In this day and age, you'd think that the gap between the
wealthy and poor would be closing in, but in fact the
opposite of this ideal is currently happening here in the
US, and even the middle class is starting to feel the
squeeze of living paycheck to paycheck.
Reports are surfacing that due to the increases and
constant fluctuations in gas prices, heating, electric,
food and mortgage rates, many are feeling their wallets
tighten, and it isn't simply limited to what was considered
lower income families and individuals.
There are food donation services and soup kitches that are
reporting increases in patronship, and it's at quite an
alarming rate of increase to boot - around 30%.
Not only are the poor seemingly getting poorer, but the
middle class now are also starting to live paycheck to
paycheck and struggling to make ends meet, while the rich
and wealthy seem to be getting richer and wealthier.
It's not abundantly apparent why this is, and that would
most likely take a very large study in demographics and
social economics to figure out the reason or reasons, but
the fact still remains that we are a culture that is living
in extremely difficult financial times with very little
wiggle room for things to get much worse.
I just went to the gas pump the other day and paid over $40
to fill my modestly sized tank. Imagine if that $40 was
almost ten percent of my paycheck, which it quite frankly
is for many people.
Now imagine that you have to fill that gas tank several
times a week to get to and from work to make money. You
get the picture.
Things like gas prices and the cost of living are sucking
people dry, and more and more people are cutting back on
spending in areas like food and essentials just so that
they can actually pay their rent and mortgages, and pay to
keep their children in a heated home in the winter.
This is the bleak reality of living today, and
unfortunately it is the reality for a growing segment of
our population unless things get better soon.
How can we expect people to put away for their retirement
savings when they are struggling just to survive? Which
brings me to another issue that is common today, those
relying on social security payments to live.
Many elderly who do not have money put away for retirement
and have had to rely solely on social security payouts,
which occur only once monthly, are finding it nearly
impossible to make this money stretch an entire month for
all of their necessities, let alone a little frivolous
spending once in a while.
This impacts the economy as a whole, since this means less
people who can go spend their money at places of business,
which depends on us as spenders to keep the economy going.
It then becomes a vicious cycle since the economy relies on
spending by consumers to keep going strong. Businesses in
turn employ people, and when they aren't making enough
money from consumer spending, they are forced to make
employee cutbacks and layoffs to allow for less revenue.
The housing market has also taken quite a fall over these
past few years, with news of even greater woes coming out
virtually every month, and news of big housing companies
going under or filing for bankruptcy.
This was also fueled by speculators who had gotten into the
whole flipping craze and bought up real estate without
actually having the right financial backing to do it, and
when their houses didn't sell, we saw a lot of these would
be flippers bankrupting the mortgage lending market.
Speculation also is that the middle class is spending above
their means, with a "competing with the Joneses" mentality
that homes have to be grandiose with the latest appliances,
high end landscaping, central air and all the latest
electronics to fill it to boot.
Just a decade ago, we didn't see all the homes with the
nine foot ceilings, prime woodwork with stainless steel
appliances, the kitchen you could play catch in, and five
bathrooms.
Today, many people think this sort of thing is "standard",
and that mentality is not exactly helping the middle class
retain their middle class status.
The middle class is quite simply over spending many
economists say, and they are putting themselves in deep
revolving debt to live a certain lifestyle that was not the
"norm" years ago. This leaves the middle class with a
severe shortage of cash flow for the extras in life, as
well as in mounds of debt, and with very little leftover,
if any, to save for the future in interest bearing accounts.
This could definitely spell trouble for the future when
this class is retiring and finds they do not have ample
money to retire comfortably on, i.e. to retire living the
same lifestyle they did pre-retirement.
This anecdotal data, paired with data showing the economy's
state of affairs definitely spells trouble for our
financial futures. If you feel you fit into one of these
classes, there are some excellent tips you can get for
investing for the future even while on a strict budget,
available for free online.
Just check out CNN Money or Motley Fool and you'll get
daily tips and tricks for stretching your dollare as far as
it can go. After all, your financial future and current
financial situation can only be helped by one person, and
that is YOU.
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Danna Schneider founded the credit card catalogue at
http://www.creditcardcatalogue.com for information on low
interest credit cards, special interest credit cards, and
the best deals currently going in credit. She also manages
an online financial and credit info blog where the latest
rates and other financial benefit news can be found at
http://www.primeratecredit.com .
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