Does it seem harder and harder to cover those monthly bills? Are you still looking at ways to reduce spending in spite of cutting out most excess spending a couple of years ago?
You are not alone. In my analysis of clients and their budgets things are getting a bit strained. Raises are for the most part nonexistent for a great number of people. Bonuses that used to be utilized to catch up and cover excess spending have not been paid in over a year. Credit card bills are growing as the minimum is paid in an effort to keep the house of cards afloat.
How can this be happening? The answer is relatively simple in some regards. With salaries at a level pace, but the costs of medical and dental expenses co-pays have increased. Decreasing take home net pay.
Also for those in Illinois we may have received the federal Social Security drop of 2%, but we also had the increase in the withholding tax to the pre Making Work Pay credit levels. Then we had the Pat Quinn election promise realized of a 5% income tax rate. So, all of these actions combined to give you that much less money in your paycheck to cover your expenses.
Then we have the inflation factor, the cost of food has increased 3 – 4 % in the past year. Gas prices are also over $1 per gallon more this year. Overall inflation is over 3%. Let’s not even bring into the equation of property taxes, sales tax or the income taxes.
So with the costs of everything going up and net income going down, yes you are losing ground. In the 1970’s when the presumed middle class was stretched, women entered the work force increasing the amount of household income. We have no one else to push out the door to bring in more money.
So, I again pound my drum of pushing financial independence by starting a side business. The indications are out there, so the sooner you start the more comfortable you will be when the true need arises to run your own micro business.