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Finance to death, in debt for life

Why Americans can’t live within their means.

Author: Jordan G Estabrook

You can finance just about anything these days.

It used to be when you bought a home and car. Now, you can do a payment plan for your clothes, education, electronics, furniture, engagement rings, you name it. We went from financing necessities to financing luxuries. Financing a home is to be expected, but we end up financing a house that’s more than what we need. Could’ve financed or bought a cheaper car, but we had to have the best and more expensive model.

Overspending on the federal level is also a huge problem. And yes, both democrats and republicans like to make it rain. Former President Donald Trump and President Joe Biden sent out stimulus checks, according to Nerkar and Thomas-Deveaux at FiftyThirtyEight, the results have been devastating for low-income Americans:

“...a recent analysis from researchers at the Federal Reserve Bank of San Francisco found that the stimulus may have raised U.S. inflation by about 3 percentage points by the end of 2021. Americans are struggling financially as a result — particularly low-income people who don’t have a cushion to absorb higher prices. Moreover, inflation is outpacing wage growth. Despite a 5.6 percent jump in wages year-over-year, 8.5 percent inflation in March 2022 meant that Americans saw a nearly 3 percent decrease in inflation-adjusted wages.”

No party is blameless here.

Before you know it, you have everything but own nothing. Someone has to pay for it.

There are two problems that Americans have:

Mindset one: I can finance and pay later, which typically results in a good load of debt over time.

Mindset two: To solve the problem from mindset one, Americans want the government to come and pay for it and “forgive them” so-to-speak, an example being an abundant amount of student loans or more stimulus checks.

With these two mindsets together, it creates a never-ending problem of spending and then expecting somebody else to pay for it.

Listen, I’m not an economics expert. Far from it. I learned my financial philosophy in high school, and it was one phrase:

There ain’t no such thing as a free lunch.

Nothing is free. Someone is paying for it, whether it’s you now or you later.

But somehow there are Americans who believe money grows on trees and that we can solve our national debt problem by spending more. More things are given to them then earned. Joe Biden will forgive their student loans while they continue to indulge in a lifestyle of Postmates and champagne.

All of that is now changing. With inflation at a 9.1% high, every American is feeling the pulls of a wallet bleeding cash.

“The energy index rose 7.5 percent over the month and contributed nearly half of the

all items increase,” said the U.S. Bureau of Labor Statistics. “With the gasoline index rising 11.2 percent and the other major component indexes also rising. The food index rose 1.0 percent in June, as did the food at home index.”

In their report, virtually every cost has increased. Even Americans who have done well to live within their means are suffering. Grocery, gas and energy prices are up significantly. I could show you the statistics, but your wallet is all the proof you need.

America’s mentality as a whole is to spend and pay later. We do it in our daily lives and so does our government. And there’s another principle that applies here as well: our bad (or good) financial choices don’t just affect one person. They have the potential to affect everybody. Poor spending choices in the federal government will affect just about everyone. Those in a higher income bracket will most likely feel these effects less, but low- and middle-income Americans will feel more financially stressed.

If student loans are forgiven, taxes go up for people with no student loans in order to pay for that “forgiveness.” Choices have long lasting and widespread effects.

The solution is complicated and above my paygrade and intelligence, but here’s where you can start with:

Begin by paying for your own lunch.

The views expressed in this article are the author’s and do not necessarily represent those of Resident Skeptics.

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