TFY - Chapter 3

Summary

This chapter impressed upon me that facts are not absolute, but reality as perceived by an individual. What is considered true is subject to change as more is known or belief systems change. There is a need to verify and demonstrate facts in order to give them credibility. Facts represent objective reality, and not opinions or assumptions. We cannot let our feelings and beliefs taint our understanding of facts, however feelings may cause us to look deeper into a matter. To get at the truth we must rely on our own judgment and not let peer pressure interfere. This seems to happen a lot in universities where “political correctness” often overrides debate. While relying on our own judgment, we must still allow for our own limitations and be prepared to change our minds if reality dictates. It can be painful sometimes to admit that you were wrong

Exercises

1. Why do you think that U.S. credit card debt has increased 6,000 percent since 1968?

Credit card use has increased for emergencies such as unemployment, medical problems and family breakups.

2. In this excerpt the authors represent some facts about the reasons families go into credit card debt counter to what is commonly believed. Which of these facts surprised you?

I was surprised at the low amount of impulse-shopping related to credit-card debt.

3. The title of this book is The Two-Income Trap. In this excerpt, the authors do not fully explain why they consider two incomes to be a trap. However, what entrapment aspects are discussed here?

The authors claim that a bidding war has inflated middle-class life. Perhaps they mean that two incomes mean higher mortgages. Otherwise they are ambiguous on this point.

4. According to these two authors, how have credit cards come to serve as “safety nets” for American families?

Credit cards are used for medical emergencies, unemployment and family breakups.

5. According to these authors what facts point to the major causes of debt in middle-class America?

Financial difficulties from emergencies lead to higher credit card use, which can spiral out of control, forcing families to take out second mortgages.