Save The Middle Class

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Where a Home of Their Own is an Elusive Dream

(October 2007)    According to Housing affordability data, which links median home prices to median incomes, a growing number of young Americans could become the first generation of the middle class to experience a serious decline in the rate of home ownership.

Despite sending two parents into the workforce to boost family earnings to record levels, even in inflation-adjusted dollars, the opportunity to buy a home is slipping beyond the grasp of many middle-class Americans. The ability of the average American family to buy the average home has fallen dramatically since 2004.

Living paycheck to paycheck gets harder

(October 2007) The calculus of living paycheck to paycheck in America is getting harder. What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families.

Explosion in High-Priced Student Loans Sow Seeds of Trouble for U.S. Economic Growth

(October 2007)   The near doubling in the cost of a college degree the past decade has produced an explosion in high-priced student loans that could haunt the U.S. economy for years.

While scholarship, grant money and government-backed student loans - whose interest rates are capped - have taken up some of the slack, many families and individual students have turned to private loans, which carry fees and interest rates that are often variable and up to 20 percent.

Many in the next generation of workers will be so debt-burdened they will have to delay home purchases, limit vacations, even eat out less to pay loans off on time.

"This is literally a new form of indenture ... something that every American parent should be scared of," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.

More than $17 billion in private student loans were issued last year, up from $4 billion a year in 2001. Outstanding student borrowing jumped from $38 billion in 1995 to $85 billion last year, according to experts and lawmakers.

Rocketing tuition fees made borrowing that much more appealing. Consumer prices on average rose less than 29 percent over the past 10 years while tuition, fees, and room and board at four-year public colleges and universities soared 79 percent to $12,796 a year and 65 percent to $30,367 a year at private institutions, according to the College Board.

Scholarship and grant money have increased, yet for almost 15 years, the maximum available per person in government-guaranteed student loans, which by law can't charge rates above 6.8 percent, has remained at $23,000 total for four years. That's less than half the average four-year tuition, room and board of $51,000 at public colleges and $121,000 at private institutions.

One third of Americans say under extreme stress

(October 2007) Worries about work and money are causing one-third of Americans to suffer from extreme stress, driving them to overeat, drink, and smoke.

In an online survey for the American Psychological Association (APA) nearly half of the 1,848 people questioned believe their stress levels have shot up in the past five years, taking a toll on their personal relationships, work productivity and health.

"We see stress as being an increasing problem," Dr Russ Newman, the executive director for professional practice at the APA, told a press briefing.

Nearly three-quarters of people blamed work and money as the main sources of stress in their lives, followed by workload and children.

Low salaries, too much work and a lack of opportunity were the main reasons for stress at work.

An equal number said they suffered from physical and psychological symptoms ranging from headaches, fatigue and muscle tension to anxiety, irritability and lack of sleep.

And about one-third of the people questioned said they had difficulty balancing family and work responsibilities. More than half said stress had caused friction in relationships with family and friends.

"Many people admitted they had difficulty dealing with stress which led to unhealthy habits.

While short-term stress can be a motivator for some people, Thorn said chronic stress takes its toll on health by contributing to high blood pressure, obesity, diabetes and other disorders.

Stressed borrowers use plastic to delay default

(October 2007)  This may be Johari Reeves' last chance to catch up on her mortgage payments. The credit cards, she'll worry about later.

As part of her efforts to avoid defaulting on the mortgage, Reeves said she has "maxed out" all her credit cards, spending to the limit on basic needs. "Now all I'm doing is making the minimum monthly payments."

Rising mortgage payments and tighter lending standards for refinancing amid the subprime credit crisis have dried up once-easy access to home equity loans for many middle-income borrowers - so desperate borrowers are using credit cards to cover basics while trying to keep up with home payments.

"They're now using plastic to pay for basics like gas and food and are running into trouble."

U.S. Federal Reserve data for August showed revolving consumer credit, mainly credit and charge cards, rose $6.14 billion, or 8.1 percent, to $915.47 billion - the highest monthly increase seen since the second quarter of 2006.

More worrying, said Merrill Lynch's Rosenberg, were Fed data for credit-card delinquency, which hit a three-year high in the second quarter of this year.

Food pantries struggling with shortages

(November 2007) Operators of free food banks say they are seeing more working people needing assistance. The increased demand is outstripping supplies and forcing many pantries and food banks to cut portions.

Demand is being driven up by rising costs of food, housing, utilities, health care and gasoline, while food manufacturers, wholesalers and retailers are finding they have less surplus food to donate and government help has decreased, according to Lisa Hamler-Fugitt, executive director of the Ohio Association of Second Harvest Foodbanks.

"I've been doing this for 20 years, and I can't believe how much worse it gets month after month," she said.

Diana Blasingame has lately found herself having to go to a free food pantry once a month to feed herself and her teenage daughter.

"I'm pretty good at making things stretch as far as I can, but food is so high now and I have to have gas in my car to do my job," said Blasingame, 46, who earns $9 an hour as a home health aide. "I work full time, but I don't have health insurance and sometimes there just isn't enough to pay bills and buy food."

"We have food banks in virtually every city in the country, and what we are hearing is that they are all facing severe shortages with demand so high," Ross Fraser, a spokesman for America's Second Harvest - The Nation's Food Bank Network, the nation's largest hunger relief group, said Friday. "One of our food banks in Florida said demand is up 35 percent over this time last year."

The U.S. Department of Agriculture's annual hunger survey released Wednesday showed that more than 35.5 million people in the United States were hungry in 2006. While that number was about the same as the previous year, heads of food banks and pantries say many more people are seeking their assistance.

"We've lost factory jobs and many service jobs don't pay a livable wage," said Dick Stevens, director of the organization's food and nutrition division. "We see a lot of desperation in families who are trying to figure out how to pay higher fuel and utility costs and still put food on the table."

Health coverage shrinks as costs up again: study

(November 2007) The cost of providing health care for workers rose again in 2007 to nearly $8,000 annually per employee, prompting more businesses to drop the benefit, according to an annual business survey released on Monday.

Costs rose by 6.1 percent, about the same pace as last year but lower than the double-digit rates of prior years.

But that's still more than twice the rate of inflation, and costs to businesses would be even higher if they had not shifted more of it to the workers and their families, the National Survey of Employer-Sponsored Health plans found.



THANK GOD FOR SOME GOOD NEWS...SOMEONE IS LISTENING !

Penn to eliminate loans by 2009

(December 2007)  The University of Pennsylvania on Monday joined Harvard and other elite private colleges in announcing loan-free financial aid packages aimed at middle- and upper-middle-class students.

All financially eligible undergraduates will receive grants instead of loans beginning in fall 2009, Penn officials said.

"Our aim is to send a signal out to every family who would not otherwise believe they could afford our tuition and fees that we're affordable to students from every economic background," Penn President Amy Gutmann said.

Penn costs about $46,000 a year for tuition and room and board. The school must continue charging such fees to those who can afford it in order to offer financial aid to less affluent students, Gutmann said.

Penn, an Ivy League school, will phase in the changes starting in September by eliminating loans for students with family incomes under $100,000. At the same time, it will reduce need-based loans by 10 percent for students whose families make more than $100,000.

The new loan-free policy continues a trend among top-tier schools to replace loans with grants in financial aid packages.

Harvard University and Swarthmore College announced similar policies this month. Yale University is expected to announce enhanced financial aid in January.

When fully implemented in 2009, Penn's new initiative will affect about 2,600 students and cost the school an extra $12.5 million a year, officials said.

The no-loan policy will be financed mainly through the university's $3.5 billion fundraising campaign.

Penn already covers tuition and room and board for students whose families earn $60,000 or less per year.

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On the Net:

University of Pennsylvania: http://www.upenn.edu


Unpaid credit cards bedevil Americans

(December 2007) Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."

The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.

At the same time, defaults - when lenders essentially give up hope of ever being repaid and write off the debt - rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders - including Advanta, GE Money Bank and HSBC - reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors - similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.



Pocketbook worries outweigh voters' concerns over war in Iraq

(December 2007)     WASHINGTON (AP) - Voters began to worry more about their pocketbooks over the last month - even more than about the war in Iraq.

More than half the voters in an ongoing survey for The Associated Press and Yahoo! News now say the economy and health care are extremely important to them personally. They fear they will face unexpected medical expenses, their homes will lose value or mortgage and credit card payments will overwhelm them.

In the new results, men and women approaching retirement were especially attentive to the economy and health care, with six out of 10 ranking both issues extremely important. Politically, the attention to such domestic issues hangs darkly over Republicans. Voters say they are far more likely to trust Democrats to handle the economy and health care.

Consider Linda Zimmerman, a 50-year-old sheep farmer from Thurmont, Md. Her daughter and son-in-law are having trouble keeping up with two mortgages on a town house, she said. One street in her neighborhood has five homes for sale, and one has been on the market for two years.

Registered as a Republican, she's ready to reconsider.

"We're Republicans and I'm very unhappy with them, and I've been watching the Democrats," she said. "We did better when (Bill) Clinton was in than we did with Bush. It's just terrible."

The Democratic edge on such issues illustrates the predicament Republicans face going into a presidential election. Iraq doesn't dominate the news as it used to, replaced by headlines about slumping home sales, high gasoline prices and a credit crunch.

Six out of 10 people polled said they believe it is at least somewhat likely that the U.S. economy will enter a recession next year. Slightly more - 64 percent - said they worried about a major unexpected medical expense, and 55 percent worried that the value of their stocks and retirement investments would drop.

Forty-four percent said they were concerned that the value of their homes would decrease during the next six months. That sentiment was especially strong in the mountain states.

"Middle class America is being chipped away at," said Edward Lemieux, a 57-year-old pattern maker from North Smithfield, R.I.

His view is influenced by the flight of manufacturing jobs from his state, by the "For Sale" signs that outnumber the "Sold" signs on neighborhood lawns and by his mother's health care needs.

"We're all of a sudden becoming a country of rich and poor," he said. "The middle class is eroding."

Nearly two-thirds of voters polled said the United States should adopt a universal health insurance program "in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers.

"I see too many people at work especially who just don't get any health care," Haynes said. "I look at what they get for retirement and Social Security, and I don't see how they live on that and afford their prescriptions."

Bank Robbed To Pay for College Tuition

(December 2007)    Two college students who claimed they were trying to raise tuition money through armed robberies got a tough lesson in court Thursday.

A Hamilton County common pleas judge sentenced Andrew Butler and Christopher Avery to 20-year prison terms and told them dire financial straits don't justify breaking the law.

"If you get to that point, robbing people isn't the answer. It never has been and it never will be," Judge Steven Martin said.

Butler, 20, and Avery, 22, apologized to their families and their victims before Martin imposed the sentence.

The men pleaded guilty to two charges of aggravated robbery and six charges of kidnapping.

Butler, who attended the University of Toledo, told Martin in an earlier hearing that tuition increases outpaced his scholarships and financial aid. Avery, a student at the University of Cincinnati, said he couldn't pay for summer classes after an internship fell through.

Prosecutors said the two had guns and were wearing masks when they made off with $130,000 from a crowded bank in suburban Reading on July 17. A day earlier, they unsuccessfully tried to rob a check-cashing business, prosecutors said.

They were caught while switching cars after the bank robbery.


The Daycare Nightmare ~ Having a child costs the Middle Class a fortune just for daycare!

http://articles.moneycentral.msn.com/Investing/HomeMortgageSavings/ChildcareCrisis.aspx?GT1=10826#pageTopAchor

A generation or two ago, Mom -- and it was usually a mom -- could stay home with the kids while Dad put in the hours at the office. His income was enough to let them own a home and a car, and put a pot-roast dinner on the table once a week.

It's just not possible to go back to that scenario, says Elizabeth Warren, one of the authors of "The Two-Income Trap."

"It's not as if parents can roll back the clock and live on one income," explains Warren, a professor at Harvard Law School. "A generation ago, a single-income family would be solidly middle class. Today a single-income family is at the bottom edge of the middle class."

Warren believes the two-income family is stretched, too, however. Child-care costs are rising at twice the rate of inflation, she says. After paying the mortgage, health insurance premiums, transportation costs and child-care fees, today's two-income families have less money left over than the one-income family did a generation ago.

"In order to go back to one income, families would have to make significant changes, possibly losing health insurance and their home," Warren says.

That sounds right to me. My family might be able to squeak by for the short term on one income, but if either Michael or I decided to give up a paycheck permanently, our family's security would deteriorate rapidly.