Middle Class Slipping Over the Edge in Debt

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The average household income has dropped $1,175 from 2000 to 2007. The average family now has to spend $4,655 more on everyday basic needs says Elizabeth Warren, professor at Harvard Law School in testimony written and brought before the Joint Economic Committee.

Gas alone is costing families $2,195 more for the same commutes than it did eight years earlier.

Child care costs have went through the roof. Families with children under 5 spend on average an additional $1,508 per month. Those with older children spend $622 more for after school care.

This has caused many families to turn to credit cards to help pick up the slack in their incomes, causing further debt.

"There have never been since the Depression so many families standing right on the edge," Warren said. "Families have tightened their belts. They have cut down in every discretionary spending area they possibly can."
"These costs are tearing a hole in the family they simply can't make up," she added. "You can't cut out enough lattes to pay for health insurance in America."

By Tami Luhby

I really don't know what people are supposed to do right now. I hear all the time people saying things like save money, anywhere and anyhow you can. Well, I don't know what else I could give up spending on that would make any real effect on my finances. There just isn't anyway to save for me and a lot of other folks struggling with their mounting bills, food and fuel costs.

Middle Class Slipping Over the Edge in Debt