How the Covid Response Has DESTROYED Personal Finances

 

 

 

How the Covid Response Has DESTROYED Personal Finances

The Organic Prepper,

 

 

Back when the virus that would soon be known as Covid-19 was just a blip on the radar, Selco wrote an article called, It’s Not the Virus You Need to Worry About. It’s the System. And like much of what Selco writes, it was prophetic.

 

Here we are, coming up on a year after the virus first began making itself apparent and the world is dramatically different. Not only are there the inevitable arguments about masks, lockdowns, vaccines, and hypocritical politicians using the whole thing as a power grab, but there are very real effects on everyday families all over the world.

 

In the United States, our personal finances have taken blow after blow. Eight million more Americans than last year are now living in poverty as millions of jobs have disappeared, never to return. Data from the review site Yelp shows that 60% of the businesses that shut down due to Covid have permanently closed. People who were formerly struggling are sinking, and many of those who were comfortably middle class are desperately trying to stay afloat.

 

It isn’t so much the virus that has caused our financial woes – it’s the response to the virus. Federal, state, and local governments have deemed what businesses are allowed to operate and how they must do so. This has resulted in the loss of businesses themselves, loss of sales, and loss of jobs. Nearly every family is feeling the effects to some degree. Please check out our new frugality website for practical solutions if you are dealing with financial issues.

Here are some of the ways American families are suffering financially due to the response to the virus.

 

More people are living paycheck to paycheck.

Back in February of this year, a report was released that showed 40% of American workers were living paycheck to paycheck.

 

Willis Towers Watson’s Global Benefits Attitudes Survey discovered that although 58 percent of workers think their finances are heading in the right direction, 38 percent of employees are living paycheck to paycheck…

 

…Almost one-fifth of those making more than $100,000 are living paycheck to paycheck, and about one-third say their financial problems negatively affect their lives. The survey polled 8,000 American workers.  (source)

 

That early 2020, pre-lockdown report looks like a glimpse of nostalgia from the good old days. A more recent report has found, due to the Covid response, that now almost two-thirds of Americans are living the paycheck to paycheck life.

 

With government shutdowns forcing countless businesses to close and then lay off workers, one in four respondents now feel their income is not stable. Nearly two in three (63%) say they’re going paycheck-to-paycheck since March 2020. Millennials seem to be the hardest hit, with 64 percent saying they’re living off their paychecks.

 

“After the unemployment rate spiked to more than 14% in April, Americans continue to be wary about their job security and income,” writes Highland President Jon Berbaum in a media release. (source)

 

Anyone who has ever lived through this situation knows that paycheck-to-paycheck is a delicate dance and it only takes one small thing to go wrong to cause your house of cards to come tumbling down.

 

NSF fees, late fees, reconnection fees, extra deposits, overdraft interest, and payday loans can all destroy the financially fragile, leaving them in a downward spiral designed to keep them trapped. There’s a reason that broke people tend to stay broke, and it’s not because they’re simply lazy and irresponsible. It’s because the system is set up in a way that it earns more money by charging poor people extra.

 

Hardly anyone has an emergency fund left.

Back in 2019, Bankrate released a survey that said only 40% of Americans would be able to pay for an emergency costing a thousand dollars out of their savings. Yet again, those were the good old days.

 

A more recent survey said that an astounding EIGHTY TWO PERCENT of Americans could no longer handle an emergency costing $500. Zero Hedge reports:

 

But perhaps the most alarming number from the entire survey: a whopping 82% of respondents said they wouldn’t be able to cover an emergency $500 expense without borrowing money.

 

For context, prior to the pandemic, surveys showed that roughly half of Americans couldn’t afford a $500 emergency expense, which means the number of people who say they couldn’t cover a small emergency has risen by 60%.  (source)