Kimberly and her husband have no credit card debt, a reasonable $963 monthly mortgage payment for their 
North Carolina home, and recently saved $600 a month on child care when their oldest child started kindergarten.
And they are drowning.
With two kids, ages 5 and 3, and now only one job between them, the family spreadsheet shows a red number at the bottom that means they will be nearly $1,000 short every month for the foreseeable future.
Kimberly, 34, just lost her $72,000-a-year human resources job, so the family’s new reality is stark. Their bills are higher than their income, and that’s how it’s going to be until Kimberly finds work.
“We never travel, and even when our jobs both were stable, have lived very modest lives. We have never been late on any payment in our lives,” said Kimberly. “[As] I lose the job I have held for nearly a decade, I do not know what we will do.”
Kimberly’s husband has a good job as a lawyer, earning $56,000 a year, but he ended law school with $150,000 in student loan debt.
Even after recently renegotiating his monthly debt payments from $1,031 down to $821, and further reducing their child care costs, the family budget is badly broken.
“We still fall approximately $800 a month short of what we need to keep the law school loans out of default and pay our mortgage,” Kimberly said.
Kimberly and her husband are the definition of “the two-income trap” as described in Elizabeth Warren’s 2003 book. With both parents working and both incomes required to balance the budget, the couple faced twice the risk of job loss as does a single-income family. And there is no safety net when one partner loses his or her job. In the past, single-income families faced with unemployment enjoyed this safety net: the stay-at-home partner could find temporary work while the main breadwinner conducted a job search. With both partners working, there is no such emergency plan available. In other words, there’s very little margin for error.
There also is no way for most single-income families to make a $1,000-a-month law school student loan payment.
Kimberly was lucky in this sense, her job loss was predictable. Her old firm was bought out, making some human resources functions redundant. The extended warning gave them a chance to hunker down, to look for ways to save on the student loan payment, for example, but it hasn’t helped with the job hunt.
“I have looked for new employment, to avoid this storm, for the past 11 months,” said Kimberly, who requested the family’s last name be withheld for privacy reasons. “In that time, I have applied for well over 100 opportunities, and been selected to interview for seven. Though two of these interviews led to second interviews, none resulted in an offer.”
Here is their monthly budget. Their take-home pay is about $3,100, and their expenses are more than $3,800.
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