A new survey shows that the vast majority of Americans believe a recession is kicking in this year. Many are finding their thoughts are consumed with rising prices, and how they can cut back to make ends meet. Sadly, taxes don’t seem to stand out as being on the radar of most. Which could mean even more financial stress when those bills come in the mail.
Recession Fears & Financial Stress
According to the Momentive Poll, over 80% of Americans fear a recession in 2022.
Around half are finding that this financial stress, and concern over rising prices is on their minds all the time. In fact, 99% are finding they are thinking about it some of the day.
Gas prices, housing costs, food prices, and medical care are the items being reported as causing the most stress.
It’s not clear whether it is just their base rent or mortgage payment that is the most worrisome, or whether some are factoring in other related housing costs, like association dues, insurances, maintenance, and property taxes. Most property owners frequently forget to budget for these items.
Consumers report that they are already reacting by cutting back on expenses to make ends meet.
More than half have cut back on dining out. 35% have been cutting subscription payments. 30% have already canceled vacations.
Others plan to skip debt payments and bills, borrow more money, or put off buying a home.
What Many Are Overlooking
A new recession is expected to bring a big dive in the stock market and retirement account balances. Many are overlooking the ability to rollover their 401ks into better diversified investments which can minimize their potential losses over the years ahead.
While many do seem to be cutting back on luxury spending categories like dining and travel, most are not pricing in and budgeting for ongoing inflation in these costs and bills. If interest rates keep on going up, then payments on any adjustable rate debt, like mortgages and credit cards will soar.
Taxes should also be at the top of mind. Not only federal and state income taxes, but annual property taxes too. Skip those payments and you could lose your home.
Ways To Cut Your Expenses
Before interest rates go up any further it may make sense to refinance debt, and pay off adjustable rate debt.
If you have excess savings, it may make sense to buy more necessities in bulk, rather than pay more for them later. For example; if your stocks are likely to go down 30% this year, and toilet paper is likely to go up in cost by 30%, you’d effectively be getting a 60% return by buying more of it now. The same applies to many other household basics.
Finally, remember that you can grieve your property tax bill and get that lowered too.