The United States is fighting a terrible economic war. About 12% of working families in the USA, according to CNBC, experience severe financial instability and are unable to pay for credit card bills, rent, food, health care, or vacations. [i]
According to The New York Times, Harvard, and the government’s USDA, rent and food inflation have effectively killed the American Dream for the majority of workers this time. [ii] [iii] [iv]
An essential component of managing personal finances is creating a budget and saving money. For the working family and the country as a whole, financial security and planning are contingent upon knowing the percentage of income allotted to these basic necessities. This essay emphasizes the devastation that has befallen working families, union members, and minorities in all major American cities, as well as the bone-crushing inflation in food and rent costs.
The data also reveals some of the hidden taxes that working families must pay, such as real estate taxes, utility taxes, and internet taxes.
Although financial experts have long advised against paying more than 30% of one’s monthly salary for rent, American budgets are currently practically insolvent due to prices much higher than 30%. [v]
Rent vs Long-Term Objectives
For most people, including families, one of the biggest expenses is rent. Rent as a proportion of income varies greatly based on location, kind of housing, and individual preferences, among other things. Rent usually takes up a bigger percentage of a monthly salary in cities or other areas where housing is in great demand.
The percentage of income allotted to inflation-adjusted rent has a substantial impact on working families’ ability to pay for loans, credit card bills, medical care, and other expenses. Excessive rent burdens, in which housing expenditures account for a large percentage of income, can put a strain on finances and reduce discretionary spending on things like a yearly trip. Furthermore, paying too much rent undermines savings efforts and prevents people from moving closer to long-term financial objectives like retirement planning or homeownership.
Regarding feeding your kids, The Wall Street Journal reports that food inflation is at its highest point in thirty years at the moment. [vi] Note: This past year, my family and I helped at a food bank to give food to people. It is frightening and upsetting to witness hardworking families struggling to make ends meet. Everyone understands that buying food is essential to a family’s monthly survival, yet for the first time in three decades, many working families can no longer afford healthful foods.
Inner City Damage
Regrettably, the expense of food, taxes, tolls, parking, baggage, and increased prices for commodities are all higher for people living in inner cities or urban areas. Food prices in inner cities are usually higher due to several factors such as high store rentals, increased insurance costs, theft, litigation risk, higher local real estate taxes on grocery providers, and so on.
Urban renters’ rents are unfairly increased by many of the same risks, taxes, insurance, and government fees. Food and rent costs are essential parts of monthly budgets and have a big impact on people’s financial security, yet working Americans are becoming more and more of the “Poor House” due to inflation and government incompetence. [vii]
Politicians imposed a 24.5% levy on your wireless internet bills in 2023, which made matters worse. [viii] The other unintended hit to customers is the 22.6% tax and surcharge on standard airplane tickets for attending a loved one’s funeral. [ix] [x]
These days, the government’s interest rate policies are the primary cause of the largest inflation problems. The worst inflation and lending rates in over 30 years are currently present for credit cards, auto loans, house loans, and student loans. Working households currently pay credit card interest rates of about 22% APR yearly. Anyone who gets hurt, becomes crippled, or loses their work could easily become bankrupt from this.
Hazardous Taxes
In case you were curious, the total cost of an electric bill includes taxes and fees up to 27%. Because of the poisonous hidden taxes, hazards, litigation, and fees in the USA today, many people are fleeing high-risk states and cities like New York, Chicago, and San Francisco in order to survive. [xi]
It is critical for families, small enterprises, and even our country to comprehend the full scope of taxation, risk, and inflation. Effective budget management and long-term financial planning require that a family’s monthly income be divided equally between rent, food, expenses, and taxes. However, many families are currently in debt, losing savings, and accruing more fines and fees from the government due to a record number of borrowings from credit cards or 401(k) accounts. [xii]
All things considered, President George H. W. Bush attempted to address these same kinds of inflationary concerns in 1992, but he was soundly defeated, with the Clintons winning the presidency with a pitiful 43% of the popular vote. That essentially indicated that 57% of voters rejected the Clintons. [xiii].
Since the Federal Reserve cannot currently help the economy by cutting interest rates, state and local politicians will likely suffer a great deal in November. In general, the last three years have seen a decline in American prosperity. Based on the Federal Reserve’s fundamental data, the Dow Jones Industrial Average would now be worth roughly 43,056.63 instead of 39,202.00 if it had only increased in line with monthly inflation during the previous three years. [xiv] As a result, seniors have suffered greatly from inflation, with their purchasing power declining yearly.