00:00 Speaker A
Well, financial stress for US adults is hovering around peak levels now, the National Foundation for Credit Counseling expecting the first quarter of this year to show stress rise to a new historic high. For more on how Americans are handling their finances, let’s welcome in now entrepreneur and Maconomics creator, Ross Mac. Ross, it is great to see you. Let’s start here, Ross. You say that people now, they’re earning more but they’re keeping less. Why is that, Ross? Walk us through the reasons.
00:27 Ross Mac
Well, one, thanks for having me and two, I think what you really have to say is, is the pace of revenue, the pace of earnings, the pace of wages keeping up with the rate of inflation? And the simple answer is no, right? I think that we as consumers in America are obviously much more stressed with rising inflation, the rise the rising cost of goods. And as a result, you have people seeing much more stress. As a result, we’re having record credit card debt, right? When it comes to people thinking that they can attain the American dream, right, the idea of when you can afford a home is getting further and further out of grass.
01:05 Speaker A
What are they most stressed about, Ross?
01:09 Ross Mac
Well, it’s a multitude of things, right? And when we talk about people having record debt, people pulling from their 401Ks just to make ends meat. They’re stressed about a multiple a multitude of things and that is one, just the the day-to-day living expenses, right? Gas prices, groceries being higher, the fact that people not being ready for retirement, the retirement becoming further and further out of grass. So I think there’s it’s a multitude of things.
01:35 Speaker A
And yet, Ross, you know, I take your point, but we just heard from the big banks, right? And and these big bank CEOs on the conference calls, they were asked point blank by these analysts, hey, how’s the American consumer? And and the CEOs basically said, Ross, listen, not much has changed. I mean, they they look at the American consumer, they said, you know, healthy, resilient. And then I I saw this Bank of America stat. In March, total card spending ex-gasoline, healthy growth they said at 3.6% year over year. So I take your point that sentiment is rough, but people are still spending, Ross, and I’m curious what you make of that.
02:11 Ross Mac
Well, one, I think is very important when we think about, you know, kind of a a top- down approach of how the overall economy is. You got to understand, right? This is case- shaped, right? There are people they’re going to be the tale of two worlds, right? The have and the have nots. And so the haves are obviously seeing, once again, record stock market, record growth in asset prices, right? However, there’s a world where a lot of people don’t actually own assets. And as a result, when you hear that inflation and and just overall the cost of living is increasing, what are they doing to make those ends meet? And as a result, they’re turning to their savings, which one was depleted during COVID. And as a result, now they’ve yet to really fully refurnish their savings. And now what are they doing? Some people are pulling from their 401k. Some people are heavily reliant on their credit cards purely just to make ends meet and meet day-to-day expenses.
03:00 Speaker A
Let’s Ross talk about some some personal finance trends, just to get your take. You got micropayments, no buy months, you got friction maxing. Um, are these actually helping people, Ross, in your opinion? Or or is it really just about people kind of making themselves feel like they’re doing something, they’re being productive?
03:22 Ross Mac
Well one, I think it’s a little bit of both, right? It is helping people feel as though they’re being productive. At the end of the day, people want to have some type of control, some type of discipline. and if it’s a trend that they need to actually do that, then so be it, right? I think long-term, it doesn’t necessarily fix the problem. What it does is effectively put a band-aid on the problem and and obviously there’s a deeper root cause. However, if you’re able to do one of these, whether it’s micropayment, saying, I’m going to pay just a little bit, you know, much more frequently, every Wednesday. The idea is, okay, we have some control. Now we are finally getting some momentum with this. However, if we still have multiple credit cards, we have to use micropayments, however, with a larger, uh a larger plan to actually get out of debt, whether that be debt snowball or debt avalanche, right? I think when it comes to the no-buy, that’s interesting, right? Okay, everybody, no buy April, no buy November, right? That’s awesome, but what happens the following month? Are you going to find yourself saying, well, now I’m actually just going to, you know, uh have some reward spending because I made it a month and now I would have spent, you know, $1,000 in May, but now since I didn’t, maybe I spend $900 the following month. And so, you know, it it one, it’s a great idea. It’s just a function of do you couple that with a a bigger solution overall?
04:31 Speaker A
So, if these are sort of short-term fixes, Ross. Um, what are more sort of just structural, real, long-term things things people should be doing to to build real personal, uh, financial strength and resilience? What are some basic rules of thumb, in your opinion?
04:52 Ross Mac
I love it. One, I think people don’t understand everything starts with financial therapy, which is helping you truly understand and change your overall relationship with money. It is a true reason why the average American is bad with money and it’s, you know, subconsciously inherited bad, um, you know, relationships that could have, you know, they could have learned it through osmosis, how they viewed their their surroundings, their upbringing, their parents, how they dealt with money. Unfortunately, you know, just like, you know, jeans, the height is is in the family, well, guess what? If your parents were potentially bad with money, you could also inherit that. So I think getting to the root cause of why a person might be overspending to look like they have money or if you grew up on spam and eating ramen noodles, maybe you might be inclined to want to overspend in Uber Eats food quite often. And so understanding what the root cause of why a person is bad with money and then trying to overcome that. And then it’s very simple, which is the next step is budgeting, right? I think people need to truly control their inflows and outflows. Obviously, uh minimize, you know, impulse spending and also uh ensure that when it comes to the cycle of going into credit card debt, is it because you’re over spending? Is it because you never is it because you didn’t have a fully funded emergency fund? And so I think those are a few things. And I think another thing people could do is is utilizes AI, right? I think everybody who has multiple credit cards should literally print out or, I’m sorry, save down a PDF of the most recent three uh credit card statements, their bank statements and as a result, upload them to whether it chat, whether it be chat GBT or Claude and literally tell AI, hey, you are my financial advisor. I need you to help me figure out where I can cut spending. Bucket this into my necessities, my wants and as a result, let’s come up with a plan to help me get out of debt in six months or 12 months. and I think that’s, you know, a few interesting ways.
06:17 Speaker A
Ross, thank you for your time today. Appreciate it.
06:20 Ross Mac
My man. Thanks for having me.
