February 23, 2024

Shortcuts: Grappling With a New Economic Reality

I’M finding myself having the same conversation over and over with friends whose children are applying to college. We want them to be able to go to the best institution they can get into, but we may not be able to afford it.

And we’re having a hard time pairing our expectations with the reality.

It’s not that we’ve been immune from the economic turmoil that has troubled the country. The magazine my husband worked at folded in 2009, and though we were luckier than most and he eventually found other work, it was a scary time.

We dealt with it by paring back on eating out, vacations and other nonessentials. But it wasn’t until we faced the reality of a college tuition bill that we realized how difficult it was to let go of the assumptions we’d had all our lives.

And we’re not the only ones. Consider the students graduating from college who expected the same kind of lifestyle — or better — than their parents had and the 60-somethings who anticipated a comfortable, if not luxurious, retirement.

“We have made an upper-middle-class income and are living an upper-middle-class life, but with how the economy has played out, we need to make more middle-class decisions, and we refuse to do it,” said a friend of mine, who asked that her name not be used because she didn’t want her friends to know her financial situation. “We live paycheck to paycheck. We’re in debt, but we can’t wrap our heads around not being able to” allow their son to apply to an expensive private university.

“When we had these kids 18 years ago, we started saving for college,” she said. “We moved to an expensive town so they could soar and achieve and go as high as they could.” Then, her husband lost his job and took a while to find a new one.

“The economic landscape has changed, but we’re still rooted in our attitude that we had when we had these kids 18 years ago,” she said. “It’s so hard to realign our attitudes with the economic reality.”

And she knows that she and her husband are not doing their children any favors if they end up heavily in debt and have no money for retirement.

My friend is not alone in grappling with this dichotomy. Findings from the 14th quarterly Allstate-National Journal Heartland Monitor Polls released in October, which explored perceptions about upward mobility among Americans, found that nearly half of those surveyed say they had more opportunity to get ahead than their parents did.

But only about one-third said they believed there would be more opportunity for their children than in the past. The poll surveyed 1,000 to 1,250 people, depending on the question, by phone.

“The majority believe they will get ahead and live the American dream in their lifetime,” said Joan Walker, executive vice president for corporate relations at Allstate. “But they worry whether that dream will be available for their children. Americans understand that risk has been transferred from institutions to individuals and the future is very uncertain. Now, it’s not so much about getting ahead, but holding steady.”

Jennifer Turner, who lives outside Harrisburg, Pa., has younger children — 6 and 8 years old — so the tuition dilemma is still distant on the horizon. But ever since her husband lost his job at a stone quarry in 2009 and started his own auto body repair and refinishing shop, times have been tough.

“I grew up on a dairy farm and money was always tight,” she said. “We had secondhand clothes and didn’t eat out. Those things aren’t bad, but I thought we would be able to do more.”

She attended a four-year college and foresaw an easier life than her parents had.

“But we’re living paycheck to paycheck,” she said. “We’re trying to stretch it and sometimes it doesn’t stretch.” After-school activities like dance for her daughter and wrestling and gymnastics for her son are a thing of the past.

Will her daughter be able to attend college?

“If she does really good in school and gets scholarships and works,” Ms. Turner said.

But after resisting the idea for a long time, she said she was finally coming to terms with the reality of her life.

“We may not be able to do what other people do. I see commercials for Disney and would love to be able to give that to my kids,” she said. “But I need to accept that I can’t, instead of fighting it and being resentful.”

The expectation that life will just continue improving generation by generation is also part of the thinking of those now in college and in their 20s.

E-mail: shortcuts@nytimes.com

Article source: http://www.nytimes.com/2012/11/03/your-money/grappling-with-a-new-economic-reality.html?partner=rss&emc=rss