The Value of $60,000

A single financial loss in one generation can ripple into the next — and set the stage for financial struggle: Part 5 of Poverty and Privilege

Editor’s note: This is the story of Richard, a man with generational wealth, and Lauren, a single mom struggling to keep her household afloat. The twist is they both have Ivy League educations but life has turned out very different for each of them. The story is true but names and certain identifying details have been changed.

Look for it at 10 a.m. Central every Saturday here on Untrickled.

If you’re new to Poverty and Privilege, you’ll want to start with Part I here.

Richard, born into generational wealth, has never needed to think twice about an unexpected bill. Lauren, despite her Ivy League law degree, has been one car repair away from financial collapse for as long as she can remember.

More than a decade ago, Lauren’s mother, Carol, now in her early 60s, was forced to spend $60,000 in a contentious divorce with her second husband, and this has contributed to the credit card and other debt both women face to this day. That $60,000 spelled the difference between Carol being above or below water.

One financial event can echo across generations

Like many mothers and daughters, Lauren and Carol try to help each other whenever they can. They work together and share the profits of the small side business that Lauren began while she still had her more lucrative job as an Ivy League-trained attorney. Carol’s other daughter, Beth, is still a full-time student but is also a part of this dynamic.

“Recognizing that Lauren is part of a small and powerful ecosystem that includes her mother and younger sister, I recently added both women to our company payroll,” Richard said. He so values Lauren’s contributions to his consulting business that he wants her to be able to concentrate on her work. Paying both her mother and her sister — who often contribute to the business by reviewing Kristen’s work and making helpful suggestions — a $500 monthly allowance gives everyone a little more breathing room.

“When Lauren has to cover her mother’s rent or help her sister with groceries, she’s pouring from an empty cup. That’s not just emotionally exhausting. It’s bad for business. I want her focused on our clients, not her and her family’s everyday economic needs.

“By relieving her of these additional obligations — although they are offered in love, and need to be done — she can then focus on caring for her sons and working for our consulting business.

“At that point, I benefit financially as well.”

The vicious credit card debt cycle

Both Carol and Lauren have carried high balances for years.

Lauren often “just missed” balancing her monthly budget every time an unexpected expense occurred, like a car repair or unanticipated household need. Until Richard hired Lauren to help with his consulting business part-time at the rate of $120 per hour, with a guaranteed $700 per week, she always had to charge such things on her credit cards.

“The credit cards were and are a necessary evil because they were the only way to stay afloat — at least until I reached my maximum. There were many times my cards were maxed out and my bank accounts empty, so my mom or sister had to charge something on their cards for me. The interest rates are criminal, but it has been the only way for me to get by, at least until I started working for Richard,” Lauren said.

“For my mom, her cards are close to maxed out again, and she has no real meaningful way of paying the debt down. So she pays these burdensome monthly minimums each month, and can no longer use the cards to float expenses, and the balances don’t seem to diminish.”

Of course, customers who maintain large balances are highly profitable for credit card companies. Well-off customers like Richard, who pay their entire balances each month, pay no interest. Often they pay no annual fees, either.

What knocked Carol out of the middle class

“During my divorce, I switched from being a stay-at-home mom to a retail job in the local mall so I could make ends meet. But by working with Lauren, I was able to quit my retail job because that income plus Social Security was just enough to cover my monthly expenses.”

Taking Social Security early meant smaller payments.

Unfortunately, the part-time business Lauren started does not make nearly as much money as it used to for a variety of reasons beyond anyone’s control.

“The side business has gotten progressively worse and more unreliable over the past few years. Lauren has always given me a third of the earnings, but we’re probably making only 25 percent of what we were making six or seven years ago,” Carol said.

“It was last fall when things became dire enough that Lauren turned to Instacart deliveries to supplement her income. Her sister Beth had done Instacart occasionally. But Beth was a student of 21. Lauren started doing Instacart at 42 and as a mother of three, with an Ivy League education and a law degree.”

Then a chance conversation with Richard changed everything.

The $60,000 question

While she is now earning a salary commensurate with her education and talents, it had been years since she last earned a professional salary. And so I asked her: “What would you do if someone gave you $60,000 in one lump sum?”

Lauren says she’s not sure how she’d best allocate such a large amount of money.

“It wouldn’t be enough to pay off all my student loans, which the current administration seems bent on collecting. I suppose I could clear some old debts to stop collections companies from calling me. It would probably be smart to invest some of it to make it grow, but I don’t have any real concept of what those numbers would look like, and I'm probably still too poor to really invest. I need access to liquid money to meet all of my ongoing obligations, particularly with three children in the house.

“I think I would use some of it to take care of a bunch of the things around the house that I’ve been putting off, like buying dressers for my sons’ rooms, fixing wobbly stones on a patio, doing some work to the kitchen, helping my mom with any pressing expenses she’s facing, and try to save the rest because I’m always worried about what unforeseen problems are around the corner.”

Richard’s reaction

Richard, on the other hand, acknowledges that an extra $60,000 wouldn’t affect his life in the least. All his family’s needs are met, and he has maxed out his retirement contributions, so he’d just invest it. Asked what amount of financial loss or windfall would actually affect his life, he was reluctant to name a dollar amount, but said it would be “considerable — in the millions.”

Learning how such comparatively small amounts affect Lauren’s family so dramatically has been a real revelation for him.

“Getting to know Lauren has absolutely changed many things. First, I have been able to hire a talented and hard-working person who functions as a true business partner. Second, I appreciate more than ever before the enormous gifts I have been given. Third, seeing how much time she has had to spend worrying about money and her family has been really eye-opening.”

The importance of a safety net

Richard was born with one. Lauren was not.

“My parents can’t bail me out when I encounter large or sudden expenses, my credit cards are practically at their limits, and while my sister would want to help, I try to avoid asking her since she’s just starting out as an adult and has enough things to balance herself. Because there are no investments or savings or 401(k)s for me, I’m only working with whatever exists in my bank account at any given moment.”

Besides the wages he pays Lauren, Richard’s company has provided new laptops for her and her children to use, plus he’s paid for a number of household appliances, back mortgage payments, and other needs that in the last year or two Lauren simply could not cover.

“We should be able to see by the end of the year how much an impact $60,000 makes,” Richard said.

“My sense is that, by the end of the year, I will probably have invested that amount in terms of helping Lauren and her family, including her mother and sister. Carol was at one point on the verge of losing her apartment and moving into Beth’s one-bedroom apartment in another city. We avoided that scenario and she has been able to stay near Lauren and her grandchildren, who adore her. She helps care for them on an almost daily basis.”

Richard sees this as a business investment

“I know that Lauren sometimes sees this as charity. I don’t. I see it as an investment that lets her focus on clients who pay us well for our expertise. Her sons’ academic promise only adds to the value proposition. If her time is spent worrying about overdue bills, always looking for the cheapest prices, or helping her mom avoid eviction, that hurts our business. This is no different than my law firm paying for dinner when we worked late, or Google hiring house cleaners or meals for its engineers. It’s a simple equation: Her time is valuable, and I would not change what we are doing.”

Next week: How Marriage and Divorce Shape Financial Futures

Read the continuing series:

Part 1, Unlikely Allies in an Unequal America

Part 2, The Country Club Lunch

Part 3, One Family’s Fall From the Middle Class

Part 4, Billable Hours Don’t Pause for Birth

About Michelle Teheux

I’m a writer in central Illinois. If you like my work, subscribe to me here and on Medium. I also have a new Substack aimed at authors who want to self-publish books, called The Indie Author. My most recent book is Strapped: Fighting for the soul of the American working class. My most recent novel is The Trailer Park Rules. If you prefer to give a one-time tip, I accept Ko-fi.

All wealthy families are alike; each poor family is poor in its own way.
— Leo Tolstoy, if he had written about a trailer park

For residents of the Loire Mobile Home Park, surviving means understanding which rules to follow and which to break. Each has landed in the trailer park for wildly different reasons.

Jonesy is a failed journalist with one dream left. Angel is the kind of irresponsible single mother society just shakes its head about, and her daughter Maya is the kid everybody overlooks. Jimmy and Janiece Jackson wanted to be the first in their families to achieve the American dream, but all the positive attitude in the world can’t solve their predicament. Darren is a disabled man trying to enjoy his life despite a dark past. Kaitlin is a former stripper with a sugar daddy, while Shirley is an older lady who has come down in the world and lives in denial. Nancy runs the park like a tyrant but finds out when a larger corporation takes over that she’s not different from the residents.

When the new owners jack up the lot rent, the lives of everyone in the park shift dramatically and in some cases tragically.

Welcome to the Loire Mobile Home Park! Please observe all rules.

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