Paul And Liz Friedman have professional careers. With their two paychecks, they are buying a $70,000 a-year version of the American dream.
Yet, despite the trappings of their success-a restored Capitol Hill town house where the morning sun streams through bay windows, where a cleaning woman makes all the surfaces shine-there is an uneasy sense that womething is missing.
They do not feel rich.
Across the Potomac River, Dave and Pat Arnaudo are similarly restive. Sharing a five-bedroom, 1810 town house in Alexandria and a combined annual income of $80,800, they say they know it sounds "Ludicrous with all the money we make, but we have no margin."
"You're just a working person," said Dave Arnaudo, 36, a GS-15 who is director of income maintenance for the Social Security Administration. "When I was in law school, I thought that if I made this much money I'd be rich. I still think I should feel wealthy, but I don't."
The couples are typical of the Washington area's growing number of dual-income professional couples-lawyer married to lawyer, lawyer married to doctor or high-level bureaucrat married to high-level bureaucrat-whose spending habits have inexorably crept up on their high-powered salaries.
While inflation gnaws away at the income of the average wager earner, these professionals who combine two incomes might be expected to feel financially secure. But they say they do not. And in Washington, where the average house goes for $105,000, the average household earns $22,991 a year and big-spending professionals have bid up the price of items ranging from Volkswagen Diesel Rabbits to live-in maids, financial advisers say the Friedmans and Arnaudos and others like them have solid reasons for feeling frustrated over money.
While the precise number of professional couples in the Washington area is not known, the number nationwide has jumped more than 266 percent in the past 19 years, from 488,000 to 1.3 million. Washington, according to population analysis, is at the leading edge of the increase.
The increase, experts say, has contributed to soaring inflation in the housing market, a boom in retail sales, a revolution in traditional male and female roles, a decline in the birth rate, a shortage of housekeepers, new demands for child care and behavioral problems for adolescents.
In Washington and elsewhere, those problems are rooted in money. Professional money advisers say high-income couples lose their money to taxes, the expenses of a second worker in the family and the sudden hunger for material gratification. Many couples say they have recently come to the disturbing, even jolting, realization that they don't know what $60,000 or $80,000 a year is worth.
"You don't feel wealthy when you think of what it costs to live in Washington," said Paul Friedman 35, a lawyer. "The costs so far outdistance the value, you don't feel at the top of the ladder at all."
The monthly tab for the Friedmans' American dream is $2,798. This includes $195 for dinner parties and dining out, $660 for the mortgage and $537 for a tax shelter. It also includes money for vacations. Two years ago the Friedmans went to Kenya, last year to Greece. Each month, after picking up this tab and paying their taxes, they have $702 to bank or to do with as they please.
"I wouldn't say we pamper ourselves, but we don't deny ourselves either," Liz Freidman 30, an administrator for the District of Columbia Bar Association, said. "We both work very hard [about 10 hours a day] and we give ourselves little presents."
The Arnaudos acknowledge they have many luxuries. They own a five-bedroom, fully restored 1810 Alexandria town house that they bought for the bargain price of $35,000 in 1970. They also own a cabin in West Virginia that they bought for $11,000 last year and in which they have invested more than $5,000 since. They have taken five European vacations in the past 10 years, at an average cost of about $1,500. Their town house is filled with fine antiques-including a 1754 Thomas Finney grandfather clock made in England and a 17th-century wooden wing chair made in Amsterdam. The Arnaudos spend about $2,000 a year buying antiques.
An informal accounting of the Arnaudos' living expenses, including their cleaning lady and season tickets for the ballet, theater and opera, shows them spending about $2,500 a month. Their after-tax monthly income comes to about $4,300.Dave Arnaudo said he and his wife are looking to invest the difference between expenses and income, but can't seem to get enough cash together.
"We don't make enough money for [forming] tax shelters [an action which accountanta say requires about $100,000 in assets in addition to a house], but we make enough so the tax man gets it all," Arnaudo said. He also said that he "really doesn't want to fool around with" tax shelters, but feels compelled to do so because of a federal income tax bite that takes about 35 percent of his and his wife's income.
According to tax accountants and real estate agents in Washington, the first thing that high-income professionals must do with their money is pay taxes. The second thing they do is buy a house.
"House ownership used to give you some place to raise your family," said Charles Krogman, a real estate agent who has sold houses in Northwest Washington for 18 years. "Now a home is a place for a tax break." The cost of the average tax break in Northwest, Krogman said, is about $120,000.
The marriage of many professional couples throws them into a tax bracket where half of their income is subject to federal income tax, according to Norman Lester, an accountant who caters to Washington professionals. Lester said couples are willing to pay more for a house than it's worth because of the tax advantages of having debts on property.
Professional couples and their lack of concern about inflated housing prices have unquestionably pushed prices even higher, according to Bruce Steele, chief of housing programs for the Washington Council of Governments. Most nationwide surveys show housing costs in Washington second only to San Francisco, another center for young professionals.
Because of housing costs, many couples say their large salaries mean little. Paul and Liz Friedman, who bought their Capitol Hill town house for $83,000 in 1976, say they would like to buy a "nice house" in Northwest Washington, but are discouraged by prices $150,000 and up. In the Springfield are of Fairfax County, an area undergoing an explosion in home building, Supervisor Marie B. Travesky says that many professional couples have bought more expensive homes than they should, saddling themselves with mortgage payments of up to $1,000 a month and slipping into a "malaise" of financial over-extension.
According to economists, professional couples lose a large portion of their combined income simply because there is a second worker in the family.
These costs include the "marriage tax," which forces married wage earners to pay more federal income tax than they would if they were single. For example, if a homeowner on Capitol Hill who makes $45,000 a year marries a woman making $25,000 a year, their married tax bill on a joint income tax return will be about $3,800 more than if they remained single and filed separately.
Other costs of having a second worker in the family are child care, communting expenses and a second professional wardrobe. These items and high taxes can eat up as much as half of the second income, according to Richard P. Coleman, an economist at the MIT-Harvard Joint Center for Urban Studies.
Larry Simmsn, 35, a lawyer for the Justice Department, and his wife Beth, 32, a doctor at the National Cancer Institute, spend about $12,000 of their $80,000 annual income on child care and commuting between Washington and their home in Great Falls.
The Simmses pay about $700 a month for child care and housekeeping, and say they are dependent on the "array of personnel we hire to do everything that we should be doing." A flare-up in the arthritic condition of their housekeeper was a major upheaval in the Simmes' family last year.
"There is nothing more important in the mechanics of our lives than security in child care," said Larry Simms. His wife Beth, the daughter of a minister, said she had always thought it "condescending" to speak of the difficulty of finding "good help," but she said without the help, she could not work.
After houses and taxes and other costs that make two careers possible in one family, professional couples and their accountants say that money is spent on "nice quality things."
Washington is the leading new car market in the United States, according to the Automobile Trade Association of Maryland. It is one of the nation's leading markets for luxury cars like Jaguars, Prosches and Mercedes-Benz. Jim Quill, sales manager for American Service Center Associates, which sells about 600 Mercedes-Benz cars a year at an average price of about $23,000, said most of his customers buying their first Mercedes are dual-income families. "They are reaching up, and sometimes they are reaching too much," Quill said.
Washingtonians also spend an extraordinarily high percentage of their food money at restaurants. According to Sales and Marketing Management magazine, people in Washington last year spent more than $1 eating in restaurants for every $2 spent for groceries. The Restaurant Association of Metropolitan Washington reported that last year, $700 million was spent at the area's 5,000 restaurants. "We are doing a heck of a lot of business," said Jack Cockrell, executive vice president of the association.
Assorted expensive wares at stores like Bloomingdale's and Nieman Marcus are also selling well in what Sales and Marketing Management magazine said is the nation's most affluent retail market.
Accountant Norman Lester said many of his clients underestimate the cost of the good live in Washington, while overestimating the buying power of their incomes.
"Some of these people try to move ahead too quickly. These couples make nice money, like $75,000 or $90,000 a year, and they eat out three or four times a week. A lot of them dig themselves into a hole.
"They spend too much money for that first house, and they are into things. They drive a Mercedes, go skiing and don't save enough. After years of deprivation in law school or medical schoo, they think they can afford it," Lester said.
Professional couples who buy too much, too fast subject themselves to stree that damages marriages and erects barriers between them and their children, according to a recent study of suburban life in affluent Fairfax County by the Mount Vernon Mental Health Center.
"People move into Fairfax [where the average house costs $71,200] and are encouraged by real estate agents and their own escalating tastes to buy a big piece of housing, often more than they can afford," said Robert C. Weigl, a social psychologist for the mental health center. "In that house, they erect a shell of a life because that is all they can afford.
"A huge amount of energy that might be used to work on a marriage or rear kids is directed at staving off financial ruin," Weigl said.