When a Possible President Was Your Personal Finance Guru

Future U.S. senator Elizabeth Warren teaches a class at University of Pennsylvania Law School in the early 1990s.

Source Leif Skoogfors/Corbis via Getty

Why you should care

Because Elizabeth Warren’s political rise began with the help of Dr. Phil.

Jordan was in his 20s, starting his career and about to get married when he heard a Harvard professor on NPR talking about a counterintuitive idea in her book The Two-Income Trap: that families with dual incomes are actually at greater risk than other families, statistically more likely to have financial disasters befall them. In order to protect themselves, couples should learn to live on one income, the author suggested. “It scared me sufficiently to always aim to contain family spending to a level of the lower earning partner,” Jordan wrote on Reddit, describing the effect of reading the book in a post that garnered nearly a thousand comments.

Now 15 years later, the Seattle tech worker (who did not want his full name used when discussing his family finances) says in an interview that the book’s advice benefited his life. It allowed him to take risks, including taking a pay cut to join a startup, and his wife to open her own Etsy business and, later, stay at home with their son during his formative years. The punch line? The financial guru who put him on that positive financial path is now running for president. 

There was nothing to suggest that Elizabeth Warren, a bookish college professor, would eventually launch herself to political superstardom. But a few key events shaped her, transitioning Warren from wonky bankruptcy law academic to U.S. senator from Massachusetts. One of them was the day she appeared on Dr. Phil in March 2004. There, the pop-television psychologist asked her to advise a couple up to their eyeballs in debt who were considering taking out a second mortgage on their home and blaming each other. And so Warren stepped in with a made-for-TV line, likening that second mortgage to a game of roulette, with their lives on the line.

While Warren is now adept at taking macroeconomic problems and applying them to the little people, that wasn’t always the case. 

 

The success of her first appearance spawned two more. And although the Harvard professor and author was already well-known in certain intelligentsia circles — the release party for The Two-Income Trap was attended by future Supreme Court Justice Elena Kagan and then-Sen. Ted Kennedy, as Politico’s Michael Kruse reports — this was her coming-out party. “When she got on Dr. Phil, that changed everything,” says Antonia Felix, author of Elizabeth Warren: Her Fight. Her Work. Her Life. 

It’s a fact the presidential candidate readily admits during an interview after a recent town hall in New Hampshire. “The event here in Plymouth is about reminding people about their political power. Dr. Phil was about reminding people about their economic power. And I loved it,” Warren says. It was when she began making the transition, she says, “from just talking to other people who were professors or doing research, to actually talking to working families, in a way that would be helpful to them individually.” 

 

While Warren is now adept at taking macroeconomic problems and applying them to the little people, that wasn’t always the case. She had the right background: The Oklahoma-born “accident” baby and fourth child of her occasionally working mother and salesman-turned-janitor father, she had worked her way to the Ivy League from such less-heralded schools as the University of Houston and Rutgers University (her academic rise came as she claimed Native American heritage with little basis, for which she has been widely criticized during her political career). Still, when it came to writing, the personable Warren was a bit of a wonk: Her earlier titles include such academic tomes as Secured Credit: A Systems Approach and The Law of Debtors and Creditors: Texts, Cases and Problems. “She was a law professor studying bankruptcy,” as New York City book editor Jo Ann Miller puts it, both in title and in style.

But Warren wanted to reach a broader audience. Her first stab at The Two-Income Trap was just called “Trapped,” says Miller, her editor, and its first draft was controversial within the publishing house, Basic Books. “There was some belief that it was anti-feminist: When women went to work, families got in trouble,” Miller says. That wasn’t the actual argument — instead, it was that families were lulled into complacency by predatory credit card companies and double incomes, and blindsided when one of those incomes disappeared.

But the concern was there. To broaden the audience base, Miller says she helped Warren decide on the “Two-Income Trap” phrasing, and encouraged the professor to add a chapter with practical tips for struggling families. “Something that people can hang on to,” Miller told her. Chapter 7, titled “The Financial Fire Drill,” quickly became a common calling card on Dr. Phil’s show. It asked readers: Could their family survive without one income? Can they downsize fixed expenses?

The final step in Warren’s transformation would come from Dr. Phil as well. After that first appearance, he told Warren the book had too much policy, and wouldn’t actually help families fix their lives. “Write another book, and this time write it for people who can use it,” he told her. 

Warren followed his advice, and All Your Worth solidified her as the public’s financial conscience, establishing ideas so ubiquitous that people forget she invented them. If a relative ever told you to save 20 percent of your income, that’s a product of her 50-30-20 rule. Disparaging short-minded strategies like no longer buying lattes, she mastered the listicle before BuzzFeed ever existed, with sections like “6 Steps to a Lifetime of Riches” and the “Do You Struggle to Save?” true/false test. As Warren campaigns today, her ability to connect the dots for families stands out. And if this road leads her to the White House, it will have started on the set of Dr. Phil

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