Debt Leaving American Families Stretched

Debt Leaving American Families Stretched

Inflation is the number one cause of financial stress.

United States household debt reached a record high of $17.5 trillion at the end of 2023, the latest figures from the New York Federal Reserve show. Credit card debt is a leading cause for this rise, with balances up $143 billion in the last year.

According to the American Psychological Association, money is the number one cause of stress in the U.S. A cnbc survey published on Sept. 7, 2023, found that 74 percent of Americans say their personal finances cause them stress. It also found that inflation is the number one cause of financial stress.

  • 61 percent of Americans say inflation is contributing to their anxiety.
  • 62 percent of adults are living paycheck to paycheck, according to a LendingClub report.
  • Over half of Americans are saving little or no money after paying their bills.

One of the biggest sources of inflation is the housing crisis. The rate of housing construction is not keeping up with the population growth and rising demand. House prices have hit record highs in almost two thirds of the major U.S. markets. The story is similar in the United Kingdom, Canada and Australia.

High levels of debt, high interest rates and a sudden downturn in the economy could cause a housing market crash much worse than the one in 2008.

In the current cost-of-living crisis, almost everything has gone up in price. According to Bloomberg:

  • Rents have risen about 20 percent since January 2020.
  • The price of used cars has increased 35 percent.
  • Groceries are 25 percent more expensive.

The increased cost of groceries is partly due to the increased price of gasoline. When gasoline is more expensive, food distributors must shorten travel distance or increase prices to cover expenses.

Many financial troubles are caused by other people, including people in power in governments and big corporations. But there are steps we can take on an individual level to eliminate this stress.

Better budgeting could ease the pain caused by inflation. But most Americans are not sticking to their budgets.

  • 84 percent of Americans with a monthly budget admit they sometimes exceed their budget, according to a NerdWallet poll published in May.
  • 44 percent of those who exceed their monthly budget say they use a credit card to cover the cost.
  • 47 percent say groceries are one of the categories that they find themselves overspending on the most.

A Republican victory in the next election could temporarily stabilize the economy, but the Bible indicates inflation will worsen in the long term. The Prophet Haggai described today’s economic conditions: “Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes” (Haggai 1:6).

These times of inflation call for smart budgeting. If you are feeling financial stress, there is a way out. The best place to start is by requesting our free booklets Solve Your Money Troubles! and The Financial Law You Can’t Afford to Ignore.