Author: Vawn Himmelsbach

While homeownership was once viewed as a path to wealth and financial stability, some homeowners are feeling trapped by homes they can no longer afford.

Take Mendy, for example. This 35-year-old from Canada has a total of $1.8 million in debt, which includes his family home and a triplex he was renting out in Montreal. Now, with a second child on the way, Mendy’s feeling downright anxious about his financial situation.

When Mendy called into The Ramsey Show for advice, host Dave Ramsey was rather blunt, telling Mendy that he and his wife need to make some serious changes before it all burns to the ground.

Struggling under the weight of debt

As Mendy explained on the show, he owes $590,000 on the family home, which is worth $750,000. He also owes $680,000 on the triplex, worth about $850,000, which he’s listed for sale (so far, there haven’t been any takers).

On top of that, he owes roughly $70,000 on each of his two electric vehicles, along with $35,000 in student loan and credit card debt, and another $350,000 in personal debt (mainly to his cousin, who lent him money for a down payment and for renovations to both properties). Mendy’s total household income is around $120,000 per year before taxes.

“I had my ‘a-ha’ moment when I saw $22,000 going out in one month after doing a budget and I don’t know what exactly to do,” Mendy shared with Ramsey and his co-host, Rachel Cruze. “I cut out everything from potato chips to haircuts, literally anything I could to curb the debt.”

Taking on more work isn’t exactly an option, either. As he explained on the show, Mendy is bipolar and his doctor has told him he needs to maintain a healthy work/life balance. And making matters worse, his wife is about to go on maternity leave.

“The answer to getting rid of this anxiety is getting rid of all the crap and the debt associated with it,” said Ramsey. That starts with getting rid of the EVs and replacing them with cheap cars, “like, $5,000 cars,” said Ramsey.

While Mendy has given up on being a landlord and is trying to sell the triplex, “that thing’s got to be priced in such a way that your real estate agent can sell it and get it gone,” said Ramsey. If Mendy can make a profit of $200K to $250K on the triplex, he could then use that to pay off a chunk of his $350K personal debt.

Ramsey also says getting Mendy’s wife on board will require a serious conversation.

“The house is on fire, darling,” said Ramsey, assuming the role of Mendy in this conversation with his wife. “You get to decide with me if we’re going to let the house burn down or are we going to do something to put it out?”

Why homeownership isn’t a safety net anymore

For decades, owning a home has been considered the ultimate financial security blanket, offering a path to future wealth. But these days, for many middle-class families, homeownership can mask financial instability rather than solve it.

As a result, many Canadians currently find themselves in a “homeownership trap,” where the financial burden of owning a home eclipses other financial goals and erodes their quality of life.

Priced annually in October, last year, property taxes and other special charges spiked 6.0% on a year-over-year basis, compared with a 4.9% increase seen in October 2023, according to Statistics Canada. "This was the highest yearly increase since 1992," the office revealed.

Homeowners insurance is expected to increase 5.28% in 2025, with Alberta leading the nation with a 9.07% year-over-year increase, according a study from insurance comparison platform My Choice.

As a result, an increasing number of homeowners may feel cost burdened, meaning they spend more than 30% of their household income on housing and utilities.

How to avoid falling into a money pit

If you’re planning to buy a house, you’ll want to make sure you’re budgeting for everything, not just the purchase price. Consider property taxes, insurance, utilities, repairs and ongoing maintenance. If you have a variable-rate mortgage, you’ll also need to have room in your budget for payments with higher interest rates.

Once you tally up these costs, if the total is well above 30% of your household income, you may want to consider other options, such as buying a smaller, less expensive home or even co-buying with friends or family.

You’ll also want to shop around for the best mortgage rate you can find, since the current rate averages around 4% for a five year fixed-rate mortgage. To negotiate a better rate with lenders, it helps to have a strong credit score and low debt-to-income ratio.

If you can afford a 20% down payment, then you can avoid paying for Canada Mortgage and Housing Corporation (CMHC) insurance each month on a conventional loan.

If you’re already living in a money pit, you could try to renegotiate your mortgage to lower your monthly payments. For example, you could consider a loan modification (changing the terms of your mortgage) or refinancing (replacing your existing mortgage with one that has better terms).

For those living in a home they can no longer afford, like Mendy, the solution could require a more radical change — like finding a roommate, downsizing to a smaller home or moving to a less expensive neighborhood. And, like Ramsey said, “quit buying crap you can’t afford.”

Sources

1. Statistics Canada: Consumer Price Index, October 2024 (Nov 19, 2024)

2. My Choice: Home Insurance Predictions for 2025, by Vitalii Starov (Mar 4, 2025)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

From The Great Resignation to quiet quitting, there’s been no shortage of trends over the past few years that reflect growing dissatisfaction and disengagement in the workplace.

The latest is quiet cracking, a phrase coined by TalentLMS, a learning management system company. The term describes a persistent sense of burnout and stagnation that leads to disengagement, poor performance, and a quiet urge to quit.

Research from TalentLMS found that one in five employees (20%) are experiencing this phenomena on a frequent or constant basis, while another 34% say they experience it occasionally.

“Unlike quiet quitting, it doesn’t show up in performance metrics immediately. But it is just as dangerous,” according to TalentLMS’s report.

And there’s a tangible cost to this: Each year, disengaged employees cost the global economy $8.8 trillion, according to Gallup.

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What is quiet cracking?

While quiet quitting refers to workers who purposely slack off at a job they no longer want, quiet cracking refers to those who “gradually become mired in feeling both unappreciated by managers and closed off from career advancement while doing work they otherwise like,” according to an article in Inc.

Or, as TalentLMS puts it, people who feel “some kind of workplace funk.”

It goes beyond employee disengagement. Rather, “it’s something deeper and harder to detect,” according to TalentLMS. Employees are “silently cracking under persistent pressure.”

Those who frequently or constantly experience quiet cracking are “68% less likely to feel valued and recognized at work” compared to their peers, while only 62% feel “secure and confident” in their future with the company.

But this trend is also hard for employers to pinpoint. And even employees don’t always recognize the warning signs until they’re “spinning their wheels doing jobs they’re losing interest in yet stick with, fearing it will be too difficult to find a new one,” according to Inc.

The TalentLMS survey of 1,000 U.S. employees found that their top concerns include:

• Economic uncertainty
• Workload and job expectations
• Poor leadership or uncertain company direction
• Layoffs or restructuring
• Lack of career advancement opportunities

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The trends impacting quiet cracking, and how to mitigate them

The TalentLMS survey of 1,000 U.S. employees found that top concerns include:

• Economic uncertainty
• Workload and job expectations
• Poor leadership or uncertain company direction
• Layoffs or restructuring
• Lack of career advancement opportunities

If so many employees are quietly cracking, what can employers and employees do about it? Recognizing what causes this condition is the first step toward finding solutions.

The solution to this isn’t actually that complicated, according to Nikhil Arora, CEO of Epignosis, the parent company of TalentLMS.

“When people feel stuck, unheard or unsure about their future, that’s when disengagement creeps in. Giving employees space to grow — through learning, skilling and real conversations — is one of the most powerful ways to turn things around,” he said in a release.

1. Uncertainty and overload

It’s important to set expectations and balance workloads, since 29% of employees say their workload is unmanageable. This can be done by auditing workload distribution and providing stress management tools to employees.

This can help them “rediscover a sense of purpose and forward momentum, something we all seek at work and in life.”

2. Lack of recognition and growth

Respondents who experienced quiet cracking are also 152% more likely to say they don’t feel valued and recognized for the contributions at work. One of the simplest ways to combat this, according to TalentLMS, is to regularly recognize employees for their contributions.

It’s also important to set expectations and balance workloads, since 29% of employees say their workload is unmanageable. This can be done by auditing workload distribution and providing stress management tools to employees.

3. Few learning or career advancement opportunities

The survey found that employees who received training in the past 12 months are 140% more likely to feel secure in their jobs — and TalentLMS advises employers to “double down on learning and development” with “structured, ongoing learning paths.”

When it comes to combatting doubts about career advancement, “employers must show belief in their employees’ potential, which includes supporting growth, even when resources are tight,” according to an article in HR Executive. That could include mentorship and training opportunities, as well as clear communication about future paths.

What employees and employers can do

Employees who recognize the symptoms of quiet cracking can talk to their manager about managing their workload or clarifying job expectations. They could also provide suggestions to improve morale (such as peer-to-peer recognition) and ask about training and development opportunities. If these efforts turn out to be fruitless, it may be time to look for another job.

Employers who want to tackle this form of disengagement can get started by auditing their current engagement efforts, identifying “gaps in managerial support and recognition,” and starting small “with consistent feedback and learning programs,” according to TalentLMS.

As the report points out, quiet cracking isn’t a well-being issue. Rather, it’s a business issue: “When employees quietly crack, they take productivity, creativity and loyalty with them.” Because when employees quietly crack, companies loudly pay the price.

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• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

With consumer household debt hitting record highs, more Americans are picking up extra work to cover bills and becoming reluctant hustlers.

A new survey from AI-powered career platform Zety found that 38% of respondents have taken on side gigs or second jobs to make extra money and keep up with their debt. The online poll of 1,005 U.S. employees was conducted by Pollfish.

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Not one respondent reported being debt-free. In fact, 43% said they’re carrying more than $25,000 in debt, and one in five said they owe at least $100,000.

That’s why some Americans are “taking on side jobs for extra cash, accepting roles they don’t want, and making urgent trade-offs to manage their financial obligations in an increasingly volatile economy,” according to the report.

The rise of the reluctant hustler

This trend lines up with other data about the labour market. The number of Americans holding multiple jobs steadily increased from 2010 to 2020, according to the Federal Reserve Bank of St. Louis. After a dip during the pandemic, those numbers have bounced back to record levels.

And this rise in side hustles isn’t slowing down. A Harris Poll for the American Staffing Association (ASA) found that more than six in 10 employed U.S. adults say they’re likely to pick up extra work in the next year.”

“For growing numbers of Americans, a side hustle can be a good way to build savings, pay off debt, find a new job, or change careers. However, for others, a side hustle means having enough money to make ends meet,” said Richard Wahlquist, CEO of ASA, in a release. “With economic uncertainty dominating the headlines, it’s not surprising to see Americans looking for ways to create some breathing room in their budgets.”

Zety’s survey also found that most respondents are shifting their financial habits to manage debt and prepare for potential fallout from U.S. policy changes. Nearly four in five (78%) believe tariffs will make it harder to repay or avoid debt.

To cope, 38% said they’ve cut back on non-essential spending and 25% have increased their minimum payments. Others reported transferring balances (13%), delaying repayment (14%), consolidating debt (8%), refinancing (5%), seeking financial counseling (5%) or negotiating with lenders (4%).

Meanwhile, U.S. consumer confidence continues to deteriorate across most age and income groups, according to The Conference Board’s Consumer Confidence Index. And despite inflation cooling, real wages haven’t seen much growth over the past decade. From May to June, real average hourly earnings dipped 0.1%, according to the Bureau of Labor Statistics.

Stagnating wages and fears of rising costs from tariffs and trade disputes are putting added strain on American households.

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Debt is carving new career paths

Student loans, medical bills and credit card debt are forcing many workers to take jobs outside their skill set, accept precarious roles or put their career ambitions on hold.

Debt isn’t just pushing Americans toward side hustles; it’s also influencing work and career choices. A Harris Poll conducted for ASA in August 2024 found that 73% of American workers are in debt, and 40% of them said their debt is influencing their career choices.

Roughly a third of Zety’s respondents said they’ve taken jobs they didn’t want or were outside of their industry to manage debt. Another 17% said they would start a business, return to school or freelance if they weren’t carrying debt.

“Debt is a growing force behind why people take certain jobs, stay in roles longer than they’d like, or hesitate to make a career pivot,” Priya Rathod, a career trends expert at job site Indeed, told CNBC.

And the pressure isn’t likely to ease any time soon. Household debt remains at record highs, and debt service payments as a percent of disposable income are creeping back up from historic lows.

But before jumping into a side hustle, it’s worth taking a hard look at the math. According to the Federal Reserve, workers with multiple jobs put in 174 more hours a year than single-job workers, yet earn $1.01 less per hour on average. That adds up to just $900 more annually.

“People really need to understand that working more hours is a short-term solution, and growing your main income is a long-term strategy,” Rathod told CNBC.

If your side hustle brings in good money, it might be worth the extra effort. But if it’s low-paying or unstable, you may be better off focusing on your current job, asking for a raise, pursuing a promotion or even changing careers altogether.

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
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• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Heather, who lives in Fairfax, Virginia, called into The Ramsey Show and asked co-hosts Dave Ramsey and Dr. John Delony if there’s any hope to get an 18-year-old to budget when she’s always had easy access to and been surrounded by wealth.

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• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now

She said her daughter was homeschooled and taught good values about money, but then went to a high school where “people will drive a different car to school every day just to show off their wealth.”

Heather says she has little control over her daughter’s spending habits since her husband insists on paying for everything, including college. Heather’s in-laws will also give her daughter money whenever she asks.

“You don’t have a daughter problem — you have a husband problem,” said Ramsey. He also said that no one with common sense would want to marry "princess girl" who has "never known a single boundary."

When parents aren’t on the same page

Heather’s daughter is acting like a typical 18-year-old, said Delony, and he “wouldn’t begrudge her a second” because the way she’s acting is “developmentally appropriate.”

That’s where parenting is supposed to come in.

Heather, who says she grew up poor, has been asking her husband to limit the amount of money they give their daughter — or, at least put it into an account they have access to so they can see how she’s spending it and discuss it with her. But he says it’s their daughter’s decision on how she spends that money and she needs to learn from her own mistakes.

Only it’s their money, not their daughter’s money.

Delony says a never-ending checking account for an 18-year-old is a “recipe for a disaster.” He said, "Prep yourself. Be prepared to wake up at 2 a.m. with a phone call from a dean of students of some college, cause it’s coming."

Since “your husband doesn’t care what you think,” he says Heather should start carving out some mom-and-daughter time each week. He suggests a regular breakfast date outside of the home until she graduates and leaves for college.

He thinks Heather should open up with her daughter about what life was like for her when she was 18 years old. These weekly chats are “planting seeds” so when Heather’s daughter is having trouble she’ll remember that she can trust her mom.

Ramsey says the answer lies in being proactive. Heather needs to insert herself into her daughter’s life and into her marriage in a proactive way — rather than standing on the sidelines watching a car wreck about to happen.

“If I’m you, I’m in a marriage counselor’s office real soon because your husband is a twerp and what he’s doing to you is unconscionable,” said Ramsey.

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How to teach teens responsible money management

Only 28 states require high school students to take a personal finance course to graduate. That means parents may be a child’s only source of financial education, learning the basics of earning, borrowing, lending and investing.

A Quicken survey of 2,000 adults in the U.S. found a “clear correlation” between early education in money and financial success as adults. Those who learned about money in their formative years were three times as likely (45% vs 14%) to have an annual income of $75K or higher than those who didn’t.

The survey suggests that teaching your kids healthy financial habits isn’t a “one-time conversation.” Rather, “parents who talk with their kids once a week about the issue are significantly more likely to have kids who say they are smart about money.”

Ramsey Solutions recommends that instead of giving kids an allowance, give them a commission for work done instead.

“When they do their chores, they’ll earn a commission,” says the website. “And when they don’t, they’ll realize they’ve made what they earned — nothing.” If they’re old enough for a job, they’ll also quickly learn that lesson.

If your teen wants to make a larger purchase, like a laptop or used car, consider loaning them money and “charging nominal interest so they get used to the concept,” says Daniel Hunt at Morgan Stanley Wealth Management.

“This can be as simple as lowering their ongoing allowance by a small amount until any advance has been repaid, with the amount of the decrease not counted against the amount owed,” he said in a blog post. “Such an approach mimics a ‘minimum payment’ option on revolving debt.”

Most importantly, they should “understand that their debt is their responsibility and that there are serious consequences if they don’t keep it under control,” he said.

Teaching teens about money management also means modeling the behavior you want them to learn — after all, kids learn by example. “If you buy everything you want for yourself with no limits on spending, then your kids will see that as normal behavior and do the same,” according to John Boitnott at Debt.com. But if you show your kids how and why you save money, “then your kids may be more inclined to be financially responsible in the future.”

This can be a challenge if both parents aren’t on the same page, like in Heather’s case. When it comes to teaching kids about money management and financial responsibility, parents should be in alignment on how they model financial boundaries — including the consequences of spending more than they earn.

As Ramsey tells Heather, her husband won’t “participate with you in parenting,” so that may require marital counseling along with maintaining an open dialogue with her daughter. And, at least according to Ramsey, there may be no hope for their daughter until their “marriage crisis” is addressed.

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
• Here are the 6 levels of wealth for retirement-age Americans — are you near the top or bottom of the pyramid?
• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

When she turned 18, Jessica from South Carolina found out her mom had been using her Social Security number since she was a toddler — racking up $186,000 of credit-card debt in Jessica’s name.

After hiring a lawyer, Jessica was able to have her credit wiped clean, but she’s left with zero credit history and can’t get a credit card.

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• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now

She called into The Ramsey Show to find out how she could recover from having her credit history wiped. “Not even a secure credit card will touch me,” she said.

Making a ‘paradigm shift’ on the value of a credit score

Jessica feels “stuck” and says she can’t even buy a car with a co-signer. While she says some financial advisors suggested her “best option” is to get married, co-host Ken Coleman flagged that suggestion.

“I want to challenge this idea that you’re stuck because you have no credit score and that you have to get married in order to have a car,” he said.

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Nor would it necessarily solve her issue. While credit scores aren’t impacted by marriage, if a married couple jointly applies for financing on a large purchase, such as a home or car, Equifax says lenders usually check both spouses’ credit information.

So what’s the solution?

It involves a pretty big “paradigm shift,” according to co-host Rachel Cruze. Jessica is focused on living her life around “having a great credit score.” But, as Cruze points out, “primarily you use a credit score to go into more debt.”

That paradigm shift involves living debt-free — without a credit card.

Consider that Americans owe $1.18 trillion in credit-card debt as of Q1 2025, according according to the Federal Reserve Bank of New York.

And the average credit-card debt, per American, was $6,371 during this same period, according to TransUnion’s Q1 2025 credit industry insights report.

Plus, high annual percentage rates (APRs) on credit cards can make it even harder to get out of debt.

“Although Federal Reserve rate cuts began in 2024 after two painful years of rate hikes, average credit-card APRs are still well above 22%, offering no relief to consumers who revolve balances from month to month,” according to Experian.

Thanks to her credit being wiped, Jessica is debt-free. She doesn’t even have the option to apply for a credit card to get into more debt, “so see that as a blessing,” said Cruze.

While Jessica has a full-time job as a debt collector and makes $19 an hour, Cruze suggests she look for a side gig (or a higher-paying job) to earn some extra money each month that she could put toward a vehicle.

If she made an extra $2,000 a month, for example, she could save enough to pay cash for a $5,000 to $7,500 secondhand vehicle in a matter of months — no credit card required.

How to live debt-free

In a survey by Forbes Advisor, 58% of respondents said card payments are “their prime facilitator of higher spending,” which is “a reflection of the ease and perhaps the less tangible nature of using cards over cash, which seems to loosen the psychological purse strings.”

And more than half (52%) of respondents are “more likely to make an impulse purchase when paying with a card compared to just 24% with cash.”

“Society tells us you have to have a credit card to survive, you can’t go to college without student loans and you’ll always have a car payment. These are straight-up myths,” according to a blog by Ramsey Solutions.

On the other hand, living debt-free means “not buying anything unless you can pay cash.”

Cruze says to start by coming up with a detailed budget and knowing exactly how much you’ll need for basic necessities such as food, shelter, utilities and transportation. Everything else can go toward saving up for your biggest needs — in Jessica’s case, that would be a car and her last semester of college.

“As you track your spending, you’ll see red flags and how quickly you get to the point where you’re spending more than you earn,” according to the Credit Counselling Society, which recommends using cash instead of cards.

“Cash-only diets are a great wake-up call to your spending because you physically see the money exchange and feel the drain on your wallet.”

If you have multiple credit cards, consider consolidating your debt onto one card (the one with the lowest interest rate or best terms) and cancel any cards you don’t need. You’ll also want to build up an emergency fund so you won’t have to rely on your credit card if you suddenly need money for an emergency.

While Jessica is “blessed” without a credit card, those looking to get out of debt can use techniques such as the snowball or avalanche method to whittle away high-interest debt.

Most likely, it will also involve increasing your income (working overtime, looking for a higher-paying job or taking on a side gig) while reducing your expenditures (cutting back on anything unnecessary, such as takeout, travel and entertainment).

To realize even greater savings, you could also look at ways to simplify or downsize. For example, is your rent eating up most of your income each month? If that’s the case, it may be time to look at finding a smaller place, getting a roommate or moving to a less expensive neighborhood (though you’ll also have to factor in the cost of moving).

“Don’t be leaning on the credit industry to get you out,” Cruze advised Jessica. In other words, getting a credit card isn’t going to solve her issues; it will only serve to get her into debt.

And, advised Coleman, “don’t get married at the advice of a financial advisor so you can get a car.”

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
• Here are the 6 levels of wealth for retirement-age Americans — are you near the top or bottom of the pyramid?
• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

A low unemployment rate typically signals that an economy is generally healthy. The unemployment rate in the U.S. remained near a 50-year-low in April 2025 at 4.2% — plus, American employers added 177,000 jobs in April despite the uncertainty of Trump’s tariffs and trade wars.

This all sounds good, right? Not so fast.

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• Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
• Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now

The “true” rate of unemployment in April, according to the Ludwig Institute for Shared Economic Prosperity (LISEP), was 24.3%, up 0.03% from the previous month. LISEP’s True Rate of Unemployment (TRU) includes the unemployed, as well as workers who are employed but still struggling.

“We are facing a job market where nearly one-in-four workers are functionally unemployed, and current trends show little sign of improvement,” said LISEP Chair Gene Ludwig in a statement published on PR Newswire.

“The harsh reality is that far too many Americans are still struggling to make ends meet, and absent an influx of dependable, good-paying jobs, the economic opportunity gap will widen.”

That could help explain why, despite the supposedly healthy employment rate, consumer confidence in the American economy has been plunging.

What is ‘functional unemployment’?

So, why is there a 20-point difference between the LISEP and Bureau of Labor Statistics (BLS) unemployment numbers? The BLS collects a massive amount of data on unemployment, but some of that data is excluded from the official unemployment rate.

For example, BLS found that 5.7 million people who aren’t employed do, in fact, want a job — but they weren’t counted as unemployed because “they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job,” according to BLS.

LISEP uses data compiled by BLS, but instead of simply measuring unemployment, LISEP measures what it calls the “functionally unemployed.” This is defined as the portion of the U.S. labor force that “does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.”

Its metrics capture not only unemployed workers, but also those stuck in poverty-wage jobs and those working part-time but can’t get full-time work. LISEP’s measurements aim to include these functionally unemployed Americans to provide a more complete picture of unemployment across the country, including the nuances that other economic indicators miss.

This, in turn, can help “provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics,” according to LISEP.

“Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development,” Ludwig said. “This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill.”

Ludwig says the public would be “well served by a commitment from economic policymakers to adopt a stable course of action” based on real-world metrics.

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The gap between official and ‘real’ numbers

LISEP uses two important differentiators in its metrics. First, to be considered fully employed, an individual must have a part-time job (with no desire to work full time, such as students) or have a full-time job working at least 35 hours per week.

Second, the individual must earn at least $20,000 annually, adjusted for inflation and calculated in January 2020 dollars, as per the Department of Health and Human Services’ U.S. poverty guidelines.

While “not technically false,” LISEP says the rate reported by the BLS is “deceiving,” considering the number of Americans in the workforce who are “employed on poverty-like wages” or “on a reduced workweek that they do not want.”

“For example, it [BLS’ unemployment rate] counts you as employed if you’ve worked as little as one hour over the prior two weeks,” Ludwig told CBS MoneyWatch. “So you can be homeless and in a tent community and have worked one hour and be counted, irrespective of how poorly-paid that hour may be.”

TRU also paints a bleak picture for certain demographics, with Hispanic and Black workers faring worse than white workers and women faring worse than men. For example, 27% of Black workers and about 28% of Hispanic workers are functionally unemployed compared to 23% of white workers.

Every month since 1995, black Americans have had a “meaningfully higher” TRU than caucasian Americans, according to LISEP.

The TRU numbers suggest the U.S. economy is much weaker than the BLS unemployment rate would have you believe — particularly for lower- and middle-income Americans — and that there’s a need for policy solutions that reflect this more nuanced reality.

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Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Think retiring early is out of reach because you don’t make a six-figure salary? It takes careful planning and discipline, but it is still possible.

About 60% of American retirees entered their golden years before they turned 65, with a median retirement age of 62, according to the 2025 EBRI/Greenwald Research Retirement Confidence Survey.

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Still, only one in 10 American retirees retired before they were 55 and about a quarter before they were 60. If you want to join that cohort but don’t have a high income, you’ll need to make some smart money moves (and a few sacrifices).

In general, retiring early means spending less, saving more, investing wisely and finding ways to reduce your living expenses in retirement. We all know this, but what are some practical steps you can take today to get on the road to retiring early?

1. Work with a financial advisor

Industry studies have shown that professional financial advice can add up to 5.1% to portfolio returns. But advisors can also help you navigate complex topics such as tax efficiency, retirement withdrawal timing and choosing suitable investments for your goals and risk tolerance. And they can help you stay on track and adjust your plan if necessary.

2. Make two budgets

Budgeting may seem too boring to be ‘savvy,’ but it’s a key financial tool. A budget can help you understand your current finances, rein in your spending and shape your financial plan. Tracking your expenditures against your budget can even reveal new possibilities for saving.

But you’ll need two budgets. After tracking your current budget for a few months, you can use it to estimate your retirement budget (what you’ll need to live off once you’re retired). This will help determine how much you’ll need to save to retire early. You’ll want to review this retirement budget periodically and make adjustments as needed.

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3. Automate your savings

To retire early, you may need to save more than the 15% that’s often suggested. If you want to join the Financial Independence and Retire Early (FIRE) movement and retire in your 30s or 40s, you may need to save up to 75% of your income.

Whichever retirement age you’re aiming for, you’ll need discipline to reach your savings goals — and one way to maintain that discipline is to automate your savings. An easy way to do this is to make 401(k) contributions directly from your paycheck, but you can also set up direct deposit into a high interest savings or investment account.

There are several apps that can help you automate your savings, including some that will round up your purchases and put the difference in a savings or investment account. Remember to increase your automated amount if you get a raise.

And if you cut out a regular expense such as a subscription or membership to save money, add this amount to your automated payments.

4. Manage your debt

It will be difficult to retire early if you’re carrying a large balance on a credit card or other high-interest debt. The savviest move is to not carry a balance — but life happens, so if you do have a balance, paying it down should be your No. 1 financial priority (along with building an emergency fund).

Paying down a credit card with a 20% interest rate delivers an immediate 20% return, so it might make it easier to do if you think of it as investing.

While you want to pay off high-interest debt as quickly as possible, you might want to consult with your advisor before accelerating your mortgage payments. If your mortgage rate is lower than your expected investment return, you may want to invest the money instead, but this decision will depend on your circumstances and preferences.

5. Maximize your biggest asset

Your biggest asset is likely your stream of future earnings, so to retire early you’ll want to maximize this asset.

While you could consider a side hustle or second job, look first at your current job and evaluate whether your time and energy might be better spent on developing your career to increase your future income stream. Consider whether you could make more from extra sales, a raise or a promotion — or if it makes more sense to take on a side gig.

Retiring early takes planning and dedication — but not necessarily a six-figure income.

What to read next

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• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Imagine a scenario where Sarah, 54, runs a struggling business, is $90,000 in debt and has zero savings — and now her daughter is starting to look at universities.

Sarah has managed to hide her dire financial situation from her daughter, who is blissfully unaware that her mom is deeply in debt. While Sarah doesn’t want her daughter to end up with a ton of student debt — she’s well aware of how debt can weigh a person down — she doesn’t know how she could cobble enough money together to pay tuition.

She wishes she had opened a Registered Education Savings Plan (RESP) — a tax-advantaged savings plan that helps families save for future education expenses — years ago. It’s too late for that option, but she’s wondering if there’s anything she can do to fix her financial situation.

Face the music

One of the first things Sarah needs to do is accept the reality of the situation. She needs to be honest with herself — and with her daughter — about her financial situation and then come up with a plan to fix it.

Since federal student aid is based in part on financial need, Sarah’s daughter could be eligible for loans, grants or work-study funds.

Even if she can’t afford to pay for her daughter’s tuition, Sarah could potentially help out in other ways. For example, if her daughter goes to a university close to home, she could live with her mom and save money on housing and meals.

Tackle debt head-on

Part of facing reality is tackling your debt head-on. That means tallying up all of your debts, including balances, interest rates and payment terms. Sarah has a few options here, such as consolidating her debt into a single loan, with one monthly payment (in this case, she may be able to negotiate a better interest rate or better terms).

She could also tackle debts one at a time with the snowball or avalanche repayment methods. With the snowball method, you pay your smallest debt first, making minimum payments on everything else. Once that’s paid off, you move on to the next-smallest debt, and so on. With the avalanche method, you pay off the debt with the highest interest rate first.

She could also work with a credit counselor to enroll in a debt management plan for unsecured debts, including credit card debt. In this case, she’d have a regular payment schedule, and she may be able to negotiate rates and fees. However, exercise some caution if a counselor offers this as your only option before performing a detailed review of your finances.

Find a consistent income stream

If Sarah’s business is failing amid a climate of economic uncertainty, she may want to consider selling the business or shuttering it and liquidating any assets. From there, she could look for a job with a more consistent income.

If she thinks she can turn her business around, she could consider a side gig in the meantime to help her make ends meet. If that would stretch her too thin, she could consider passive income streams. For example, if her daughter moves out to go to university, could Sarah get a roommate to bring in some extra cash?

Only consider bankruptcy as a last resort

Declaring bankruptcy is usually considered a last resort, and Sarah may want to exhaust all other options before going this route. While this can offer some relief from overwhelming debt, declaring bankruptcy comes with long-term consequences.

There are two types of bankruptcies she could opt for. First, is personal bankruptcy which assigns assets to a Licensed Insolvency Trusty who then distributes funds to creditors, and is governed the Bankruptcy and Insolvency Act (BIA). The other is a Consumer Proposal, a formal, legally binding process also governed by the BIA, and is an alternative to bankruptcy. It involves creating a repayment plan with creditors wherein you usually pay a reduced amount over a specified period of time.

But proceed with caution.

“If you include secured debt, such as a mortgage loan or auto loan, in your bankruptcy filing, you could also lose the property or vehicle you used as collateral for the debt,” according to according to Experian. Plus, it can stay on your credit report for a chunk of time damaging your credit score and affecting your future ability to borrow money.

Create a plan for rebuilding

Whatever option she chooses, Sarah should also consider creating a multi-year plan to help her rebuild, which could include a debt consolidation or debt management plan.

To do this, she’ll need to know how much she’s bringing in, how much is going out (expenses and debts) and how much she can reasonably set aside each month for savings and investments.

Having a multi-year plan could help her see the light at the end of the tunnel, rather than feeling stuck and despondent. And being able to meet small, achievable goals over a set period of time could make it easier to stick with this plan.

This is where it could be helpful to work with a financial planner or credit counselor to create a realistic plan for the future. If she can’t afford a financial advisor, there may be free credit counseling services that could help.

Sources

1. Experian: Bankruptcy: How It Works, Types and Consequences (Jan 5, 2024)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Credit cards are popular with Americans — and so are the points, rewards and perks that come with them. That’s why some Americans devote time and energy (and spending) to optimize multiple rewards programs and claim rewards they wouldn’t otherwise be able to afford, such as flying business class.

The number of credit card accounts in the U.S. has increased steadily over the past 15 years; in 2023, 82% of adults had a credit card.

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About half of cardholders carry a balance and, in the first quarter of 2025, Americans were carrying a near-record total of $1.18 trillion in credit card balances.

But economic uncertainty and pending legislation are about to change the rewards landscape — and not for the better.

Consumers can’t get enough of credit card rewards

Rewards have played a part in the growth of credit cards (and debt) by helping credit card providers attract and retain customers.

“The reward point functions as an alternative currency with real economic value, yet it continues to carry aspirational and emotional significance,” So Yeon Chun, an associate professor of technology and operations management at INSEAD, recently told Business Insider.

“In other words,” he said, “rewards have become a dual-purpose behavioral currency: A tool for economic relief and a channel for emotional and symbolic value.”

Redeeming rewards “can have an outsize effect on satisfaction” on cash-strapped consumers, according to Bain & Company.

A few years ago, rewards redemption was a “routine episode, or interaction that fulfills a need, unlikely to faze customers,” according to the global management consulting firm. “But it has since become a ‘moment of truth’ — an episode with a high likelihood to delight or annoy, depending on how well the credit card provider executes the end-to-end process.”

At the same time, rewards have economic value that consumers are using to make day-to-day purchases and cover necessities.

“Most consumers, including middle-income earners, now use rewards not just to manage spending, inflation or debt, but also to preserve lifestyle,” Chun told Business Insider.

Consumers had amassed reward balances of more than $33 billion by the end of 2022, according to the Consumer Financial Protection Bureau (CFPB).

And those rewards are “incredibly popular,” according to the Ipsos Consumer Tracker, summing up the results of a 2024 poll. Seventy-one percent of Americans have a rewards or cashback credit card, and about one in five younger Americans (ages 18-34) use the rewards for experiences they “couldn’t afford otherwise.”

But it also found that over a third of respondents said they wouldn’t spend as much on their credit cards if rewards weren’t offered.

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Dark clouds on the rewards horizon

Despite their popularity, economic headwinds may cause a reduction or restructuring of rewards programs similar to what happened during the Great Recession, when 0% balance transfer programs were cut back dramatically.

While economic prognosticators disagree as to how likely we are to enter a recession in the near term, continued near-record levels of economic policy uncertainty are having much the same effect on business decisions as a recession.

For instance, airline reward programs have already started to lose value — and other perks may soon follow.

“In the more typical downturn, we are likely to see a different kind of shift. Issuers will preserve the appearance of program stability while quietly reducing average value,” Chun told Business Insider. “Redemption thresholds may rise, expiration timelines may tighten, bonus categories may rotate more frequently, and access to high-value redemptions will become more conditional.”

Even more concerning to consumers who’ve racked up rewards, those programs may disappear altogether in the U.S. — despite their popularity.

Senator Dick Durbin, a Democrat from Illinois, and Sen. Roger Marshall, a Republican from Kansas, are driving efforts to move the Credit Card Competition Act through Congress.

The bill would reduce interchange fees, which are the fees charged to merchants that allow them to accept credit cards. These fees are a source of revenue for credit card companies and help to fund rewards programs. Some major airlines have already warned that if the legislation passes, frequent flyer programs could disappear.

At the same time, credit card providers can devalue your rewards at any time (which can also happen naturally with inflation) — so accumulating and hoarding points may not be in your best interest.

What to read next

• Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
• Here are the 6 levels of wealth for retirement-age Americans — are you near the top or bottom of the pyramid?
• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement

Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.