We had a great chat last week about Dave Ramsey’s brand of personal finance. One of the few things that we all agreed upon was that there are very different rules for personal finance depending on your education,  geographic location, and age.

Megan McArdle talks about different spending patterns in red and blue states. She says that blue state families spend too much on education. They spend too much on homes to buy access to better high schools and take out a second mortgage on their house to pay for college tuition. Red state families spend too much on their cars.

So, let’s talk about personal finance again, but let’s leave out the examples of the TJ Maxx girl and free-spending medical students. Let’s just talk about middle class, suburban families. I’ll talk about blue-state suburban families, but feel free to bring in the red-state equivalents.

It’s really hard to come up with an ideal-type suburban family. Even if I narrow down suburban families to this little area of Northern New Jersey, I can think up dozens of different models. Three examples with fictional names:

1. The Pre-Boom Family – There’s a big difference in finances between families that bought their homes before the housing boom and those that bought their homes after the housing boom. Kate bought a really cute home on a nice block in a nice suburb for $220,000. One year later, that house was worth $500,000 without a single improvement. She and her husband were able to put down a 50% down payment. In their early 50s, they have no mortgage. She’s a SAHM and will never need to work. They put on a huge addition on their house and take fabulous vacations. Even with the real estate corrections of the last year, their home with their improvements is now worth $750,000. They are frugal, but their stability comes from their real estate luck.

2. The Post-Boom/Declining Income Family. Dan bought his home three years after Kate, so he has a 30-year mortgage. He and his wife work at two careers. Each of those careers have seen a significant drop in income. One of those careers used to support a family in the 70s, but now they need to double up to get by. With two full time careers and long commutes, they have greater expenses than Kate. They have to pay for childcare for their three children. The need a housecleaner and lawn services, because they are never at home to do those things. They have to spend more on their vehicles. They often need take out food from restaurants.  They buy lunch at work every day, because they have no time to make sandwiches the night before. They can’t shop around for supermarket deals; the only time that they have to shop for food is Sunday afternoon. It’s nearly impossible to be frugal, when you have no time. Even if they found time to make sandwiches the night before, Dan would still be financially shaky, because he bought his home at the wrong time and because his salary is low.

3. The Education Spender. Sue buys a house in the most expensive town in order to get access to the top ranked high school. She sends her three boys to sports camps and travel sports leagues, which can add up to $10,000 per year. She hopes that her children will attend a better school or get scholarships, if they are good at lacrosse. Her husband’s salary pays the mortgage, but they don’t have much left over to put into the 401K or to fund the rainy day account. They spend so much on their mortgage that they have no money put aside for college. The kids aren’t super smart, so they probably won’t get any scholarships. College tuition will be funded with second mortgages on the house.

Yes, Sue is doing a lot of things wrong. You shouldn’t spend so much on a house that you can’t fund the 401K plan. Sports are a bad college investment. Nobody should fund college with a second mortgage. It’s better to go to a good public college than an expensive private school. Megan makes those points, and I totally agree with her.

However, there is a practical version of Sue. The first priority should be living within your income and creating a rainy day account, but after that, the next priority should be education. There are more educational options in wealthier towns. Sue isn’t totally stupid. A greater proportional of the high school attends a four-year college, there are more honors classes, there are better special-ed support, the teachers are paid more, and so on. There are many more career opportunities for kid who finish a four-year college, and the high school in the wealthy town gets most of its kids on that track. The trick is to get into the town, but without gettting sucked into the competitive spending environment.

Sue’s home in the wealthy town becomes an investment. It only increases in value, because other families want access to the schools. After the kids leave the high school, Sue promptly sells the home and moves to a cheaper area.

I’m not sure how to come up with personal finance advice that would cover Kate, Dan, Impractical Sue, and Practical Sue. Their situations and priorities are so different. Frugality might be the least important piece of advice.