A significant portion of Americans face financial challenges, with many living paycheck to paycheck and struggling to meet their financial obligations.
Living Paycheck to Paycheck
In recent months research shows that approximately 63% of Americans were living paycheck to paycheck, indicating that a majority of individuals have little to no savings and rely entirely on their next paycheck to cover expenses. Citation: Zippia
Financial Strain and Struggles for Almost All Working Folks
Financial strain is not limited to low-income households. A survey by LendingClub found that 40% of individuals earning over $100,000 annually also live paycheck to paycheck. Citation: CBS News
Delinquency Rates on Various Debts
Delinquency rates, which measure the percentage of debt payments that are overdue, have been increasing across various types of debt:
- Credit Cards: In the first quarter of 2024, 8.9% of previously current credit card holders fell into delinquency, marking the highest rate since 2011. Investopedia
- Auto Loans: Approximately 8.0% of auto loan balances transitioned into delinquency over the past year. Federal Reserve Bank of New York
- Mortgages: Mortgage Rates for workers has tripled. Rates are up 200% right now from about 3% to 9%. Monthly mortgage payments are extreme at this time.
- Student Loans: 40 Million families have student loans with the debt burden being 300% higher over the last 4 years. The government has overcharged families with school loans by 200-400 Billion dollars in the last 3 years. To be clear, Over the last three years, if the monthly interest rate on $2 trillion in student loans increased from 3% to 9%, borrowers would have paid approximately $429.2 billion more in interest. Thus, Biden and Harris took and EXTRA $10,000 dollars from every family with loans. (Investopedia)
Regional Variations in Delinquency
Delinquency rates vary across different metropolitan areas. For instance, in Greensboro, North Carolina, 26.8% of consumers are behind on credit card payments, while in El Paso, Texas, 24.8% are delinquent. Citation: LendingTree
Impact of Inflation and Rising Costs
Persistent inflation and rising costs for essentials such as housing, healthcare, and education have exacerbated financial strain for many Americans. Despite a resilient job market, these factors have led to increased debt and higher delinquency rates. Citation: Investopedia The enormous majority of Americans are worse off today than 4 years ago.
People on Public Assistance Don’t Even Know How Bad Things Are
With approximately 25% of Americans relying on public assistance programs—including food, housing, healthcare, and utilities—a significant portion of the population is shielded from the economic pain and pressures of inflation and job scarcity.
These free programs, essential as they are for supporting vulnerable groups, inadvertently affect the standard of living of working families, teachers, union workers, women and working minorities.
When individuals receive these free goods and services without the need to work, they are insulated from the rising costs of living that affect those outside the free network. This reduces the incentive to seek employment, contributing to a decline in overall workforce participation. As fewer people engage in productive work, GDP growth slows, since economic expansion depends on both labor input and productivity and this contributes to the national debt as well.
Moreover, increased demand from publicly funded consumption, without matching productivity, drives up prices for taxpaying families, furthering inflation.
This inflationary cycle impacts working families and taxpayers in medium to large cities hardest, as they face rising costs in housing, healthcare, food, utilities, heating oil, and other essentials.
Thus, while public assistance provides a vital safety net, over-expansion of these programs has lead to reduced GDP growth and inflation, placing economic strain on the rest of the population who is working and pulling the wagon. Furthermore, the people who are paying taxes are now burdened with expanded fees, interest, and costs on all loans that they hold which is bankrupting many families today.
As a note of caution to all new immigrants and migrants, each of you will be on the hook for a lot of money in debt once you become a citizen. Each new American citizen would inherit approximately $97,143 in national debt with $34 Trillion in debt and 350 million citizens.
If Trump is elected again, I sincerely urge the new administration to sit down with a new commission and panel of taxpayers, CEOs, union bosses, and governors to find ways to implement new benefits and new health care for taxpayers and workers.
Since unions can’t negotiate a penny more from suppliers, workers, shareholders, communities and customers, they government is the only stakeholder left who can provide any relief. City, state and local taxes are also pummeling the workers, and they must have relief, deductions, child care relief, health costs relieve, and potential expense deductions for any new business related activities or working from home. Remember, healthy workers increase national GDP.
Conclusion
The financial landscape in the United States reveals that a substantial percentage of individuals are living paycheck to paycheck and struggling with debt obligations. This issue spans across various income levels and regions, highlighting the need for comprehensive financial education and policy interventions to address the underlying causes of financial instability.
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Commissioner George Mentz JD MBA CILS CWM® is the first in the USA to rank as a Top 50 Influencer & Thought Leader in: Management, PM, HR, FinTech, Wealth Management, and B2B according to Onalytica.com and Thinkers360.com. George Mentz JD MBA CILS is a CWM Chartered Wealth Manager ®, global speaker - educator, tax-economist, international lawyer and CEO of the GAFM Global Academy of Finance & Management ®. The GAFM is a EU accredited graduate body that trains and certifies professionals in 150+ nations under standards of the: US Dept of Education, ACBSP, ISO 21001, ISO 991, ISO 29993, QAHE, ECLBS, and ISO 29990 standards. Mentz is also an award-winning author and award winning graduate law professor of wealth management of one of the top 30 ranked law schools in the USA.
The Wall Street Journal - American Borrowers Are on Shakier Ground. These Charts Show Why.
Barron's Americans' Overdue Bills Are Mounting Up. More People Are Missing Payments.
Investopedia More People Are Falling Behind On Credit Card Bills
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