There should be more of these kind of financial slice of life, so we learn the truth on the ground, of the challenges face by common man.

THE FINANCIAL DIARIES by Jonathan Morduch and Rachel Schneider is a very insightful look at "how American families cope in a world of uncertainty," arguing that it is volatility in cash flow rather than differences in income levels which contributes to inequality and difficulties with long-term financial planning.

Last Fall our students read excerpts from J. D. Vance's Hillbilly Elegy and and I can see them also building empathy for Becky and Jeremy Moore and other Financial Diaries Households. Morduch and Schneider describe how their team of ten researchers lived in Ohio, Kentucky, California, Mississippi, and New York while learning about cash flow for 235 households - collecting information on over 300,000 transactions between 2012 and 2013. The data is presented in numerous bar graphs and in stories with quotes like, "Work, family and church are the constants in Janice's life. And worry." Many readers will find the uncertainty and the extent of month to month fluctuations for low and lower-middle income families to be shocking. THE FINANCIAL DIARIES received a starred review from Publishers Weekly.

Link in post: http://treviansbookit.blogspot.com/2016/09/hillbilly-elegy-by-jd-vance.html

It’s not necessarily poverty, but it definitely is instability and precarity. That is what Financial Diaries has found in a yearlong study of several hundred families from across the country and the economic spectrum. It is based on a similar effort in Bangladesh, India and South Africa that led to similar insights. Morduch and Schneider collected some 300,000 data points in their quest. The gig economy, the lowering of real wages, the elimination of loyalty, permanence, benefits and full time employment has put tens of millions of families at risk of being unable to pay bills some months. These are not welfare scammers; 92% would take simple stability over more wealth. Morduch and Schneider say instability has risen faster than inequality. They visited numerous times during the year and learned their stories, their habits, and their workarounds. The first half of the book relates several different and frustrating examples of this new precarity.

The Federal Reserve says one third of Americans - 100 million people - are just getting by, juggling shutoffs in utilities, mortgage payment delays and payday loans. Holding two, three and sometimes four jobs is becoming routine as Uberization lowers incomes. There are now more small credit and payday loan stores than McDonalds and Starbucks combined. That is the economy’s answer. And they make life worse.

The families have workarounds; they have to. It could be living with your mother in your late 40s, or at least borrowing from her. It might mean a community savings club, raising money on the internet or using some of the innovative financial tools that startups are continually inventing. The most common issue seems to be saving – not for retirement, as half of Americans have no retirement savings – but smoothing out the ups and downs as pay never seems to match expenditures for long. Traditional banks don’t fill the bill, and resilient American families are trying other means. (There is a wonderful app that puts some wages aside for when they’re really, really needed, and which will lend money when there isn’t enough money saved). The second half of Financial Diaries is all about those workarounds – borrowing, lending, community, and family. It is an uplifting finish to an otherwise grim tale.

One of the biggest problems is that the standard stats don’t show any of this. Taking annual income figures doesn’t reflect the rollercoaster ride all year, let alone the stress and the anxiety. These families deny themselves everything. They try to do the right thing. But they can never seem to get ahead. It is subsistence living in an economy that brags of full employment. Shame.

David Wineberg

I am sorry I could not really read this as the PDF version I received did not work. I would have looked forward to reading it.

This is a year-long study of 235 American household budgets, yielding the interesting insight that is isn't necessarily low wages that get people underwater with payday loans or evictions, but illliquidity and inconsistent pay, often from shifting hours and varying tips. This situation defies traditional financial literacy education, and often bounces people on and programs which might otherwise provide the short term stability needed to permanently leave the program. Morduch and Schneider look at pilot programs which do address this, from apps that use algorithms to smooth out monthly income to traditional lending clubs popular among immigrant extended families, as well as controls on usury and my continual favorite, promotion of small-scale, low-tech, low-fee banking.