The USA was always regarded as the land of opportunity. Hard work would guarantee success and ordinary people would be able to make a comfortable life for themselves and their families. People expected to be able to give their children a better education than they had had themselves and on graduation children could look forward to good career prospects. The US Economy’s strength was the hard working labor force, some with manual skills and others in jobs which tested their intellect and imagination. It seems that those who have regarded themselves as middle class are no longer in as strong a position as they used to be. Some of the reasons are their own fault. The complacent attitude to debt resulted in widespread misery as the real estate market crashed. The ongoing problems with credit card debt shows a high level of irresponsibility.
Other reasons include factors beyond their control. Even the experts did not foresee the Collateralized Debt Obligation crisis that precipitated the recession. Financial plans were destroyed overnight and foreclosures happened throughout every State in the USA. Unemployment resulted in many families being unable to meet their monthly financial obligations.
While the economy has moved forward after the recession, even there consumer spending which is an important part of growth has often been done on credit and the problems that result from that are not always easy to solve. Real wages have not been rising for some time and those who wanted to have the latest technology, a new automobile every few years and a fashionable wardrobe often did it on credit, not from their monthly income.
Some necessities have become increasingly expensive, rising at a rate well above inflation. Medical and educational costs have far outstripped the rate of inflation. Life expectancy is increasing and the prospect of higher medical bills in later life are a real problem. There are other reasons why many in the middle class are struggling:
- The overall level of debt that has been accumulated over years even without the intervention of the recession.
- The performance of the stock market and the low rate of interest that has prevailed in recent years that has meant reduced returns on investment.
- The fact that many people have simply never got into the habit of spending.
- There is still the lingering effects of the recession; the real estate market’s recovery is certainly not uniform across the whole of the Country.
- Unemployment figures look good on the surface but when analyzed more closely they reveal the extent to which part time jobs have become an increasing part of the labor market. There are also plenty of people who though working have yet to find a job that fully utilizes their skills.
The overall conclusion is that the middle class as a whole should look at its financial management skills and whether there are obvious ways to improve them.
Personal Budget Decisions
While you may find this difficult to believe there are clearly many people working in a business that requires a proper budget and cash flow in order to make good management decisions who don’t realize that they should use exactly the same process in their personal financial lives. A household budget that includes all income and expenditure will soon identify where there may be problems. If monthly expenditure is being supported by using a credit card that is an indication of overspending.
Credit cards incur a high level of interest at the end of each month after a card holder’s payment has been deducted. Those who make just the minimum payment will hardly reduce their balance. It is a debt that needs to be cleared and can be by a personal loan that attracts a far lower rate of interest. Online lenders will assess realistic applications and make an immediate decision before transferring the funds within a working day. That loan paying off an expensive balance can be repaid by installment that is entered in the monthly budget instead of payments to the credit card company. That is just a single, but very important, part of getting things in order and going against the trend of someone in the middle class who is struggling.