There’s a story going around right now that if inflation were to cool and prices finally came down, Americans would be back on solid financial footing.
I don’t buy it. Not at all.
Because here’s the uncomfortable truth. Even if prices fell tomorrow, many Americans would still go bankrupt.
WHY RESTRICTING CREDIT CARD RATES WILL KILL CREDIT FOR WORKING FAMILIES
And it’s not just about the economy.
It’s about our instant gratification behavior.
The blame game is getting old
In recent years we have pointed the finger at:
- Inflation
- Companies
- Interest rates
- “Greedy Prices”
And yes, prices went up. A lot of.
But at some point we have to step back and ask a harder question:
If money is so tight, why does it seem like no one got the memo?
A reality check on life
I’m not looking at spreadsheets here. I see with my own eyes what is really happening on the ground.
Recently I went to several high-end restaurants, traveled through busy airports, and attended concerts and live shows, and this is what I saw.
Each one was full.
Not half full. Don’t struggle. Packaged.
That is not the behavior of a scared or worried consumer. That is the behavior of a consumer who is still very comfortable spending his money and does not really believe that he will go through difficult times.
The spending addiction that no one wants to admit
This is where this gets real. We don’t just have an affordability problem in America.
We have a problem with spending discipline.
People are still:
- Booking holidays that they can’t really afford
- Eating out several times a week
- Buy clothes, gadgets and ‘experiences’ on impulse
And then turn around and say to themselves, “I can’t get ahead because everything is so expensive and the government has to solve the problem.” That’s only part of the story.
We forgot the “Pay yourself first” rule
The real problem is not just rising prices. The fact is that as incomes have risen even modestly, lifestyles have also risen and people have forgotten the cardinal rule of saving money from above and then spending what’s left. We reverse engineered it to spend first and then maybe save if anything is left over.
We have normalized premium travel abroad instead of basic travel. We’ve switched to eating out three to four times a week instead of cooking at home. We’ve added convenience to every moment of our lives, like taking Ubers, doing Doordash, or needing access to a club for comfort over cost.
And we justify it because “we deserve it, we don’t know if there will be another COVID, or if everyone seems to be doing it, so why shouldn’t I?”
Maybe. But we also have to be able to afford it, which is why credit card debt and overall debt burden are at an all-time high. Our leaders are doing it in Washington, and we are doing it on the main streets. Two wrongs don’t make a right.
The credit card illusion
This is what really fuels this disconnect. Debt. The kind of debt that looks like saturated fat in your diet. You know how they tell you there’s good cholesterol and bad cholesterol? Well, many Americans are on a diet of bad cholesterol and bad debt, and it will lead to financial widowhood for families across our country.
Credit cards, buy-now-pay-later, financing everything from vacations to concert tickets.
It gives the illusion that you are doing well, you can keep up with your Instagram friends and that the money will somehow work itself out later. But that is not the case.
It keeps building up, just like interest always does, until you’ve dug a hole too deep to get out of financially.
Why lower prices can’t solve this
Let’s say inflation cools down. Even deflation. Stabilize prices. Maybe even come down in some areas.
Does that suddenly solve your:
- Overspending habits?
- Instant gratification problem?
- Buy algorithm on social media?
- Lack of budgeting?
- Dependent on debt?
Of course not.
Because those are behavioral problems and not economic ones.
At some point we must own this:
You can’t compensate for bad spending habits.
And you can’t wait them out with lower prices.
If your lifestyle consistently exceeds your income, the outcome is predictable, regardless of what the CPI says.
This is a wake-up call. It’s not a lecture.
It’s not about shaming anyone. It’s about seeing with your own eyes what’s happening.
It’s about recognizing that financial stability isn’t just determined by what things cost.
CLICK HERE FOR MORE FOX NEWS ADVICE
It is determined by being disciplined and doing what you want to do with your money.
Because right now there is evidence everywhere that restaurants are full, flights full and concerts sold out.
And yet people still say they’re falling behind. Both things cannot be true forever.
CLICK HERE TO DOWNLOAD THE FOX NEWS APP
If prices fall, it may help slow the leaking of your financial ties, but it won’t save you from the fundamental problem.
Because the biggest threat to your financial future isn’t inflation. It’s the spending habits you refuse to change.
CLICK HERE TO FROM TED JENKIN
