P2P : The New Paradigm

The title refers to "paycheck to paycheck" as evidenced by an article on CNNfn: Scraping by on $150,000 a year.

If she thought it would really fix her family's finances, Amy Schuett would make it her New Year's resolution to squeeze every bit of extra spending from the family budget.

But she's already slashed so many little luxuries - the gourmet coffee, the restaurant lunches, the weekly dates with husband Brian - that she's fresh out of ideas.

Cable TV? Unplugged. Pool membership? Down the drain.

They've even considered giving up their unlisted phone number. At a cost of $3 a month, this move wouldn't save much - even over, say, 150 years - but it shows how desperate the couple feel about easing their financial strain. "We're struggling week to week to get by," says Brian, 42. "Any money that comes in gets chewed up right away."

Digesting that fact becomes harder when you consider that the Schuetts earn a comfortable living, with Amy, 39, pulling in $150,000 a year as a hospital psychiatrist. True, their income did take a big hit last summer when Brian got laid off from his job as a sales rep for a pharmaceutical firm (he'd been making a base salary of $82,000 a year, plus commissions as high as $24,000).

And they do have four daughters to raise, ages four to nine. But still.

The Schuetts don't have any child-care bills (Brian is now a stay-at-home dad). They don't have credit-card debt. They don't splurge on fancy vacations. And they live in a nice but definitely not luxurious home on a three-acre plot in Elkhorn, Neb., just west of Omaha, where the cost of living is, well, livable.

For readers that are not familiar, $150K is a boatload of money in Nebraska. It would be one thing to argue that about a family of six in California, New York, or Illinois. It's a completely different thing in Nebraska.

(For the record, I have friends in all three places with similar family sizes that make the numbers work, and they make it work without any debt, I might add.)

You're netting a little more than $8,000 a month. If you can't make ends meet on that, you're seriously fucked up.

So what the fuck is going on?

Read below:

A closer look at the Schuetts' finances reveals, for example, that a big chunk of their income is eaten up by two rental properties. Brian purchased them thinking they'd generate extra income, but he has yet to find tenants. Even when the properties are finally occupied, the area's softening rental market probably won't allow them to make enough to cover carrying costs.

Meanwhile, the two houses are expected to appreciate only about 3 percent a year - the couple can do better than that with Treasuries (bonds, at least, will never need expensive new wiring).

But the Schuetts haven't had a heart-to-heart about selling the properties yet because Brian has been so keen on making them work. "Our strategy has been to practice 'avoidance,'" says Amy. "But you don't have to be a psychiatrist to see that."

Two "investment" properties, no tenants, no hope for tenants, no plan. Just a "keenness to make them work".

What's the strategy? "Avoidance."

How can it not end badly?

Last year, for instance, Brian's parents gave the Schuetts a horse named Red for their kids to ride. They think it will cost a few hundred dollars a month to feed and care for the animal, and they're willing to give up ballet lessons and gymnastics classes for the girls to pay for it.

The trade-off is worth it, says Brian, because "the kids so love having a horse."

In fact, Amy has already got a name if they get a second horse: Buttercup.

Oh, good! A horse.

Note that they "think" it'll cost a few hundred. They don't actually have any solid numbers. And they're planning on a second horse while their finances are all fucked up.

Also, who cares what the kids love? If they love riding so much, you can always give them "riding lessons" just like swimming or gymnastic lessons. You don't "need" to own a horse.

Who actually believes that this will not end badly?

Broke is the new black!