Why Are So Many So Close to Bankruptcy?

Much is constantly said about people's dire financial straits. On July 29th Vice President Kamala Harris told an audience, “Most Americans are a $400 unexpected expense away from bankruptcy.” According to the Fed’s 2022 Economic Well-Being of US Households survey, 37 percent of Americans lack enough money to cover a $400 emergency expense, up from 32 percent in 2021. When I hear comments like this I have to wonder if the majority of US citizens are as fiscally irresponsible as the politicians in DC.

The national unemployment rate has not exceeded 4 percent since November 2021.


According to the St. Louis Federal Reserve, real (inflation adjusted) median annual household income set new all-time highs in 2016 ($70,840), 2017 ($72,090), 2018 ($73,030) and peaked in 2019 at $78,250. After the federal government started paying people to stay home it dropped to $74,580 by 2022. Massive increases in federal deficits caused inflation to skyrocket after 2020, this helped erode real household income.


In 1973 the average size of a new home was 1,660 square feet. Now it is 2,273 square feet.


The average price of a new car hit a high of $48,681 in November 2022.


Statistica reports that the 2023 average price of a smartphone is $823. It projects that 123 million phones will ship in 2023. PCMag's Best Smartphone Under $200, an unlocked Moto G Play, costs $100.


Even with people “cutting the cable” and switching to streaming services there were still 76 million cable/satellite subscribers in 2021. They paid an average of over $100/month for the service.


As I drive around the countryside I see self-storage facilities popping up like weeds, so that people can store all their stuff they bought but don’t regularly use.


From 2021 to 2022 credit card debt increased by 17 percent, to $1.11 trillion. The average household with credit card debt paid $1,400 in interest annually. 


Eighteen percent of Americans have used “buy now pay later” plans, just like politicians do every year with our federal budget.


Is it possible that the only reason so many have insufficient “rainy day” funds is because they refuse to be responsible in their spending?

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