US families: times are hard but traditional values flourish
New Albany, Ind.
''To get ahead in America, you have to be willing to relocate.''Skip to next paragraph
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Dennis Feiock is voicing an old truism about American corporate life. But for him and his wife, Bonnye - and for an increasing number of middle-management executives like him - it is apparent that the well-worn ties between success and mobility are beginning to fray. Sitting in their living room as the late afternoon sunlight glows in the treetops outside, the Feiocks are not about to move.
As we talk about personal finances, life style, and the direction now being set by the federal government, one subject keeps reappearing: America's housing crunch. In housing costs, both real and anticipated, the sagging national economy makes itself most strongly felt in the lives of many executives like Dennis, in the $30,000 to $40,000 salary range.
And those costs - reflected in mortgage payments, remodeling costs, and fuel bills - are making some significant changes in the life style of this upwardly mobile group.
In some ways, Dennis Feiock (pronounced ''Fowk'') is typical of the nation's fast-moving young executives - those whom Europeans caricature when they accuse the American businessman of getting out of bed in the morning and heading home to his job. Spend several hours with Dennis and it is obvious that he suffers no lack of ambition. He admits (and Bonnye agrees) that ''I'm somewhat of a workaholic.'' As assistant manager of industrial relations for the Henry Vogt Machine Company (a local manufacturer in nearby Louisville, Ky.), Dennis pours himself into his work.
Nor is Dennis unfamiliar with corporate ladders. For a dozen years he moved around the country, living in Florida, New York, and Arkansas as a personnel officer with General Electric before coming back to live in his hometown. He recognizes that his present position allows little room for advancement; the top slots in his firm are filled by members of the family that owns it. But that fact is more than offset by another: Louisville is the firm's only location, and the Feiocks will never have to move again.
It is not that they have suffered financially in their past moves. When Dennis and Bonnye were married in 1969, they bought a house for $24,000 - which sold two years later for $32,000. Their next house went from $41,000 to $68,000 in four years. They then bought a house for $45,000, kept it one year, and sold it for $52,000.
In each case, he says, they bought ''a good basic house that was run down.'' Not only did they make money. They also gained the experience that finally allowed them to embark on their own project - building a large (3,500 -square-foot) contemporary house of their own, doing all the contracting and much of the actual labor themselves.
Like many Americans, the Feiocks and their three young children are, as Bonnye says, ''very family-oriented'' - and consequently very house-oriented. To talk with them about family finances, in fact, is to talk about housing costs.
''We put money into housing more than anything else,'' says Dennis. Having decided to settle for good in New Albany - on a half-acre lot once owned by his parents, who still live in sight of their house - they drew up plans for their house in 1979 and set to work. ''For a whole year,'' he says, ''we didn't see anybody while we were building this house.'' The result: a spacious and elegant home worth, he estimates, $125,000.
Now, three years after they began building, the effect of their decision to build is still being felt. During the four months of basic construction, interest rates went from 8.5 percent to 13.5 percent - and their project went $ 10,000 over budget. ''We kind of overcommitted ourselves,'' says Dennis.
It was an overcommitment not uncommon in the housing market today. In the 15 years since 1967, while the nation's gross average weekly earnings have increased 2.6 times, the cost of financing a home - mortgage principle and interest, insurance, and taxes - has increased five times, according to November 1981 Department of Labor figures.
The result: An 80 percent mortgage on a modest $75,000 house costs, at today's rates, over $1,000 a month - which, by the old ''25 percent rule of thumb'' widely accepted in the banking industry, requires a family income of $48 ,000. According to the Census Bureau, the median American family with a mortgage devotes only 19 percent of its income to housing - simply because many have old, low-rate mortgages. But families who move encounter what Allan Groves of the Federal Home Loan Bank of Boston calls ''a stairstep function'' - a sudden escalation in the amount they must pay to maintain their standard of living.
Yet Dennis, like many homeowners, stands to benefit from the very thing that most worries the Reagan administration: inflation. Continuing inflation would drive up his salary, while his monthly mortgage payment remains fixed. The result: housing will take a smaller part of his salary - as long as he doesn't disturb the equation by moving.