According to a CNN Money article entitled, "Why America's middle class is losing ground".
In the wake of the Great Recession, millions of middle-class people are being pinched by stagnating incomes and the increased cost of living. America's median household income has dropped by more than $4,000 since 2000, after adjusting for inflation, and the typical trappings of middle-class life are slipping out of financial reach for many families.
We're a part of this middle class who is losing ground. While we don't have credit card debt to the extent of many people, our income has been dropping and has dropped dramatically since 2000. But we're doing our best to forge ahead in these tough times.
What's Changed with Income?
Year-over-year, our income hasn't been drastically reduced, but it has been reduced nonetheless. My wife's pay was actually cut by 25 cents an hour and my overall annual pay was decreased by $2,100.
While this amount isn't life altering, it certainly hurts our ability to save. Add to this that I don't have an employer-sponsored retirement plan and my wife's plan has a matching contribution that is worth about $200 a year, and not only has our income taken a hit, but our ability to plan for retirement is affected as well.
Big Expense Increases
But it isn't necessarily our reduced income that has hurt us the most recently but our increase in expenses. And this increase is due largely to things outside our direct ability to control.
For example, we've recently seen our income tax in Illinois (our state of residence) take a 66 percent jump, moving from 3 percent to 5 percent. Add to this, the reinstatement of the full payroll tax adds another 2 percent to our overall expenses. Worse yet, our health insurance recently took a huge leap, increasing from about $120 a week to just over $150 a week, a 25 percent increase.
All these increasing expenses, factored in with a nearly $100,000 loss on the home we bought during the housing market bubble, and our position in the middle class is faltering.
How We've Adjusted
Even with these financial hurdles, we're not given up just yet; we still have at least a little fight left in us. Therefore, we've done some things to attempt to retain our position in the middle class.
First off, we've downsized our home significantly. In the process, not only have we eliminated a $1,350 a month mortgage, but we've cut things like our property taxes, utilities, and maintenance and upkeep costs, allowing us to stretch our diminished income further. Second, we've changed our shopping habits. While we've always been good shoppers, last year we changed to shopping at Aldi grocery stores, which has helped us cut nearly 30 percent off our previous shopping bills. And finally, since I work from home, I undertake the childcare duties for our five-year-old and newborn. This saves us thousands of dollars each year in childcare costs and again helps us stretch our declining income.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More From This Contributor:
The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
Luhby, Tami. "Why America's middle class is losing ground". March 5, 2013. http://money.cnn.com/2013/03/05/news/economy/middle-class-wages/index.html?iid=HP_LN. March 7, 2013.