Financial fire drill

Harvard Law Professor Elizabeth Warren is an expert on bankruptcy and is an outspoken critic of consumer lenders.

On this All Thing Considered interview, Warren argues that two-incomes families are at the greater financial risk than others.

A paradox

A middle-class lifestyle is increasingly out of reach for middle-class families, many of whom are going broke trying to attain it. And they generally need two incomes to make ends meet.

However, it's reliance on that second income (usually mom's) that's putting them in financial peril. By counting on two incomes to fund the basics of a middle-class lifestyle - including modest homes in safe neighborhoods with good schools and high-quality child care, preschool, after-school care, or college - families are without their safety nets.

Safety nets

A generation ago, if the sole breadwinner lost his (or her) job or became disabled, the family had a backup earner who could readily step into the workforce.

Today, families who hit a financial rock in the road often turn to credit cards, mortgage refinancing, and payday lenders - often at ballooning interest costs that drag families into a spiral of debt. More and more, bankruptcy becomes the only way out.

Financial fire drill

1) Can your family survive without the second income?

2) Can you downdrift the fixed expenses?

Don't stretch yourself to buy a house you can't afford.

3) What is your emergency backup plan?

- Protect what you value the most, such as family and home.

Warren encourages families to create a plan - savings to cover the mortgage payment for a few months, valuables to sell, a relative to move in with if circumstances dictate giving up the house - before disaster strikes and debt rages out of control.

Lastly, Warren really discourages families from using credits as safety nets.