The Middle Class Is Broke and on the Verge of Bankruptcy Filing

As the mainstream media continues to talk up the economy, one fact can’t be disputed, that disposable income for the middle class American family is becoming a thing of the past. The news continues to tell a story of how the real estate market is recovering and less Americans are filing bankruptcy, hence, a recovery. This is nothing more than a bunch of hogwash. All you have to do is to ask your friends, family members and neighbors how they are doing financially and everyone will complain about the tax increases and the costs of food at the grocery store. That’s not even bringing up gas prices. The government would like you to believe that gas prices go up and down based on what’s going on in the Middle East.

That is only part of the equation and the truth of the matter is gas prices are going up, the dollar is going down in value. Every week it’s something new, sequester, fiscal cliff or some financial disaster that if they didn’t step in and fix it by bailing out a bunch of their donors, the economy would collapse. Most economists stated that it would’ve been better to let the big banks fail back in 2008 and we would be seeing some kind of recovery for the middle class by now. Today the billionaires list was released and as I reviewed it there is something interesting I found. The rich are getting richer through this economic crisis. Many of them increased their net wealth by as much as 50%. Just look at your bank statement and see how much interest they are giving you. It is probably close to nothing, but they are making billions on shorting and manipulating the markets.

A recent study said the average American is three weeks away from filing for bankruptcy. Some people find that hard to believe but in reality it is close to the truth. The truth of the matter is most Americans are living paycheck to paycheck and thanks to the increase in payroll taxes, gas prices and food prices, those paychecks are worth less and less. Most American families have gotten to the point where they have no disposable income for eating out or entertainment as it is unnecessary.

I’ve put together some signs that show the middle class is running out of money and on the verge of a bankruptcy filing.

This week Subway restaurant reported that the recent tax increases has had a noticeable impact on their business. They are estimating a 2% decline of sales since the tax increase at the beginning of the year. Subway is not the only restaurant struggling, many other large chains are complaining and the decline in business.

An article came out last week showing many of America’s largest retail chain stores will be closing down hundreds of stores in 2013. The list included Sears, Best Buy, JC Penney, Office Depot, Barnes & Noble, GameStop and OfficeMax. The economy must be worse than expected for these giant retailers to start trimming the fat.

According to the New York Federal Reserve student loan debt has tripled over the last 10 years. This has translated into most young adults having no disposable income to go out because they are drowning in student loan debt. Student loan debt has now surpassed $1 trillion.

A study released today stated 24% of all Americans have more credit card debt than they do money in the bank. This is nothing more than a cocktail for these individuals to end up filing for bankruptcy as their only alternative. Today, credit card debt is one of the major causes that push people into a bankruptcy filing.

Over the last four years the median income in the United States has declined $4000. Added to the U.S. Census Bureau stated the middle class is taking a smaller share of the overall US income than ever before in history.

As the Dow continues to set new records, the media is singing happy days are here again, Americans need to take an honest look at their own personal situation. They need to keep it real and they need to file bankruptcy they should contact a bankruptcy attorney and discuss your situation. The media as a responsible to pay these people’s bills and people need to wake up and take accountability for their personal situation before it’s too late.

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Bad Credit A Bigger Risk than Terrorism

Yes its true! According to an article written by Dan Seymour of the Associated Press on Monday, the biggest short term risk to our economy is bad credit. According to a survey of 258 members conducted by the National Association of Business Economics (NABE) credit has replaced terrorism as the gravest immediate threat to our economy.

It almost sounds surreal but I actually agree with the findings of the survey. As we continue to deal with the “credit crisis”, the issues have trickled down into our everyday lives at a record pace. The stock market being our first indicator, followed by the fact that 2 million people are expected to lose their homes this year to foreclosure. Even the big boys like Home Depot are taking the hit. Folks, real estate drives our economy far more than we would care to admit. Ask the car dealers, airlines, and other companies that depend on high discretionary income if real estate drives our economy. With less people able to tap cash/equity out of their mortgages through refinancing, Realtors not spending at a very high clip either, and the 100,000+ loan officers who have left the industry our entire economy is feeling the crunch. Builders are building less new homes being which means less work for the blue collar individuals ultimately leading to higher than normal unemployment rates. It is a serious trickle down effect.

Whoever thought that a few missed payments here and there would supplant Osama Bin Laden and his terrorist goons as one of the greatest risk to the U.S.A. I believe it goes back to my blog from last week about “Was the Mortgage a Mistake”. The consumerism mentality of our culture has left us in a very tough position for now. In a perfect world maybe we should have purchased smaller homes with stable fixed rates and chose not to drive our gas guzzling oversized SUV’s. But who know the bottom was going to fall out so quickly.

Listed below are 5 tips I encourage you to use, so we do not continue to add to the threats bad credit is placing on our society:

1) Stop using the credit cards unless you can afford to pay the balance in full for that month. This tip alone will give you a raise in income by having your money work harder for you because it won’t be spent paying high interest credit debt.

2) Pick up the book Smart Couples Finish Rich by David Bach. Married or single this book has some great tips on budgeting and other financial tools that will help you weather the storm and plan for the future

3) If you know you are going to be late contact your creditors in advance. Most creditors will be more forgiving of customers who are proactive about there obligations.

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