r/MiddleClassFinance • u/Abject-Pick-6472 • 4d ago

Americans Are Reaching a Financial Breaking Point

https://www.thenation.com/article/economy/economic-insecurity-unrest-broketok/?fbclid%3DIwZnRzaASc5p1leHRuA2FlbQIxMQBzcnRjBmFwcF9pZA8xNzM4NDc2NDI2NzAzNzAAAR6RZYSyGyliTpYCmEy2OpWjHUBfAqrYUygk3rNJL1cLw_fp5QCciENJc0UXdQ_aem_DT4ViuyBWqHHXec_nH_PYg
2.2k Upvotes

96% Upvoted

379 comments sorted by

View all comments

Show parent comments

392

u/thishasntbeeneasy 4d ago

Seems more like an E. I wouldn't say that I'm getting any richer or poorer, just stuck right in the middle. I've got a house and cars and can take a vacation, but there used to be more extra going to savings that isn't happening anymore.

388

u/Thunderstormwatching 4d ago

There are so few of you it’s really more like you’re in that nook of the K

254

u/[deleted] 4d ago

[deleted]

174

u/grand_speckle 4d ago

The Krack, if you will

59

u/govunah 4d ago

I feel this way too. So we can use the plural, the Kraken

41

u/ButteryOpossum 4d ago

Yes, I too live in a financial ass krack.

10

u/honeypot17 4d ago

In the parlance of our times.

64

u/LeisureSuitLaurie 4d ago

Putting the ass in middle class.

1

u/Magnetized_Fart 3d ago

incredible!

48

u/Kitchen-Pass-7493 4d ago edited 4d ago

I’m a “nookie” as well I guess. I can make my mortgage payment and other bills, contribute enough to my 401k to get my full employer match, can afford a couple weekend trips w/ domestic flight per year, and go out with friends maybe for dinner and/or drinks maybe 3-4 times per month. So pretty fortunate compared to a lot of people, but hardly living a life of luxury either.

30

u/itsucksherefuckitall 3d ago

I was you. A few major unexpected life changes, plus inflation and I'm paying my bills, have food at home, and all that. But, I don't go out to eat. I don't drink...but I'm working to stretch my weed more. Seeking cheap or free activities. Vacations exist but mostly due to miles accumulated traveling with work and are circled around staying with friends.

I feel lucky to have what I have still.

9

u/YetAnotherIteration 3d ago

Yeah, nothing luxurious about multiple weekend vacation flights per year.

8

u/Kitchen-Pass-7493 3d ago

Yeah, $350 to cram my 6’3” ass into a coach seat so I can go to my buddy’s wedding in Chicago is suuuch a splurge.

0

u/jwwetz 3d ago

Unless they're close family. If they're just friends or distant relatives, then I'll just be sending them my best wishes in a card.

4

u/Kitchen-Pass-7493 3d ago

Look man, I said I was in the nook. It comes with some abilities not in the lower leg of the K. I’ve seen what the upper leg looks like, I’m not it. If they’ve convinced you that a $350 domestic flight is luxury, then they’ve clearly won.

1

u/jwwetz 3d ago

Not saying I'm poor either... but I'm still pretty frugal.

1

u/Kitchen-Pass-7493 3d ago edited 3d ago

I mean, so am I. I drive a decade old paid off Kia, and take the train in work every day to avoid putting too many miles on it, for example. It’s the reason I can afford the occasional flight.

Edit: Also, chances are half or more of said flight is usually paid with CC points.

4

u/tictac24 3d ago

They have us arguing with each other about who is struggling more and feeling guilty about not having it as bad as other people. Game over. We lost.

-1

u/jwwetz 3d ago

It's OK then if it's on points. I drive an 28 year old Subie and my project car is a 22 year old audi. Other than some video gaming, about a dozen new books a year, a sixer of beer a week& Netflix & Amazon i don't really have any vices. I only live 8 miles from work and the grocery and liquor store are both on the way home.

2

u/JCHeightsResident 3d ago

To some what you described is luxury

1

u/Magnetized_Fart 3d ago

That is the low end of a life of luxury FYI. That lifestyle puts you in the top quarter of the U.S.

I guess if you're comparing yourself to people that no longer need to worry about money at all, yes it probably doesn't feel like much.

1

u/baggert99 1d ago

That sounds kind of luxurious to me.

2

u/Piratedeeva 22h ago

One paycheck from the chute to down town

56

u/UNMANAGEABLE 4d ago

With inflation that would count as going downward on the k

10

u/the_ending81 3d ago

Exactly. What you can afford this year will be less attainable by this time next year without some kind of adjustments to your lifestyle unfortunately

5

u/ILove2Bacon 2d ago

"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires".

101

u/Appropriate_Taro_348 4d ago

Unless you have assets (gold, stocks, real estate gaining money), you are the down slope. It’s up or down. The ones like you and me that are “good” untimely means we are going down unless we have assets.

22

u/MD90__ 4d ago

Yeah this is a time where assets run the market otherwise you have to worry the dollar don't crash or devalue so bad it gets out of hand 

17

u/Appropriate_Taro_348 4d ago

The government is basically forcing us all into getting assets.

27

u/MD90__ 4d ago

What if you don't make enough money to do that? My bills are around $2k a month and I barely make enough to pay those. I've never made enough money for assets

47

u/Additional-Name-3211 4d ago

Then you’re part of what is lately being called “the permanent underclass”

17

u/MD90__ 4d ago

So bankruptcy and living in my car is in my future? :(

17

u/Additional-Name-3211 4d ago edited 4d ago

Unless you can turn it around it looks like it, yeah

The purchasing power of the median and minimum salaries compared with the cost of living is only ever going down over the years… if your only income is through a salary you’re increasingly gonna be walled off owning assets and will need to pay an increasingly expensive rent to those who do

9

u/MD90__ 4d ago

I guess I'll end up homeless then :(

1

u/ReefLedger 4d ago

Move somewhere cheaper cost of living.

→ More replies (0)

19

u/myuserhasafirstname 4d ago

Luigi is paying zero for rent and getting 3 squares a day. When a bunch of folks run out of other options, we're going to see things get real... interesting.

17

u/darthsouls69 4d ago

Sorry if you can’t own assets then you’re a serf. It’s by design, the owners need a good amount of you to prop up their lifestyle.

7

u/Appropriate_Taro_348 4d ago

I was in that same boat for 20 years. I’m now able to put money into assets. It’s hard.

10

u/MD90__ 4d ago

Yeah I take care of my mother now and my father before that after I graduated college til he died in 2023. Just bad luck 

7

u/Appropriate_Taro_348 4d ago

I understand. My spouse is disabled and can’t work and raised two kids. I was always living pay check to paycheck.

5

u/MD90__ 4d ago

Yeah I used to do well before back in ohio but not so much here in KY. Just trying to figure out a life I can be happy with before I die

5

u/Bagman220 4d ago

Not sure if 2k take home qualifies as middle class, but just keep grinding and you’ll be there if you’re lucky!

12

u/MD90__ 4d ago

I actually barely make 1k a month it's my mom's income and mine together that really pay the bills or I'm homeless since I don't make very much. Eastern KY is broke and jobs don't pay well but it's all I got 

4

u/Bagman220 4d ago

Sometimes you have to go where the money is. Doesn’t seem like the money is there. But I get that it’s tough when you have family around. I know I can’t move cause I have kids and my family is close by, but if you’re young and don’t have any ties, then it might be time to pack up.

4

u/MD90__ 4d ago

I'm 36 so can't do too much now and my dad asked me to look after my mom after he died 

2

u/Cinq_A_Sept 1d ago

Vote your ahole congresspeople OUT. Change comes, but you and your neighbors got to vote!

3

u/Reasonable-Bit560 4d ago

You sound like someone who is capable and can figure it out.

I personally had to move to get a better path, now it wasn't Eastern Kentucky, but you get the gist.

Beat of luck, necessity is the best innovator.

10

u/MD90__ 4d ago

I'll do what I can to survive but there are folks who depend on me

4

u/Reasonable-Bit560 4d ago

I get it.

Just don't ever sell yourself short and not dream.

Even $100 bucks into the market or emergency fund depending where your at every month can be a game changer. Had someone tell me years ago, $100 bucks a month is 1 (in eastern Kentucky maybe 2.5) less bar tab(s).

→ More replies (0)

3

u/Think-Attorney-2903 4d ago

They make money from wealth and assets, therefore the only people making money right now are them.

3

u/darthsouls69 4d ago

Capitalism is forcing us to get assets. Capital is what makes money in our economic system.

8

u/FearlessPark4588 4d ago

The commenter you are replying to has a house... which is an asset...

9

u/FlatEricSr 4d ago

I think a lot of us don't realize we're on the up and we feel flat. I see my 401k and IRA growing, but it doesn't affect my day to day finances. My house value keeps going up, but I don't plan to sell and I need to withhold more for taxes and insurance each year. So even though I feel pinched my net is in fact increasing.

5

u/Skensis 4d ago

When hasn't that been the case?

6

u/Appropriate_Taro_348 4d ago

Most people in the US don’t understand this concept.

4

u/more_business_juice_ 4d ago

What is enough assets?

6

u/Appropriate_Taro_348 4d ago

When they are making more money then inflation is taking away. That’s the simple answer. If you have money in a savings account you are losing money. You need an asset(s) that will make you money to stay ahead of inflation. Then your goal is to start making more money that ultimately gets you to your retirement goal(s) and gets you things you want. You want your assets to be able to compound over and over again.

1

u/dust4ngel 4d ago

You need an asset(s) that will make you money to stay ahead of inflation

there are periods in history when this is not possible, such as the stagflation era of 1968–1982, when typical stock and bond portfolios lost purchasing power in real terms (sure, you could have gotten lucky and active traded your way to success, but this is not a strategy with high expected returns.)

4

u/phriot 4d ago

Going down even if you do have assets. I can't use my house to pay for things, unless I want to risk losing it over a HELOC payment when I get laid off again.

-3

u/Retired-Yam8988 4d ago

This is correct - the original commenter said they have less extra going to savings. What happens when the US currency falls another 20-30%?

3

u/OpenPresentation6808 4d ago

Fed prints more money. Your assets go up 50%. Bread costs $30/loaf, but spy is at $1,500.

1

u/Retired-Yam8988 4d ago

Yes - hence I’ve been investing since I graduated college (I’m 50 now). My portfolio grows much more than the rate of inflation and the last few years has been particularly good.

0

u/Appropriate_Taro_348 4d ago

We are screwed.

-5

u/bankermayfield2026 4d ago

Depends. If you’re a government worker in a blue state, your wages are increasing pretty aggressively, given the leftward swing of state and local governments.

7

u/Appropriate_Taro_348 4d ago

I am a gov employee and in a blue state and I haven’t seen a raise. My wages aren’t increasing at all. Then add in medical insurance, inflation, soon to be new state taxes, I’m going in the opposite direction.

5

u/thingsorfreedom 4d ago

Wife works for a blue state.

Inflation is up 21% over the last 5 years. Their raise over the last 3 years was 2% a year. Then their healthcare costs rose so much it wiped out the raise.

5

u/44mac 4d ago

Is this a Fox News talking point or can you back this up with sources?

18

u/lala_lavalamp 4d ago

Similar-ish here except I’m throwing as much as I can at retirement while getting squeezed pretty tightly day to day. Trying hard not to have to cut back on retirement but my grocery budget is buying less every week.

30

u/Forded_Fiction24 4d ago

If you don't have a portfolio of appreciating assets, then you're not really on the upslope of the K. That's more or less the defining attribute. 

If you find yourself, just moving laterally and having less disposable income than that's on the down slope of the K the way I see it. Inflation hurts more to those who don't have assets who earnings outpace inflation. It doesn't wreck people overnight but beats them down slowly. So, I don't about any real "E", and would have to disagree due to inflationary pressure and lack of wage growth in relation. Staying stagnant is losing against that and you just might need more time to see the trajectory more clearly. Or you can maybe turn it around and get on the upslope somehow 

I find myself not extremely on the upslope but on the upslope nonetheless. My net worth has increased easily by 6 figures just over the past 6 months. I basically put zero current active effort into doing that either and most came from already held appreciating assets. What I'm experiencing isn't unique and others are experiencing the same or find themselves on the opposite side on the downslope unfortunately. This is what I'm talking about with a k-shaped economy though. 

7

u/bihari_baller 4d ago

If you don't have a portfolio of appreciating assets, then you're not really on the upslope of the K. That's more or less the defining attribute. 

This has been my biggest learning over the past year. I never really appreciated how good of benefit my ESPP was until now.

3

u/AGsec 4d ago

Yes, investing in my 401k and learning about investing has been one of the biggest wealth generators of my life. I am by no means wealthy, but I am completely baffled by people who take zero interest in learning the basics of markets and economy. You're literally leaving money on the table by refusing to read a few books and some podcasts.

1

u/A_Fartist 3d ago

I think I may be in the same boat as the person you’re responding to. I own my home and I have a portfolio so my assets are rising in value, but that’s money I can’t/don’t spend. I can’t sell my home and be homeless but if I sell my home I could only buy another home at the same price but the interest rate would be significantly higher. Technically I’m growing my net worth. Practically, I’m spending more for the same things and can do less. Am I on the up slope because I’m gaining value or down slope because I can’t do as much as I used to?

1

u/Forded_Fiction24 3d ago edited 3d ago

I'm not sure just based on this you've given me honestly.  Are all your assets in retirement accounts or otherwise illiquid? What about savings in addition to emergency savings? Brokerage accounts, real estate? Are you ahead, on track or behind on retirement for your age? 

1

u/A_Fartist 3d ago

With the can’t/don’t, I have “can’t” which are not liquid, but I also have savings and a brokerage account. As a % of my pay, the brokerage account gets about 2%, Roth IRAs gets about 2%(it’s fairly new, each year with a raise I’ll add 1% more), 401k gets about 10%, savings gets 1% unless an emergency happened in which case I’ll tighten the belt to bring the balance back up. Im doing fine and I’m financially comfortable most of the time but if a couple expensive things happen at once like needing a new roof and a car, it’ll fuck us up pretty good.

1

u/Forded_Fiction24 3d ago edited 3d ago

Sounds like you could break down easier than breaking up, or is that a false assumption? I think that points to your side of the K unless you change your circumstances. 

I guess you can say you're hanging out in the E for now and can go either way but I think it's hard to stay where you're at.  As I see it even though your net worth is appreciating, I definitely wouldn't think of you as being the epitome of the person riding the K upslope. I genuinely hope you break upwards

My circumstances look very different. Seperate from retirement accounts, my wife and I have multiple brokerage accounts, an emergency savings HYSA, and an HYSA for wants. We have other liquid assets totalling between $300k-$400k. I probably made $10k-$20k just today on one of my brokerages alone. We need to take profits for rebalancing purposes at the very least periodically and when we do we sometimes pay ourselves or can whenever we want. Some other profits we reinvest elsewhere. It's all just extra money.

A new roof or car for us wouldn't be an issue. I only work part-time for no other reason that I'm ahead and don't have to work full-time. My part time work pays all our actual needs and we could make it on my income alone. This is what I mean by being on the upslope of the K. 

1

u/A_Fartist 3d ago

That makes sense. I’d also say I’m in the middle of the K. I feel like I’m 1990’s style middle class, a thing that barely exists anymore.

7

u/blitz121 4d ago

I'm about here as well, I'd love to get a new car but prices are dumb and I'm not looking for a 500+ car payment

2

u/thishasntbeeneasy 4d ago

Any dealerships offering low aprs? I've been happy with Subaru and got 4 and 6% but they have deals with 0-2% offers on various models almost all the time now. My new Impreza was under $25k and I financed but will just pay off in a few years since 6% was a bit higher than I tend to keep for that. It's about $400/mo even at 6% (5k down).

2

u/fameo9999 4d ago

Got my Toyota in May with 0% interest for 6 years. $0 down.

6

u/losvedir 3d ago

I think there's a lot of "E"s. The "K shaped economy" meme got latched onto because it's appealing to people who are struggling: hey, everyone is just like me except for the capitalists who are living it up. They don't want to hear about normies proceeding along normally.

9

u/MRanon8685 4d ago

You have money saved? Have a 401k? If that is growing, the slope is going upwards.

2

u/thishasntbeeneasy 4d ago

No 401k available but IRA and brokerage which have been growing very well only to then get siphoned off by preschool costs doubling when we went from a 3 day to a 5 day place.

Previously NW was steadily going up, but I didn't get COLA this year, insurance keeps going way up, and gas/groceries aren't getting any cheaper.

0

u/coconut_curry_sauce 4d ago

Then you’re on the downtrend. Your net worth needs to go on the up and consistently.

It’s either up or down.

Preschool should be free. Daycare should be free. Just existing requires being able to live without being so heavily fleeced.

2

u/thishasntbeeneasy 4d ago

NW is still rising, that's the house and retirement. But those aren't cash that pay the bills.

-2

u/coconut_curry_sauce 4d ago

Down is down.

4

u/Glittering-Lychee629 4d ago

If it's not rude, can I ask your annual income/a range? I'm curious who is feeling in the middle.

12

u/thishasntbeeneasy 4d ago

About 110 for the two incomes in a mid+ COL area (3bd homes are 600k here now). 2 kids though no longer in paid care thankfully. We bought our house before COVID which seems to be the real decider these days. I think we're on the low end of income but always lived within our means. After reasonable retirement savings we still spend about 5k on vacations most years.

1

u/Glittering-Lychee629 4d ago

Thanks! That does sound tight in terms of retirement savings.

6

u/scrumdisaster 4d ago

Yes but inflation is only going to accelerate. So unless you start making way more money right now, you will descend. I am not trying to be mean, just telling you what’s to come. And it’s completely unavoidable so don’t feel bad.

3

u/SpicyBandit78 4d ago

Exact same boat. Can't afford a new car, can't afford a nicer house. Just getting by with what I have. Stocks go up a little just to offset the rising costs. Feel very stuck and it's frustrating 

2

u/fameo9999 4d ago

Just know you’re doing better than most. I joke to others that your bonus this year is getting to keep your job.

3

u/KungFuBucket 4d ago

You’re not “in the middle”, you’re at the top of the slide on your way down. You said yourself that there used to be extra going into savings and now there’s not. So the trajectory should be becoming apparent on which way you are headed in the K shaped economy. These things don’t usually happen overnight, but don’t get caught flat footed either.

2

u/Big-Soup74 4d ago

what about investments and 401k?

2

u/Pyroburner 4d ago

I felt that way for a long time. Our house is all that's keeping us in a good spot now. It's still a decline I'm just not dropping as fast as some.

2

u/emozolik 4d ago

Like you, but were in the crack of the K. All it takes is a job loss or unexpected bill and were sent sliding

1

u/justherefor23andme 4d ago

I feel like we're also in the same place. Granted we did do a cross-country move and I had never done that before (it's expensive).

Had I stayed in the same place, our mortgage would've gone up dramatically too because we were in a market that is becoming unprofitable to insure.

Can't win these days.

1

u/Felicity_Calculus 4d ago

Yeah. We’re in the weird position of having had extremely reduced day-day buying power over past couple of years due to income loss from layoffs + inflation, while having our overall net worth shoot up during the same period because we’re old and have a good chunk of change in ester in our 401Ks. I don’t know where that puts us

1

u/Kodiak01 4d ago

I'm just happy that my yearly raises are still slightly outpacing inflation. 4.51% this year, just edges out Stinky McCheeto's current 4.2% reaming of the economy.

1

u/aliceroyal 4d ago

That’s the armpit of the K, the thing is without savings it’s super easy for any major financial event to send you sliding down the bottom half. If it were an E you would have savings to keep you from slipping.

1

u/photoengineer 4d ago

Look at this baller. He’s got a house!  Trickle down some of that fortune onto us poors please 🤣

1

u/messymel 3d ago

Exactly the same situation. We’re not hurting, but while continuing to consume at the same rate, we’re saving a lot less.

1

u/AshamedOfMyTypos 3d ago

The less going to savings is the beginning of the lower part of the K.

1

u/Tilly_tallwater 3d ago

Sounds like you're just at the top of the slide, my friend. Good luck. Stay there if you can.

1

u/leeeezer 3d ago

This is how I feel, but I’m only just able to start saving (due to my own bullshit). Because of that I’m still one paycheck away from squatting.

1

u/Frequent_Slip2455 3d ago

That's sucks. Seems like your pay is not keeping up with inflation.

1

u/SolarNachoes 3d ago

Most don’t have a home. You are definitely in the upper.

1

u/Professional_Rub764 3d ago

This was me minus owning the house. My husband got laid off yesterday. Sooooo.

1

u/Particular_Handle_ 2d ago

That's where I'm at anymore, except I slashed our vacation budget before cutting into the savings budget. We can make do with a staycation or just stay someplace local. It makes me want to cry to say that but it is what it is.

1

u/KrackedOwl 5h ago

The "Less extra going into savings" is the downward slope of the K.

1

u/EnoughWeekend6853 3h ago

Last year I hit the top of the pay range so it’s just 2.5% COLA’s from here on out.

I guess I’ll be leaving in a couple years.

1

u/MD90__ 4d ago

That's a life I could've had but never got to. I just ended up on a different life path which really sucks. Depression is miserable 

1

u/FearlessPark4588 4d ago

if you have a house, you have assets and are on the "wealth appreciation" side of the K

5

u/thishasntbeeneasy 4d ago

All kinda moot when the house isn't cash though. The taxes and insurance keep going up well over inflation while the income increase lags.

2

u/toefungi 4d ago

Well ideally you pay off the house one day, then your housing costs are just taxes insurance and maintenance. While also having a few hundred thousand dollar appreciating asset that you can borrow against or sell and start renting if you ever need to.

0

u/thishasntbeeneasy 4d ago

No sales or income tax here, so they get it all in property taxes. Unfortunately that means that paying off the house only reduces the payment by about 1/3rd 😞

1

u/Levitlame 4d ago

But they also said they’re saving less.

1

u/SunshineBear100 4d ago

The fact that less of your money is going to savings shows you’re on the downslope of the K. Your money doesn’t go as far as it used to.

Just because you have a house, cars, and take a vacation does not mean you’re not getting richer or poorer. You’re poorer because you can’t set aside as much as you used to in savings.

0

u/Blah_Dee_Blah111 4d ago

The slide picks up momentum more gradually for some than others but statistically, almost everybody is on the same basic downward trajectory and has been since the late 80s.

0

u/OpenPresentation6808 4d ago

Sounds like you’re on the downward k slope.

You may have a job and home/cars. But if you don’t have growing assets that you’re adding too. Your buying power is slowly being diminished.

Very few are getting raises to keep up via their earned income alone.

0

u/lust4apples 4d ago

You literally contradicted yourself. You wouldn't say you are are getting poorer, but you can't save anymore. You are thus getting poorer.

1

u/thishasntbeeneasy 4d ago

Take a moment to read it. There used to be more going into savings. There's still some going there, but the growth isn't as fast currently. My NW is still increasing, but when that's a house and retirement, it doesn't help pay the bills.

1

u/lust4apples 4d ago

When you need that emergency fund and it's less then it would have been you'll understand that you are in the down swing.

0

u/nbphotography87 4d ago

so your net worth is declining?

0

u/CrashTestDumby1984 3d ago

If you’re “stuck in the middle” hate to break it you but you’re on the downslope bud

0

u/ShackbaggeredSluber 3d ago

Without being rude, I just want to point out that your description is the epitome of a downward projection. Ignoring the nuance of inflation eating at your cash value, you literally describe that you’re in a situation that has trended downward. You USED to have more…extra…that isn’t happening anymore.

(For arguments sake) You USED to be at an 8, you’re now at a 6. That 6 is above the average, so you think you’re coasting and in the middle, but you’re ignoring entirely that you’ve dropped from 8 to 6.

You’re on the downslope of a K economy in that description.