Gas prices and housing costs are rising across the nation. With the increased prices for housing and gas (as well as food, transportation, and even medical care), American families are just spending more. However, for many, the increased expenditure isn’t just a change to their bottom line; it wasn’t in the budget. So, where are they finding the additional funds?
Increased Pricing Means Higher Demands on Americans’ Incomes:
Consumers are paying more for what they are used to buying, from filling up their vehicles with gas to groceries to used vehicles. The overall higher cost of living is putting heavy demands on household incomes. In most cases, household income fails to keep up with the increasing prices.
When Income Fails to Keep Up with Increasing Prices:
For a notable portion of U.S. households, increased spending due to higher prices on necessities means increased debt; from credit card balances to auto loans, the average American household now owes approximately $155,622. Moreover, median American income dropped 3% in the last two years. In comparison, the cost of living during that same period rose almost 7% (with a significant portion of the increase due to higher housing and medical costs).
Financial Relief from the Strains of Higher Costs of Living:
About 78% of Americans have received pandemic relief in some form since March 2020. In popular polls, numbers indicate that the financial stimulus payments issued as pandemic relief went towards paying down debt, savings, or buying necessities. But despite the poll results, over ⅓ of consumers also claimed their financial situation deteriorated during the past year. After paying off $83 billion in credit card debt (a record-breaking number), American credit balances are rising again. And even more significant, student loan debt, mortgage, and auto loan balances are all on the rise. In addition, during the past year and a half, many Americans faced job loss or drastic changes to their workplace situation (decreased hours, pay cuts, loss of benefits, increased work duties, etc.) The combination of factors has left many American households struggling to stay on top of the cost of living and facing mounting credit card debt despite financial relief provided by stimulus checks and other assistance programs like expanded unemployment benefits.
Covering the Higher Costs of Living with Debt:
Some expect wage increases in 2022. In addition, the government still offers assistance in the form of increased Supplemental Nutrition Assistance Program benefits, federal assistance for renters behind on their rent, and an extended payment pause for federal student loan borrowers through May 2022. However, many are still facing a financial crunch. The average American household carrying debt is now holding a balance of $155,622 (a total of $15 trillion across the nation), which is up 6.2% compared to last year.
If the higher living costs have left you facing an impossible financial situation, and you need to discuss the benefits of filing bankruptcy, get in touch with Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. You are in good hands with Kenneth C. Rannick P.C.