The Financial Diaries Quotes

“The data tell a clear story: families leave poverty in great numbers, and they enter poverty in great numbers. Only a small share lives in poverty for long periods.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Becky’s experience of poverty is common. In fact, temporary poverty like Becky experienced is far more common than the chronic, grinding deprivation that easily comes to mind when thinking of poverty. The idea that most people who require help are born poor and will always be poor, subsisting only thanks to state benefits, is increasingly out of whack with the facts.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“The word “underwrite” first came into use in the insurance industry in the 1700s, when the insured person or company representative would literally write his name under the description of the item being insured.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Even more than savings, debt is freighted with moral baggage. We even use two different words for the same thing: credit and debt. When you apply for a loan, you fill out a credit application, while lenders make a decision to give you money based largely on your credit score. The most common borrowing vehicle for Americans is a credit card. If instead the process involved filling out a debt application, checking our debt score, and using a debt card, many of us might consider our actions differently.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“But our data, along with other research, point to new ways of understanding saving among low- and moderate-income Americans. Many of these families are committed, effective savers; they’re just not saving in the ways financial advisors might imagine. They put aside money for expenses they anticipate in the next few months, not the distant future.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“In 2013, the United States spent almost $400 billion in federal tax subsidies for homeownership and retirement savings. That was 30 percent of all federal tax expenditures. About 70 percent of the savings from the mortgage interest and property tax deductions went to the top 20 percent of earners. Almost none went to the bottom 40 percent. The proportions were similar for retirement-related tax deductions.13 On the bottom end of the income spectrum, if government policy served any function, it was to create hurdles for families trying to save.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“There has to be an easier way. That was the conviction that inspired Jon Schlossberg and Quinten Farmer to launch a technology company named Even whose mission is to help families deal with income spikes and dips.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Nationally, 22 percent of Americans reported overdrawing their bank accounts at least once in the previous twelve months,”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Families’ inability to fully protect themselves translates into difficulties during particularly tough times. The Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED) again gives a national picture. The SHED surveyors asked respondents how they would deal with an unexpected car repair or another urgent need requiring $400 quickly.9 Just about half (47 percent) reported that it wouldn’t be a problem: they could handle the emergency with money on hand. Another 38 percent could come up with the money by borrowing or selling something. But 14 percent of the sample said that there was just no way to come up with $400, period.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Today, about a quarter of poor families with children are covered by TANF, for example, down from about 70 percent twenty years ago.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“But while Becky put aside household goods for the future, she and Jeremy had far less success with the obvious way to smooth their consumption: building up a financial stockpile in a savings account. During most of the study year, while Jeremy fixed trucks on commission, they could predict reasonably accurately how his paychecks would rise and fall with the seasons. They knew in principle to save during the months with bigger paychecks, but in practice they had little success. Eventually, they simply closed their savings account. “It’s tough for us. I don’t know why,” Becky conceded. “The discipline for us to not dip into that rainy-day fund—for entertainment or something fun—is too much.” So Becky instead built up a rainy-day fund composed of toiletries, frozen pork chops, and boxed cereal and thus avoided the temptation to spend on something fun; you can’t buy movie tickets with eight tubes of toothpaste.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Housing costs are also squeezing middle- and lower-income families. For the poorest third of households, housing expenses have increased more than 50 percent since the mid-1990s and for the middle third, about 25 percent.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Between 2003 and 2013, health insurance premiums for employer-provided health benefits rose by 73 percent—and workers’ share of that increase was 93 percent. Deductibles more than doubled.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Income volatility can also interfere with the existing social safety net. Some welfare programs require beneficiaries to work a certain number of hours each week, assuming that the number of hours worked is under the control of the employee, rather than the employer.53 Qualification for programs like food stamps and health insurance subsidies is based on an average monthly income threshold. But of course volatile incomes mean that families bounce in and out of eligibility.54 Bouncing in and out of Medicaid ineligibility causes interruptions in care for chronic conditions, particularly in places where the doctors who accept Medicaid and private insurance don’t overlap.55 There can also be severe penalties for “fraud” in these programs, receiving benefits when your income is too high. But households subject to volatile incomes may not, themselves, know when or whether they will cross thresholds of eligibility. For instance, as of 2016, the Pennsylvania Medicaid Application asks whether anyone in the household has a hard time predicting their income, but in the very next question requires applicants to do exactly that—for the next twenty-four months—in order to establish eligibility.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“A 2014 New York Times profile of a Starbucks barista so clearly demonstrated the serious negative consequences of her frequently changing work schedule (especially on her ability to find quality child care), and how common irregular and volatile schedules were for Starbucks workers, that the company announced changes to its scheduling policies within forty-eight hours.46”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“The dispassionate economist would look at income volatility and say it’s not necessarily a problem in and of itself. People should just save and borrow as necessary to cope with the spikes and dips in income. But to do that kind of saving and borrowing, you have to have access to affordable, quality financial services designed for those purposes. Many people don’t. But even when families have tools to cope with their financial ups and downs (be it by saving, borrowing, or earning more), volatility brings costs.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“The indication is that participating in the gig economy requires either a base of capital (a vehicle, a room to rent) or technology skills—both of which are associated with higher levels of education—and less vulnerability to income volatility, since higher levels of education are correlated with salaried and non-tipped jobs.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Promoters of the “gig economy”—the term used to describe freelance work enabled by technology platforms like AirBnB, Uber, and TaskRabbit—often argue that it can reduce financial instability. When workers’ income dips in their regular jobs, the argument goes, they can fill the gap with short-term gigs. While that may be true in theory, how it works in practice is much less clear.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“One of the origins of tipping in nineteenth-century America lies in the refusal of white business owners to pay newly freed, black workers a wage, and there are still documented differences in tips received by servers today based on their race.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Using data collected directly from firms, economists at the Federal Reserve and Harvard Business School found that volatility in publicly traded firms’ sales growth rates and profit-to-sales ratios has increased dramatically since 1970—and that the increased volatility is reflected directly in the wages of workers within the year. In other words, firms seem to be reacting more quickly to changes in the business environment by increasing or cutting what they are paying their existing workers (not by layoffs or new hires). This connection is most pronounced in the service sector and for low-wage workers.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“In 2006, political scientist Jacob Hacker described what he called the “Great Risk Shift” in a book by the same name. Over the half century following World War II, governments and businesses gradually shifted financial risks from their ledgers onto the shoulders of individuals and families.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“The most recent data available from the U.S. Census’s SIPP show that 90 million people, nearly one-third of all Americans, experienced poverty for two months or more between 2009 and 2011. In contrast, just 10 million people, less than 4 percent of the population, were poor for the entire three years.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty

“Indeed, the instability of families’ incomes has risen faster than the inequality of families’ incomes.”
― Jonathan Morduch, The Financial Diaries: How American Families Cope in a World of Uncertainty