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Yahoo
27-05-2025
- Business
- Yahoo
4 Things the Middle Class Needs To Do Now To Thrive in the Trump Economy
On the campaign trail in 2024, President Donald Trump made a number of promises to the middle class. He promised that, if elected president for a second term, he would ensure the end of inflation, slash energy and electricity bills, and put a temporary cap on credit card interest rates. Trump also promised cheaper groceries; the list goes on. Explore More: Find Out: We're not even 150 days into President Trump's four-year term. It's far too early to tell whether Trump will succeed in delivering on these promises in full. But at this moment, many middle-class Americans are concerned about life in the U.S. becoming even more expensive. Tariffs, for example, could cost American households $5,200 annually, according to the Center for American Progress. Putting fear, doubt and even high hopes aside, we must ask: 'What can the middle class do right now to thrive in the Trump economy?' Consider the following expert-provided moves to make. Sean Babin, certified financial planner (CFP), CEO and lead financial advisor at Babin Wealth Management, highlighted the many challenges staring down the middle class right now: Rising home prices, rising childcare costs, rising education costs, rising healthcare costs and rising food costs. It's a lot to keep up with and can push you into high-interest debt if you're not amply prepared. Babin recommended having an emergency fund with at least three to six months' of living expenses in it. If you can set more aside than that (in a HYSA), absolutely do that. Suze Orman champions an emergency fund that will float you for 12 months. Be Aware: After the worst of the pandemic passed, Babin noticed a type of spend-happy FOMO rage among the middle class. ''You only live once' became a rallying cry across America,' Babin said. 'After being locked down for over a year, people were eager to make up for lost time, traveling, dining out, splurging on experiences, and buying things they'd long postponed. This wave of so-called 'revenge spending' saw many consumers throwing caution to the wind, often spending beyond their means. From blueberries to plane tickets, demand soared, and so did prices. The prevailing mindset was: Put it on the credit card and deal with it later. But as the bills piled up, so did the debt and its consequences are now being felt.' The middle class must reduce their spending if they want to survive these economic challenges. Chiefly, they must eliminate credit card debt. In 2023, the average outstanding debt per cardholder in the U.S. was about $6,088 and the average interest rate on credit cards is 21.47%, according to TransUnion. And credit card debt delinquency has risen since then. So, while we all kinda, sorta know that credit card debt is not good, we don't necessarily recognize how horrifically lethal it is. Yes, to some extent, the middle class can't be blamed for their credit card habit. We're fed promotional bait from credit card companies day and night, and even if we're pulling in six figures, we're living paycheck to paycheck or close to it. But we have to be real with ourselves. Putting food on the table is not the sole cause of credit card debt in the U.S; it's also things like buying luxury goods and electronics. 'Carrying a balance on a credit card is a big no no that will keep you trapped in the middle class,' Babin said. 'Have a plan to pay off high-interest rate debt as soon as possible. Might have to say no to some family vacations and nights out. It takes work to pay yourself first.' You have to invest and you have to invest in a variety of assets. 'Stocks, real estate, gold, your own business,' said Joseph Camberato, CEO at National Business Capital. 'The middle class often gets stuck trying to save their way to stability, but that's not enough anymore. The wealthy get wealthier because their money is always working for them. They buy things that grow in value: Assets that rise when prices rise. Their money is working for them while they sleep. Investing becomes their second job and focus. That's how they stay ahead of inflation. If you're not investing, you're falling behind.' And remember, a tumultuous market is still a good one to invest in. Do your homework, stay calm and be in it for the long haul — and stop putting this off. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 4 Affordable Car Brands You Won't Regret Buying in 2025 How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on 4 Things the Middle Class Needs To Do Now To Thrive in the Trump Economy
Yahoo
22-05-2025
- Business
- Yahoo
3 Money Traps Lower-Middle-Class Folks Get Tricked Into
Those in the lower middle class may be trying to find a new way to climb to the next rung of the socioeconomic ladder, but there are those out there who would take advantage of it, pulling the rug out from under them with the allure of prosperity and wealth. Read Next: Find Out: If you consider yourself in this tax bracket, watch out for these kinds of plots that can work against you. Here are three money traps lower-middle-class folks can get tricked into. Also see eight money traps millennials fell for that Gen Z avoids. Sean Babin, CEO of Babin Wealth Management, advised steering clear of annuities, which are contracts between an individual and an insurance company. With annuities, an individual will purchase one in full or with payments and then the insurance company will make payments to them for a certain amount of time, per 'Behind the scenes, these insurance companies have rigged the game in their favor through either high fees and/or caps on how much you can make,' Babin explained. 'Annuities can have what's called a 'cap rate,' meaning if your cap rate is 10% and the stock market returns 24%, like it did in 2024, the insurance company gets to keep all that growth over 10%.' If your goal is to grow your wealth, Babin cautioned that an annuity is not the product to do it in. 'If you have an annuity, discuss your options with a fiduciary, not the insurance company,' he said. Explore More: Spend money on a credit card and earn points, cash back, miles and other rewards in return. For some, this might sound like a win-win, but it can be a lose-lose. That's because you need to make sure you are paying off your balance in full if you choose to get one of these credit cards, according to Michael Rodriguez, founder of Equanimity Wealth. 'These cards deliberately target aspirational lower-middle-class consumers with promises of luxury perks and lifestyle upgrades, knowing many won't be able to pay off their balances,' Rodriguez said. 'When you pay such high interest to get pennies on the dollar for travel rewards, you end up losing more than you are gaining. I love using credit cards for the perks, but it is important to avoid the high interest credit card trap.' 'The average credit card interest rate is 22%,' Babin said. 'If you spent that $5,000 to get the welcome bonus but could only pay $2,000 back, the annual interest owed on $3,000 is $660.' Having an expensive car is one of the quickest ways to set you back financially, in Babin's professional opinion. 'If your car payment is over $700 per month, you have an expensive car,' Babin said. 'Don't get trapped into buying a car that's more than you need.' Rodriguez highlighted that traditional auto loans used to be around 60 months and are now closer to 84 months. 'These extended terms specifically target lower-income buyers by making expensive vehicles seem 'affordable' with smaller payments spread over more years,' Rodriguez explained. 'What they don't emphasize is how much more you'll pay in interest, or that many buyers end up with negative equity.' In other words, one could end up owing more than what the car is worth, only adding to the financial woes of the lower-middle-class folks trying to get ahead. More From GOBankingRates 5 Types of Cars Retirees Should Stay Away From Buying Sources Sean Babin, Babin Wealth Management 'Annuities.' Michael Rodriguez, Equanimity Wealth This article originally appeared on 3 Money Traps Lower-Middle-Class Folks Get Tricked Into Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-04-2025
- Business
- Yahoo
7 Steps To Take If Money Has You Trapped at Your Job
According to the Career Gridlock report from Resume Now, 60% of workers have stayed in roles longer because they were worried about what would happen when they left their jobs. While 57% of employees cited wanting better benefits, only 13% admitted that they had made a career transition. The report also found that 35% of workers felt stuck at their current job because they were afraid of taking a pay cut and 34% were worried about financial instability during the transition. Trending Now: Check Out: It's also worth pointing out that the Glassdoor Worklife Trends report found that 65% of professionals admitted to feeling stuck in their roles, yet the quit rates had reached the lowest point since June 2020. Glassdoor data also discovered that 17% of employees who made a career transition noted that their pay decreased in 2024. Here are seven steps worth considering if money has you trapped at your current job. 'The first step toward financial freedom is analyzing your budget,' said Sean Babin, certified financial planner (CFP) and CEO of Babin Wealth Management. 'Many Americans have little awareness of their monthly spending and whether they're operating at a surplus or a deficit.' For You: You can start by reviewing your expenses and reducing your spending so that you can save more and not have to worry about covering hefty expenses if you transition jobs. When you understand your spending better, you can look for ways to reduce it. Here are a few quick ways to review your finances right now: Go through your fixed expenses to see if you can cut anything, like a subscription service or a membership you no longer use. Review your variable costs to see if you have any problem areas, like dining out or a particular hobby that's more expensive than you realized. Once you've reviewed your spending, you'll want to move on to the next critical step. If you feel trapped at your job, it's likely because you're not confident with your financial situation and overall savings. One of the first places to start is your emergency fund so that you have the resources to bail you out. Alari Aho, human resources and talent acquisition expert and CEO of Toggl Hire, pointed out that even a small emergency fund can help you because when an opportunity to move on does come up, you'll be in a stronger position to take it. How much should you save if you feel trapped at a job? Babin shared the following formula: 'A good rule of thumb is that for every $10,000 in salary you're aiming for, expect your job search to take about a month, Babin said. 'So, if your goal is a $100,000 salary, it may take 10 months or more to land the right position.' This formula is different from the traditional approach that personal finance experts suggest, which is to save up anywhere from three to six months' worth of living expenses in your emergency fund. Either way, the goal is to save up some money so that you're comfortable with making a career transition and don't feel stuck. Babin recommended connecting with recruiters in your desired industry. 'They can be invaluable in helping you navigate opportunities and get in front of the right people,' he added. Applying for jobs while you're still employed can help you get a foot in the door and boost your confidence. You may discover that there are opportunities available to you that you weren't aware of. Aho recommended networking with individuals in your desired field so that you don't feel alone. By reaching out to contacts on social media or attending events related to your field, you can better understand what's happening in your industry. The reason that you're feeling trapped could be that you're not aware of your options in your industry because you're only checking job boards. Babin pointed out that traditional job boards are saturated with hundreds, sometimes thousands, of applicants per listing, making it difficult to stand out. 'These days, it's less about blindly applying online and more about who you know — and who can get you in the door,' Babib said. You'll want to designate some time to attending industry events and reaching out to your network so that you can explore all possibilities. 'You don't need to quit your job right away, but small steps, such as acquiring a new skill or revising your resume, are enough to feel less stagnant,' Aho explained. If you're feeling like you can't leave your current job, this could be the ideal time to look into any certificates or skills that can help you upgrade your resume so that you have more to offer when applying for different roles. The Glassdoor report cited that 39% of employees had taken on a side hustle to help supplement their pay. If you're feeling trapped at a job because of the income, you'll want to try to boost your earnings through a side job or freelance work. This could provide some wiggle room financially or you may even discover a new career path. The best option is to offer freelance services in your field on a marketplace like to see if there's demand in your industry. You'll want to explore these platforms to see what the rates are like and if it's worth taking on contract work. This will also help you better grasp the demand for your skill set in the current market. Aho noted that you shouldn't overlook the power of talking with your manager. If you're feeling burned out or have concerns about compensation, you might be able to fix things through open communication with your boss. There could be an opportunity for a job transfer or advancement within reach. 'Sometimes, the conversation you're afraid to have is the one that changes everything,' Aho said. This could be a wake-up call to discuss career advancement opportunities with senior-level management in your company. More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early The New Retirement Problem Boomers Are Facing 8 Common Mistakes Retirees Make With Their Social Security Checks This article originally appeared on 7 Steps To Take If Money Has You Trapped at Your Job Sign in to access your portfolio
