t recover from. In The Walrus, Raizel Robin writes about this new middle class. It’s an aspirational one that lives paycheck to paycheck, is not always willing to give up certain lifestyle choices and luxury activities, and relies on Payday loans that only compound their problems. Some financial analysts warn that the day of reckoning is approaching.
Indeed, while the largest chunk of our household expenditures goes toward groceries, transportation, and shelter, many Canadians seem uninterested in prioritizing needs over wants—according to a recent cibc poll, only half of those surveyed were willing to cut spending on non-essential items in order to keep up with bills. Our debt load is, in a sense, the result of an aspirational burden. “Middle class” once meant exactly that—the median in household net worth, or the point at which half the population has a higher income and the other half a lower one. A 2013 internal government document deemed middle-class incomes to be anywhere between $54,000 and $108,000—that’s quite a spread. Middle-class status has thus become more of a state of mind than a demographic bracket. Federal finance minister Bill Morneau recently admitted as much, defining middle-class Canadians, in part, according to the “lifestyle they aspire to.”
But it’s hard to deny the fact that such lifestyles tend to be defined by consumption, or what one American sociologist has dubbed “upscale emulation.” A bankruptcy lawyer I spoke with has helped clients in just this fix—clients such as the Toronto architect crushed by $105,000 in tax debt and $75,000 in credit card debt who still managed to vacation in the tropics four times a year with his wife. Or the divorced, self-employed Toronto chiropractor who made $4,900 a month and insisted that both her kids attend private school—until the Canada Revenue Agency froze her accounts. We spend our way into the standard of living we feel we deserve, buying stuff that makes us who we think we are, or want to be.
He wore tan work boots and rough jeans. He told a friend in the waiting room that he had a couple hours off work and thought he’d stop in for some extra cash. The receptionist told him the names of that day’s phlebotomists. He paused. Sliding a 16-gauge needle into someone’s arm is tricky, and the man reconsidered. Instead of signing in, he announced to the room that he’d come back tomorrow and try his luck.
I’d driven 107 miles from my home in Bangor, Maine to the BPL Plasma Center in Lewiston to collect $50 for having my arm punctured and a liter of my plasma sucked out. The actual donation takes about 35 minutes, but the drive and its attendant wait makes for an eight-hour day. I clocked in for that trip five times this summer.
I’m a professor at the University of Maine. My salary is $52,000, and I am a year away from tenure. But like everyone else in that room, I was desperate for money. Read more…
We are witnessing a steady proliferation of financial systems built on genuine support, not victimization. “Socially minded lending” and “democratic debt” prioritize the well-being of the borrower, not only the lender. At YES!, Nathan Schneider examines several of these diverse institutions, from worker cooperatives to well-connected community investors.
It began with a series of intergenerational meetings in Washington state, where the Gen Xers present began to grasp just how much student debt was crippling recent college graduates. The respective groups got over their mutual resentments—the jadedness of the young, the affluence of their elders—and designed a cooperative that would refinance the graduates’ debts under less burdensome terms. After the refinancing, rather than leaving the borrowers to fend for themselves, the model calls on well-connected friends to mentor and help them find the sources of income they’ll need.
The benefits go both ways. “My partner and I were never burdened with student debt, and so we feel obligated to help those who are,” says Rose Hughes, who is both an architect of Salish Sea Cooperative Finance and an investor member in it. “We also get to network with younger people who are doing fascinating things to help our society.”
In the process, says borrower member Erika Lundahl, “the people with capital are taking some systematic responsibility for student debt and the effect it has on society as a whole.”
Warren believes that the two-income family has contributed to the bankruptcy rate. “For middle-class families, the most important part of the safety net for generations has been the stay-at-home mother,” Warren and her daughter, Amelia Warren Tyagi, wrote in “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke” (2003), a book aimed at a wider audience than Warren’s earlier, academic work. (“Mom, you are boring,” Tyagi told Warren. “Collaborating with my daughter is not for sissies,” Warren says.) It used to be that when a middle-class family was faced with a financial crisis the woman in the house could get a job, to tide things over, which is what happened when Warren’s father had a heart attack and her mother got a job at Sears. This cushion doesn’t exist in the two-income family, which, in its short history—it has its origins, as a middle-class phenomenon, in the nineteen-seventies—has also taken on a great deal more housing debt. The 1974 Equal Credit Opportunity Act required lenders to count a wife’s income when evaluating borrowers; the deregulation of the mortgage lending industry began in 1980. With two wage earners and low down payments, middle-class families took on bigger mortgages and contributed to an increase in the cost of housing, especially when families with children paid a premium for property in school districts with high test scores. Financial crisis, for a two-income family, usually means having to live, quite suddenly, on one income. In these straits, families with children tend to totter on the edge of ruin. “Having a child is now the single best predictor that a woman will end up in financial collapse,” Warren and Tyagi reported. Between 1981 and 2001, the number of women filing for bankruptcy rose more than six hundred percent.
In 2008 I sold a book-in-progress for $200,000 ($170,000 after commission, to be paid in four installments), which still seems to me like a lot of money. At the time, though, it seemed infinite. The resulting book—a “paperback original,” as they’re called—has sold around 8,000 copies, which is about a fifth of what it needed to sell not to be considered a flop. This essentially guarantees that no one will ever pay me that kind of money to write a book again.
It took me a while to realize that my book had failed. No one ever told me point-blank that it had. It was more like the failure occurred in tiny increments over the course of two years, after which it was too late to develop a solid Plan B.
I spent some of the advance on clothes that no longer fit my body/life, but mostly I spent it on taxes—New York even has a city tax, on top of the state and federal kind—and rent. I lived alone for three years in Brooklyn, paying $1,700 a month ($61,200 all told) for a pretty but small one-bedroom within eyeshot of the Brooklyn–Queens Expressway. I also spent $400 a month on health insurance. At one point I thought I would find another full-time job after finishing the book, but then I must have convinced myself that teaching yoga part time would better enable my writing. I also thought that I would immediately start another book, which I would sell, like the first, before I’d written half of it. In order to believe this I had to cut myself off from all kinds of practical realities; considering these realities seemed like planning for failure. In retrospect it seems clear that I should never have bought health insurance, nor lived by myself.
These are stories about injustice, about broken promises, about frustration and desperation and of course, debt. This is a list for anyone caught in a gross transition period, in a dead-end job, who is trying to make something, anything work out long-term. This is a list for anyone who has been told to “just find a job” or “you can do anything you set your mind to” or “your generation is so lazy/narcissistic/vapid.” This is a list for anyone who has been late on their rent, or hassled by credit card companies, or received overdue loan warnings. You’re not alone.
The Billfold is my go-to site for voyeurism, empathy, financial advice, and great storytelling. Schiller and her friends attempt to “ford the murky river of the hiring process” of self-employment, multiple part-time jobs and internships—anything but traditional full-time work.
The recently founded Association of Transgender Professionals (ATP) works to further transgender equality in the workplace in the U.S. and abroad. ATP helps trans* individuals prepare for interviews, apply for jobs, and find employment; it also assists companies in recruiting LGBTQ folks.
Silva spoke to over a hundred working-class citizens in Lowell, Mass. and Richmond, Va. She found that education for working-class teens is no path to success; rather, these students have no one to advocate for them or explain the labyrinthine bureaucracy of higher education and financial planning, which ends in a dead-end of debt and frustration.
A man with $90,000 in debt makes some hard decisions about his life—starting with a trip to Kosovo for an IT job:
Of course, all I understood at the time was JOB INTERVIEW and VIENNA. Prior to my application, I had never heard of the OSCE, and I knew next to nothing about Kosovo. My IT skills were rudimentary and my management experience nonexistent. I was mystified why I got a call. I was so completely unqualified for this job, I might have treated this like a mini-vacation but for one significant fact: the salary. The job paid $85,000 a year, tax-free (due to the glorious Foreign Earned Income Exclusion). This was an incomprehensible amount of money. It would fix everything. The pressure to do well in this interview, just for this one small chance at a dream life and the magical solution to all of my problems, was intense.
I flew to Vienna two weeks later and interviewed the next morning in a small yellow room. It was 10 a.m.—4 a.m. EST. There was a panel, chaired by my would-be boss, a taciturn Austrian man. I was dressed in a garish blue Hugo Boss sport coat that I picked up at Century 21 a week earlier. I was over caffeinated, jet lagged, and clammy. I made nervous self-deprecating jokes, which translated poorly between our cultures. It was a disaster from start to finish. I left the interview thinking, ‘Thanks for the free trip to Vienna.’ I spent the rest of the day squandering my remaining per diem on beer and meat, refusing to think about what might have been. The next morning I flew home.
A writer, out of money, is forced to part ways with his dream guitar:
The first hospital bill arrived in late June. My eyes roamed its surface: “If paying by check…” “YOU ARE RESPONSIBLE FOR YOUR BILL. PLEASE PAY THE BALANCE AS SOON AS POSSIBLE.” “Please pay this amount…” Along came the dizzying despondency of the Amount Due, four figures comprising the deductibles left over from a six-day stay and ER consultations and minor surgery and X-rays and everything else a troop of professionals provides to keep patients alive and well at Lenox Hill Hospital. More bills followed—consultations here, outpatient follow-ups there. As sure as I felt my preexisting vortex of personal financial ruin gather strength around me, its waves tickling and willing the bills into whispering tremors in my hand, I knew how all of this would end: I would sell the Bean.