More from the New York Times on Wall Street types coping with unemployment and other woes. No, I'm not referring to the media circus on Alexandra Penney, who made her money with bestsellers like How to Make Love to a Man and is now blogging on losing all to Bernard Madoff. I am referring to an article yesterday on a family much downscale from Penney, but much upscale from me.
Read it here: http://www.nytimes.com/2009/01/11/fashion/11berrys.html?pagewanted=2
The essay is about the stress on marriages during financial meltdowns. Featured is a family from tony Darien CT, where Dad, formerly of a "boutique investment firm," is now unemployed. Mom, who left a fancy job to stay home with the kids, has gone back to work, though she doesn't make as much as Dad did. They have downsized from a nanny to an au pair, but are continuing with expensive kids' sports and lessons. Their relationship has its moments of tension (Mom wants to buy kids clothes from Ralph Lauren, rather than from Walmart), but is basically strong.
Why am I writing about this? Because in this article is some very humble financial advice. In spite of working for a "boutique investment firm," Dad paid off the house and put aside a substantial sum in a college fund. Paying off the mortgage has been generally touted only in the "frugality press"; mainstream financial advice has always been that you can make more by investing your money.
Ditto for college funds. Dad said that he once had enough to send both kids to Harvard. Not bad, considering kids were 5 and 6 when he lost his job 2 years ago. Two sets of Harvard tuition would have totaled about $360,000 2 years ago. Presumably, this is a cash account (I assume this because the family is dipping into this money to maintain their current lifestyle).
So: a paid off mortgage and a substantial cash fund, for emergencies or college or whatever. You can go a long time with one person working, no mortgage, and 8 years of Ivy League tuition payments.
Dear readers: what do you think of all these articles on the woes of the formerly wealthy?