Why Americans Feel Squeezed Even When Inflation “Cools”
Prices may not be rising as fast as they were, but that does not mean life suddenly feels affordable again. In this Dvorkin on Debt episode, Sydney sits down with Howard Dvorkin, CPA and Chairman of Debt.com, to talk about the affordability crisis and why so many Americans feel like they are working hard but still falling behind.
Video Transcript
Welcome back to Dvorkin on Debt, where we talk about all things money with our resident money expert, Howard Dvorkin, how you doing?
I'm great, Sydney. How are you?
You ready to talk about the affordability crisis? So, there's a new Gallup report that says affordability is the top financial concern for Americans right now. What is driving that?
Everything costs more, but the income hasn’t kept up. When the costs of basics like housing, health care, and energy dominate your budget, there's no room to breathe.
The report also says that more Americans feel like their financial situation is getting worse. Why is that happening even if the economy shows stable on paper?
Because it is getting worse. Everything costs more. As I said, because people don't live on paper. They live paycheck to paycheck. Even if inflation has cooled, prices are still high and they're probably not going down. So, people feel stuck. They're earning but not getting ahead. And that really impacts the mindset of the consumer.
So’ what is the biggest financial mistake that people make when they're feeling this kind of pressure?
People try to maintain a lifestyle with their credit cards. That's where the trouble starts. When you use credit cards to fill in the gaps, you're turning a short-term problem into long-term debt.
So, what should people do if affordability is the issue?
Focus on what you can control. Cut costs where you can, but more importantly, prioritize. Keep the roof over your head, keep your transportation, put food on the table, and protect your cash flow. Then deal with the debt strategically, not emotionally.
And what's the bottom line for someone who's feeling very squeezed right now?
Affordability isn't just about spending less. It's about making smarter decisions with what you have. If your budget isn't working, it's time to change the plan, not blame yourself or others.
Very insightful, Howard. Thank you so much for joining us, and I look forward to talking to you again.
It's always great, Sydney. Thank you.
