Last week's reading

Since I just had a baby, I actually have been reading more books than usual. How is this possible, some ask. Well, when I am nursing, I generally read a book. So that means I have about 20 minutes at a time, about 10 times a day, to read. If you think about it, that is a ton of reading a person can get done. So last week, I read three new books. Two were books about economics, and one was fiction.

The first book I read was called Strapped. The main arguement of the book is that today's 20 and 30-somethings are unfairly disadvantaged from the start of their adult lives. Because of student loan debt and lower salaries available to those without a college degree, there is no way for our generation to get ahead. We start out in the red. To some extent, I agree with these points. Some people pay hundreds of dollars a month in student loans. Add on top of that exorbitant housing costs if you live in a major city, and it can be hard to get by on the kind of paycheck one usually receives from a first job. Most people, however, don't stay at the bottom of the salary ladder forever. Although this book makes it sound like people are drowning in debt into their mid-thirties, I don't think that is the general experience of my generation, nor can it be blamed on student debt.

There are, of course, many people in debt from my generation. Some of those people have had a lot of bad luck, spent time unemployed or underemployed and still had the fixed costs assosiated with housing, transportation, and school loans. Add to that any sort of emergency (medical especially) and you can easily see how the debt could spiral out of control. However, there is another group of my contemporaries who are also drowning in debt, but entirely through the fault of themselves. These people make average or above average incomes, but feel they either need to appear wealthy, or feel entitled to a wealtlhy lifestyle while they are still in their twenties. They finance these marvelous lifestyles primarily with credit cards. It is hard for me to feel much pity for these people. The author, however, seems to beleive these type of people are mythical; that they don't actually exist.

What are the solutions to these problems. Well, according to the author, the government needs to take care of these problems. The government should finance college completely for lower income people, and almost entirely for the middle class. Also, the author would like the government to provide high quality day care for all children who has two working parents (or for single parents).

When I picked up this book, I was expecting some solution to the massive debt problem in our society. However, I was dissappointed that the only suggestions were that the government provide MORE services and spend MORE tax dollars.

In my opinion, the best way to help combat this problem would be to create a tax on consumption, rather than income. That way, people who feel the need to keep up with the Jones can do so, and help finance the government. Those who would like to save for the future would be rewarded for doing so by paying less in taxes. Do you remember the first time you got a paycheck and saw how much came out in taxes? I do, and I was shocked. Imagine how much more income you would have, if the payroll taxes were not removed.

This leads into the next book I read called The Number. This book was really interesting. It is about how to figure out how much to need to retire and what to do to get there. It was really aimed at readers in their late 40s and 50s, but I found it compelling. When planning for retirement, the author points out, times have changed. First of all, many people who are now in their 50s or younger could easily live into their 90s. We need to plan on our money lasting a lot longer than it used to. Also, pension plans have gone the way of the dinosaurs. So our savings have to cover a larger percentage of our retirements. This book has no worksheets or other quick ways to figure out how much you will need, but it will help you think about it. I think retirement planning is easy to put off, especially if you are in your 20s and have a family and you feel like to barely make it from paycheck to paycheck, but it is so important to start early. If you put off saving until you are in your 40s or 50s, the task can seem overwhelming and in some cases will be too late. Unless you plan on working into your 80s, out of necessity, you can put off thinking about your savings. But if you want to have options at the end of your life, you need to think about it at the beginning of your life.