As an American citizen with a lot of Third World friends and associates, it’s very common for such individuals to express their lifelong dream to me, which is to one day live and work in the United States. That desire is primarily fueled by the longing to have more-realistic access to the prospect of achieving upward social mobility and, relatedly more notably, to make an appreciable amount of money.
It’s like I heard one (American) lecturer say, that the thing which differentiates the US from most other countries in the world is, most simply put, opportunity.
But as someone who has lived in and studied the system, I try to impress on my foreign buddies that enjoying the American Dream isn’t as simple as living in the United States and having a fulltime job. There are in fact many American families who are struggling to make ends meet.
It’s hard to get that point across to a lot of foreigners, since their impressions of the States are largely based on fictional TV shows. But research and statistics indicate that there are even well-paid Americans who are not satisfied with their financial standing in the system. Or put otherwise, many American families and not only those who are considered poor, are, in one way or another, struggling financially. And in this post, we will look at the top issues they tend to face in that regard.
DEBT
The United States is a debt-based economy. The US government itself is the biggest debtor in the world, currently being on the hook for over $34 trillion. That breaks down to each American citizen individually owing about $80,000 right off the bat.
However, most Americans are not preoccupied with paying off the national debt. Quoting this fact is just to illustrate that this is indeed an economy built on lending and borrowing, buy now and pay later, with interest.
So many American families are in debt, primarily of the private variety. If a person fails to pay off their loans in time their credit rating will be negatively affected, making it more difficult to, say, purchase or maintain a house or automobile.
Owning a house and car is part and parcel of the American Dream. But sometimes in the quest for these acquisitions, we don’t fully appreciate the fact the average mortgage takes 30 years to pay off and a standard car note (as of 2023) approximately 6 years.
Or another way of looking at it is that when taking on such debts, the borrower is presuming that their future will at least remain as prosperous as their present. So if unexpectedly they were to face some type of monetary calamity, or if something were to go wrong with the economy at large that adversely affects them, still they have to pay those loans or risk having the house and car confiscated, besides receiving a bad credit rating, making it more difficult to recoup them in the future.
That’s what many American families are compelled to bust their as-es in keeping up with their mortgages, car notes and other debts, not only to retain those purchases but also so that they won’t end up in the dog house with creditors. And since the system is so heavily based on credit, some of the other entries found on this list also have to do with debt.
INFLATION
Worrying levels of inflation reads as if it has become norm as far as the global economy is concerned in general, and Americans have not been spared. Based on traditional American standards, a person reaching millionaire status would mean that said individual and their immediate family are rich.
But these days, most American millionaires don’t feel as if they are wealthy. And while there are a number of reasons why, at the top of the list is actually “persistent inflation”.
The average cost of living for a family of four in the United States is estimated to be about $6,000 a month or roughly $50,000 annually. Meanwhile, according to government statistics, as of 2022 the average American household earns about $75,000 annually.
After taxes, the figure comes out to about $64,000. On paper, if you’re spending $6,000 a month on bills, then $64k annually should be more than enough to rightfully survive. But the situation isn’t that simple. Furthermore that is the median household income, meaning that many families earn a lot less yet still have the same hopes, dreams and aspirations as other Americans.
A big part of the problem is, once again, inflation. Simply put, the price of goods and services are rising faster than the wages of employees, thus creating a no-win situation from a financial perspective.
Some of the entities who control the economy, including some big businesses, simply don’t care when it comes to using inflation as a means of profiteering. That’s why even well-to-do earners, like millionaires, are also feeling the pinch. If the things you purchase are constantly going up in price while your earnings aren’t on a relative level (if at all), then chances are you will have to endure some type of monetary discomfort.
It becomes difficult, if not impossible to make ends meet or save money when prices are always increasing. And unfortunately, that’s what many American families are experiencing in the here and now.
INSUFFICIENT INCOME
The United States is one of the countries with the highest costs of living, and many of its residents simply aren’t making enough money to live comfortably. For instance, there are about 40 million Americans, i.e. 12% of the country’s population, who live below the poverty line.
Furthermore, a good percentage of Americans are unemployed. According to some politicians, the rate of unemployment can be even considered alarming. Sometimes, unemployed Americans without jobs are stigmatized as being lazy, but there are other forces at play.
For instance, a lot of those jobs that were lost during the COVID-19 pandemic may never be recovered. And there are other phenomena, such as the advent of artificial intelligence, which has and will continue to force a lot of Americans out of work or force them to take pay cuts.
Having insufficient income further sucks, even beyond being unable to fulfill basic needs, because without adequate funds a family may not qualify for credit, which is the standard road towards achieving the American Dream, such as purchasing a home.
But whether renting or mortgaging, housing tends to be pretty expensive nonetheless. For example, employees on the poorer end of the spectrum tend to rent. And the economy, as a whole, is suffering from rent inflation, as increases in the price of housing are exceeding those which are being gained in wages. So even the likes of steady, fulltime workers are burdened with housing costs, feeling as if the money they’re earning is insufficient.
TAXES
The US economy is such that, unless you’re one of those rarer individuals who works off the books, the man is by all means going to take his cut. The government is very serious about collecting its taxes, to the point that one of the few professions that has been booming since the pandemic is that of Internal Revenue Service agents.
Statistics vary as to how much Americans pay, on average, in taxes. That’s because some workers are laden with a higher tax burden than others. For instance, being the member of a household, i.e. married, can be more advantageous from a tax perspective than living the single life, where singles sometimes have to cough up to 25% of their earnings.
Meanwhile, many employees on the lower end of the economic bracket may not be burdened with federal taxes at all. But generally speaking, it has been estimated that the average American pays approximately $13,000 a year in federal taxes alone. And over the span of a lifetime all of their taxes, both federal and local, will well exceed over half-a-million dollars, i.e. a third of their total earnings(!).
Taxes tend to be put to sound use in the United States, in that you can generally see what the government is spending the money on, such as providing welfare for the poor or maintaining the country’s world-class infrastructure.
But that doesn’t mean that it feels good when, upon receiving your pay after putting in hours of work, a substantial amount of your income has been taxed. And that’s especially true in the current economic environment, whereas many of us are struggling to get by to begin with.
INABILITY TO SAVE
When most of us get a job, regardless of how high or low the pay may be, the goal usually isn’t to spend the entire income. Even with our respective debts on the side, we idealize being able to stash some away in savings. And that’s especially true these days, as no one should need to be reminded that having a job is not to be taken for granted.
But unfortunately, most Americans are rather living paycheck-to-paycheck, most simply meaning that if we do suddenly find ourselves unemployed, we don’t have enough money stashed in the bank to survive. Or another way of looking at it is that if any type of emergency arises, one would have to resort to credit, if available, to solve it rather than the funds they actually have on hand.
And of course this is a less-than-ideal predicament to be in, especially when you have to cater to an entire family.
In many instances that reality, i.e. an American employee being unable to save money, may have something to do with the cost of their lifestyle. But when you’re looking at the country from afar, it’s a lot easier to say ‘go without this or that’ as opposed to actually being there.
Also, it isn’t as if the average American worker is engaged in hard chillin’. There’s a lot of stress involved in holding down a 9 to 5, with Americans being arguably the hardest workers in the Western world. Also many, if not most of us have had to make unwanted lifestyle changes in recent years due to harsh economic realities of events such as the pandemic, mass layoffs and constant inflation.
And it can be really disheartening when every day you’re out busting your hump ,with the lingering fear in the back of your mind that if something were to unexpectedly go wrong with you or someone in your family, then you’ll instantly end up facing monetary hardship.
STUDENT LOANS
Student loans are a form of debt that deserve their own section because, unlike taking out a mortgage or car note for instance, when we apply for student loans we’re usually naïve, unemployed teenagers. This is the first major debt that many of us accrue, and it’s as if we’re betting on the future, not only ourselves but also that the society at large will rightfully value the field of study we have respectively chosen to pursue.
But the reality of this situation tends to be far less favorable than the fantasy. The average student loan debt takes an entire 20 years to pay off. That means that if you’ve been steadily working and making payments since completing your undergraduate studies, the debt should be cleared by the time you’re in your early-to-mid forties.
If you proceed to secure further loans in the pursuit of degrees which will allow you access to higher-paying professions, such as a medical doctor, you may even find yourself in a situation where the debt you’ve accumulated can never be paid off.
So as fate would have it, student loans – these funds which at one point we feel as if we cannot face the future without – can actually become a major burden later down the line, one which borrowers, as adults, may regret having partaken of. For example, the stress derived from always having to make these seemingly-neverending payments contributes heavily to dissatisfaction on the part of borrowers, especially in the workplace but also in life in general.
Or as one study bluntly concluded, “taking out student loans makes you unhealthier than your debt-free peers”. That would undoubtedly be one of the reasons why the relatively-compassionate President Joe Biden recently approved over $130 billion in student debt relief – a substantial amount of money no doubt, but just a drop in a bucket in terms of the $2 trillion Americans owe in student loans overall.
CREDIT CARD DEBT
Before student loans started generating so much attention in the mainstream media, credit card debt was long recognized as the villain of the lending world – a luxury that could turn otherwise responsible Americans into materialistic junkies.
We’ve long heard stories of how the debt system is intentionally designed to have us paying as much interest on the original purchase as possible. But still, the concept of ‘buy now, pay later’ is a temptation that many of us can’t resist.
With that in mind, it should be no surprise that the average American household is straddled with about $8,000 in credit card debt. After all, besides fulfilling our material needs and wants, we may also use credit cards to mitigate our other debts. It’s basically a cycle, and again some would say by the design of those running the system, the creditors.
The reason these types of debts accumulate is usually because we don’t have enough money on hand to pay them off, meaning that they can and often do become a lingering source of concern and stress. So credit cards, as enjoyable or useful as they may be at times, can easily be ranked amongst the financial issues that commonly face American households.
RETIREMENT
In recognition of the fact that we will eventually reach an age where we can no longer hold down a job, many Americans save for retirement. Some employees have it such that money is automatically deducted from employees’ pay for this very cause, while some of us may take it more upon ourselves to save for retirement.
In any event, the golden years can be a stressful time of life if there aren’t adequate funds in the bank, and many Americans are not saving enough. For instance, it has been noted that there’s a correlation between mental health and taking retirement savings more seriously, meaning that those of us with mental health issues likely don’t have enough retirement funds.
And even upon retirement, lingering debts, such as those mentioned above, still have to be paid off, even though you’re no longer in the workforce.
In other words, even if your employer has you on a retirement plan, based on your lifestyle or the volatility of the economy, you may be compelled to also personally save money for your senior years. Another sound strategy when planning for your retirement is to invest while you’re still an active worker.
But as pointed out earlier, many of us don’t have any disposable funds to save or invest to begin with. So aging and worrying about the future while concurrently recognizing that you may not have enough money to retire on can definitely be classified as a financial issue. Another may be a family that has to cater to a senior who does not have adequate retirement funds.
CONCLUSION
Generally speaking, financial issues commonly faced by American families can be categorized as being caused by either inadequate income, the high, ever-increasing cost of living and/or personal debt. All of the above concerns – student loans, credit cards, retirement, housing, taxes, the inability to save, etc. – fits into one or more of those categories.
In other words, if we were paid more, if the cost of living was lower and if we weren’t in so much debt, our families would be a lot freer financially. But it’s as if living and thriving in this system has become such that you cannot avoid rising costs of survival nor taking out some sort of debt in search of a more comfortable life.
