How to Survive in the Difficult World of the Middle Class

Is the middle class the “most endangered species in America“? Since the economic downturn of 2008, America’s middle class has been on the decline. Reports from the Pew Research Center show that both median income and median wealth have declined sharply—dropping 5 percent and 28 percent, respectively—and about 42 percent of those polled say that they’re worse off now than they were before the financial crisis.
So what’s a middle-class American to do? These tips will help you survive in what seems to be, at least for now, the new normal.
1) Educate, educate, educate. Surround yourself with quality mentors, and seek advice from trusted professionals, such as financial advisors, attorneys, and accountants.
2) If possible, buy a home Securing a mortgage loan now, while interest rates are still at historic lows, will give you time to build equity (hopefully), as well as offer some tax relief; in many circumstances, you can write off mortgage interest and real estate taxes. The government offers a number of programs to help you purchase a house.
3) If you’ve got kids, make sure that you understand the associated tax breaks. Speak with an accountant about tax credits for child care and dependent care costs, the child tax credits, and proper filing st
4)Contribute to your 401 Even socking away small amounts provides benefits in the form of tax deferrals and compounding growth. If your company provides matching, be sure you’re taking full advantage.
5) Continually prioritize and evaluate your debt situation. Stop using credit cards and focus on paying down deb
6) Utilize 529 college savings account Getting a college education is more important than ever, and 529 savings accounts allow your investment to grow tax-free; distributions come out tax-free, too.
It’s scary out there, but you can use these simple steps to help you survive—and even thrive.  For decades the middle class has been in decline. Hope they help you survive in spite of these downward economic trends.
Listen below to Win Damon and I review this on FM 106.1 WNBP Newbuyrport and WNBP.com.

Sources:
http://www.pewsocialtrends.org/2012/08/22/the-lost-decade-of- the-middle-class/, http://www.npr.org/2013/03/26/175274579/american-winter-families-struggle-to- survive-fall-from-middle-class, portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home,
www.nolo.com/legal-encyclopedia/tax-breaks-for-parents-30180.html
Stuart Steinberg, CPA, MBA has been dealing with families and their money issues since 1988. He can be reached at 55 Pleasant Street Newburyport and at (978)864-9581 and stu@eaglerockfinancial.net
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.
Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
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