4/19/2011 12:46 PM ET|
When prices rise, but income doesn't
With fewer jobs and opportunities, budgets are being stretched by the rising cost of everything. Hard spending cuts might not be enough.
Living on a "fixed income" traditionally meant you were retired or disabled and receiving Social Security benefits and perhaps a pension. You couldn't ask for overtime or a raise to compensate for higher expenses.
Thanks to layoffs, furloughs and a dismal job market, however, today millions of other people are learning what it's like to have incomes that don't increase even as their costs do.
Rising prices for gas, food and clothing are squeezing these vulnerable folks, often after they've already trimmed expenses to the bone.
Valarie Weinhaus, a disabled single mother of three young children, long ago disconnected the cable television and cut back to a cheaper Internet plan. She buys food in bulk at a store that caters to the local Amish population -- "you can get 100 pounds of beans for $15.99," said the Kirksville, Mo., resident -- and opts for the store or generic brands when she shops elsewhere.
Weinhaus, 39, buys clothes for herself and the children at thrift stores. The kids -- who are 5, 7 and 9 -- don't participate in extracurricular school activities, because those would mean extra costs Weinhaus can't afford on her $951-a-month disability check. Now that gas prices are soaring, Weinhaus' car remains parked most of the time, and she wonders where else she could cut costs.
"I have to have my cellphone for the schools to be able to reach me in case of emergency, but I might have to let it go for the summer and have AT&T put me on an inactive line," she mused.
A 5.6% jump in gas prices last month, combined with a 1.1% increase in food prices, pushed the Consumer Price Index up 2.7% from a year earlier, the Labor Department reported last week.
And thanks to a global shortage, prices on goods made with cotton -- everything from socks to sheets -- are expected to rise 10% to 15% this summer, according to a survey by Capital Business Credit, a finance company based in New York.
Still, economists aren't heralding the return of inflation. Energy and food prices move around so much that their costs aren't considered when economists look at "core" inflation, which in March was up just 1.2% from a year earlier.
The other measures economists consult -- Treasury bond prices and consumer expectations of future price increases -- also aren't signaling much inflation ahead.
But the idea that inflation isn't a problem is a hard sell to anyone who's filled up a gas tank lately or been to a grocery.
Faced with a shrinking budget and rising prices, people typically:
- Use less, for example by carpooling, walking or riding the bus when gas prices rise
- Trim other expenses, such as eating out or pay television
- Buy for less, using sales or coupons
- Substitute cheaper products for more-expensive ones -- hamburger on sale instead of higher-priced cuts of meat, or beans and rice instead of hamburger.
When you've cut as far as you can and prices keep going up, however, it may be time to ask for help.
One place to start: Benefits.gov, the federal government's central clearinghouse for aid as varied as career help, veterans benefits, nutrition assistance and tax advice.
If you're a senior or concerned about someone who is, you also should check out the Eldercare Locator, another government site that connects people to local services that offer free or discounted food, home repairs and transportation, among other help.
Here are other places to go to find help:
- Health care.Federally funded health centers offer treatment, checkups, children's immunizations, dental care and prescription drugs. You pay what you can afford, based on your income. If prescription drugs are pinching your budget, talk to your pharmacist about generics and other alternatives. (Doctors often don't know the retail prices of drugs, but pharmacists do and are aware of other options.)
- Rental assistance. The U.S. Department of Housing and Urban Development offers subsidized housing, public housing and rental (Section 8) vouchers for low-income people, while the states provide additional resources. Start your search here. If you don't qualify for help, renting a room or sharing housing with another family could help lower your costs.
- Energy assistance. The Low-Income Home Energy Assistance Program (LIHEAP) is another federally funded program that helps people pay home heating and cooling costs. Every state and the District of Columbia has an energy-assistance program; you can find yours here. (Use the menu bar near the top of the page to find your state; only states with online applications are included in the links below.) If you earn too much to qualify, consider an energy audit to pinpoint ways to lower your bills. The U.S. Department of Energy has a do-it-yourself version here.
- Nutrition help. The federal government offers two programs, the Supplemental Nutritional Assistance Program (which used to be known as the Food Stamp Program) and WIC (Women, Infants and Children). If you don't meet the requirements for either, you can still visit local food banks, which typically don't require you to document the depth of your need. You can find your nearest one here.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
VIDEO ON MSN MONEY
12 years only, one of the possible options below..
A. Two Six-year Senate terms
B. Six Two-year House terms
C. One Six-year Senate term and three Two-Year House terms
2. No Tenure / No Pension
All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people.
4. Congress can purchase their own retirement plan, just as all Americans do.
5. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.
6. Congress loses their current health care system and participates in the same health care system as the American people.
7. Congress must equally abide by all laws they impose on the American people.
8. All contracts with past and present Congressmen are void effective 1/1/11.
The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves.
Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.
If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S. ) to receive the message. Maybe it is time..
We haven't had a vacation in almost 5 years. We don't go "out". I buy just what we absolutely need at the grocery store and it's private label. I get $10.00 per week.... (when I can cash my paycheck) that's all mine. Yep... I can really help the economy with that.
Add in the rising gas prices, food prices and everything else. We really don't even make ends meet let alone come close to breaking even. It's a never ending game of finance juggling.
When are We The People going to finally say enough is enough? We forget that we are a powerful voice when we all stand together. We need to get the oil speculators to STOP what they're doing. We need to tell our elected officials that if they can't or won't do the job that WE HIRED them to do.... WE WILL REPLACE THEM!!!!
Hey..Its only money ...? now if Hillery can give Pakistan 7 billion just to be our friends, and pelosi can have a office in Calif. that cost taxpayers $18,000 a month...
Yep America is in a world of hurt...many people need jobs and a way to take care of their families without being on welfare...
And here I am, one collegiate graduate and 2 more in college, ive got the "empty nest" syndrome and just put my house on the market in order to "downsize" as a way of cutting costs. My GOD was I in for a kick in the gut when I saw how my house depreciated $100k, I swear I dont recall ONE WORD that the agent spoke beyond that drop for a 4 bdrm 3 bath, 2 car attached w/full basement on an acre - I bout fainted but im going to take the hit and move into something smaller because I just do NOT utilize this big house by myself anymore and its just plain silly to me to continue with these exhorbitant costs $200/mo just to have my yard cut also.
Every time I pump gas, I just want to hurl because the costs are going up on a daily basis, I feel for people with young children, their costs are going to be astronomical, even on two incomes. I wont even ask, when will it end, because I know that it wont!
The Middle Class did three things to cope over this period: 1) more 2-spouse working households, 2) longer average hours working, and 3) credit card and home equity loans.
There's no "4" to go to except for "government stimulus." Unless the powers that be -meaning the wealthy special interests that now clearly control our government- realize that everyone will suffer if American's can't afford to buy the goods and services they produce, we're headed for a very shaky future.
Compounding this is the fact that over 1/6, on the way to 1/4 of all money is spent on health care. That is unsustainable and cripples our economy now.
Wow she gets more than I do being disable.. I would love the extra money.. extra $277 that is.
Everyone on Capital Hill should for three months live on a "normal" American income. Then, for three more month live on an American disable income. Then talk to Americans about how we can save some money.
America isn't some 30-50 million person European style socialist country, we have 312 MILLION (1/3 of a billion) people. And foot the bill (housing, education, healthcare, etc.) for an unknown estimated 12 million "undocumented" guests.
You can keep your $25M for defense in the (hopeful) tipping of Libya. The US is in serious financial trouble, TRILLIONS of dollars in trouble. Be prepared to say goodbye to many socialist amenities. Pretty soon we'll be a pay as you go nation.
No money means no money.
No money means no SS.
No money means no healthcare.
No money means no Post Office.
No money means no WIC.
No money means no education.
No money means no subsidised housing.
If 2% of ALL taxpayers (just 6 million people out of 312) pay HALF of all collected taxes and less than half of ALL Americans even work, how long do you think those people are going to stick around while the government looks to raise taxes even further as government looks to get bigger and bigger and promise more and more?
So many articles point out the same "helpful" programs. These programs do nothing to help the "working poor" such as myself since the income limits are extremely low. I know for a fact I would be better off if I quit work all together and got on every program listed. As long as I am able to work, I will.
I know of a number of young, single mothers who would very willingly work but are bascially penalized if they do so. If you work a minimum wage, part-time job, all assistance (HUD, food stamps, etc) goes down drastically. I've done the math for a couple of these women and, unfortunately, they are far better off not working.
do the math. Average wage (if that) for most jobs is $10 an hour. Gas is $4 a gallon. Figure in taxes, medical insurance etc., (if you have it) & is it even worth it to work?!
When everyone figures out it's cheaper to quit & go on welfare maybe just maybe our elected officials will actually pay attention! Nobama & his wife made over a million last year isn't his salary only $200,000 a year. How'd that happen?
Our elected officials are so far out of the loop they might as well be living on Mars.
so many people dont seem to understand how this system works
let me break it down for you in simple terms,,,slave owners and slaves
the slave owners are the ones in power and they are not going to do anything that will allow the slaves(us) to become at all powerful enough to control our own lives because that limits their power.
as long as we need them to help us they have the power,,,and they manipulate the system so that we will always need their help and so are always indebted to them.
this short video explains it all in crystle clear language that everyone should be able to understand...http://www.youtube.com/watch?v=Xbp6umQT58A
these concepts are nothing new to our owners,,they are as old as civilization its self
In 2010, there were 144 new billionaires in this country.
For the middle class it is game over!. Checkmate.
The Politicians (both parties) have stolen the American Dream.
As stated before on television, we are no longer the "middle class", we are the "WORKING POOR"! The Government doesn't care about us, the large companies use our reduced salaries to re-tool their plants, everything now is "new and improved" and it costs more to buy. And do not get me started on the cost of gasoline ...I have written my Congressmen\women since 2005 and still they do nothing for us.
I grew up in the late 1960s and early 1970s and I remember we all protested for things like this. I have tried to rally people over the last few years but everyone is out for themselves.
I am at a loss...America is going down hill fast and I wish we could all get together and do something to tell Washington DC that "I'm as mad as HEL_, and I will not take it any longer"!
Will you join me and write your Congressmen\women? It's all I can think of doing.
One more last thing to say. Nobody is going to unite to evict these politicians from office! What with tv,video games, and the computer we don't know our neighbors. We have successfully alienated ourselves from the rest of us. Most of us are too busy working to meet our neighbors who are also working anyway. About the only thing lack of jobs and money may do is to get us to meet one another again and maybe then, just maybe, people will unite to avoid starvation and being forced out of our homes and into the streets. Maybe then people will decide to boot these people out of office and put people in who do not have $100,000.00 or higher salaries. Maybe then we will have elected officials who are representative of ourselves, of how we actually live. Till then we are at the mercy of these wealthy business people who have no use for us working poor!
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