Avoid These 7 Money Traps to Escape the Struggling Middle Class

The Middle Class. Depending on how you slice the numbers, between 25% and 66% of the American population is in “the middle class.” While it's hard to put an exact number of American are in this social class, we know that the size of the struggling middle class is growing.

As wages get squeezed and living costs increase, there's less money at the end of each month than in previous decades. While there's plenty of talk about universal basic income, debt jubilees, and many other political measures to help the middle class, there is something you can do today to improve your finances.

It's called spending your money (and time) wisely. One of the most valuable financial assets of being in the middle class is having a disposable income. While you're not filthy rich and can live a rockstar lifestyle indefinitely, remember you have the ability to create opportunities to improve your quality of life. 

Who Is The Struggling Middle Class?

Here's a quick definition of what I consider the struggling middle class:

  • Don't have to worry about where your next meal comes from
  • Can afford many low-cost luxuries like going to a sports game, concert, or taking a vacation
  • Able to save some money for retirement and savings (besides your tax refund and 401k match)
  • You're one financial disaster away from losing everything

My Hypothesis

This is my hypothesis: The struggling middle class is so large because we have enough disposable income to live a comfortable lifestyle, but don't earn enough to sustain it if “the chips hit the fan.” There are many temptations to spend money and you “must” spend to prove your social status.

Don't get me wrong, being “Middle Class” is a huge blessing. We still have it countless times better than almost anybody else in the world. Our worst day is still better than the best day in many other countries.

My family is solidly in the solid middle class as we make about $20,000 less than the median US household income of $60,000.

To thrive on a modest income, we had to change our spending habits to avoid falling into money traps.

These Money Traps Prolong the Paycheck to Paycheck Lifestyle

New readers probably don't know that I switched careers a few years ago and took a large pay cut. As the career transition took longer than anticipated, we lived only made about $20,000 in 2016.

Thankfully, we had money in the bank and we didn't go hungry, but having to go from making $80,000 to $20,000 virtually overnight made us reevaluate our spending priorities as we actually had to balance the checkbook and make sure had enough money to pay our monthly bills before we spent $5 on an extra purchase.

The following money traps are what we avoided so we can no longer financially struggle, even though we earn less money than the average American household.
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1. Stop Going Out to Eat

One of the first expenses we cut was going out to eat. Previously, I spent about $20 a day at restaurants during the workweek. Yes, that's several thousand dollars I could have put toward anything other than paying the restaurant staff to take the order and prepare the food my wife now makes at home for a fraction of the cost.

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  • Five dinner entrees with sides
    • Includes one freezer-friendly, one slow cooker, and one 20-minute meal
  • One bonus idea–maybe it's a dessert, lunch, or beverage idea

Not only do you save money, but you will feel better because you're using fresh ingredients.

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2. Quit Watching Cable TV

I used to think that not having cable tv was going to be the end of the world. After the first two weeks, you find other things to occupy your time. Instead of paying $100 to $260 for cable or satellite, do these two actions instead:

A monthly Pure Flix subscription costs $10.99 per month. This is my #1 streaming platform because the content is a diverse catalog of family-friendly movies and tv shows.

About books. I like to read non-fiction so I can learn something new. Whether it's a biography or learning a new skill, I want to learn from others to improve my own life. And, also to teach important life lessons to my own children. Plus, the average CEO reads 60 books a year! That's one behavior I want to emulate.

3. Paying Too Much for Insurance

One problem with having valuable possessions is that you need to pay insurance to maintain them. I once heard that the difference between being in the upper class and the middle class is that insurance prevents the middle class from climbing into the next social rung.

In other words, the rich can own nice things and the monthly insurance premiums to protect their stuff and still improve the net worth. The middle class spends their wealth accumulating possessions and the rest of their income insuring their property to prevent financial calamity. While the struggling middle class doesn't lose anything, they're not gaining anything either.

Lower Your Insurance Premiums

One way to lower your insurance premiums is to sell insurable items you don't need like switching from a brand new car to a reliable used car. Or, moving into a smaller house.

But, you're still going to have pay insurance even after you downsize. Your second step is to switch insurance providers and pay less money.

You can find lower quotes with some of the following insurance groups:


4. Indefinite Monthly Loan Payments

I'm going to let you in on a little secret…we made our last loan payment in May 2018. As I write this, we've been debt-free for three whole months!

No longer having to make a $1,000 monthly payment is a huge relief. I liken it to getting an instant $12,000 raise. And, I didn't have to switch jobs or work more hours to get it.

You may not include your monthly loan payments in your take-home pay. After all, the money is already spent before it touches your bank account. Plus, the lender is nice enough to initiate your monthly payment so you don't have to worry about remembering to pay it.

I highly recommend you stop constantly borrowing money to buy stuff.

To pay off your current loans sooner, follow these steps:

  • Make extra monthly payments (I did this for my student, car, and home loans) starting with the highest interest rate first
  • Consolidate your high-interest debt when it saves you money
  • Shop Craigslist or eBay instead of paying retail
  • Pay with cash instead of borrowing money and paying interest

If you rent, a homeowner has probably definitely told you to buy a house to stop paying your landlord's mortgage. Same thing with monthly payments. As long as you have one, you're giving free money to other people in the form of loan interest. And, you're probably buying stuff you don't really need in the first place.

Say “No” to Instant Gratification: Before I make a large purchase (usually $100+) I wait at least one day before being. FOMO is real and it tugs at all of our heartstrings. Sleeping on a large purchase decision helps you differentiate between “wants” and “needs.”

5. Keeping All Your Cash in the Checking Account

If you're like me and see you have an extra $1,000 in the checking account, you think you can finally buy that big ticket item you've been putting off for the last few months.

I'm a huge fan of having multiple bank accounts. We keep enough cash in our checking account (plus a few extra dollars to avoid overdraft fees) to pay our monthly bills. Any extra income gets put in a separate savings account that our checking account can't pull from in case it overdrafts.

Personally, I use the online bank Capital One 360 for these three reasons:

  • No fees or minimum balance requirement
  • It's a high-interest savings account
  • I can create sub-accounts (one account per savings goal–property tax, vacation, etc.)

Invest Your Spare Change: If you want to “force” yourself to save each day, you can also use a micro-investing app like Acorns. It rounds up each purchase and invests the difference as a penny saved is a penny earned.
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6. Not Thinking You Can Make More Money

One gift every person has is having an imagination. That means you can use your noggin to solve problems and think of ways to improve your life. You don't have to wait for your boss to give you a bonus or to qualify for an aid program. Don't get me wrong, these safety nets are helpful for true temporary need, but they can easily turn into a crutch.

Personally, I was tired of my old job which is why I started pursuing a different path. I didn't wait for opportunity to come knocking, I looked for it. Yes, it took work and some failure along the way, but my side hustle eventually turned into a full-time job. Only after I took the initial step and also connected with others along the way for doors to open.

Although we get envious of CEOs, athletes, and highly-paid celebrities, most of them made lots of personal sacrifices to climb the ladder. Now, they are compensated handsomely for being “the best.” I don't need to sign a million-dollar contract or have a fancy yacht to validate my self-worth, but it's rewarding to look back and know that I put forth my best effort which now lets me enjoy more time with my family and having enough money to not worry about making ends meet.

If you need some inspiration to make extra money, glance at these two resources:

Not Having a Plan

My wife and I crave routine. But, there are times we don't know what we need to do today to plan for tomorrow. That's true for our finances, family, and careers. We ask others for advice and we also look for online resources.

This year, I've been reading several books about real estate investing and we have talked with several local contacts with real estate experience. In the past, we've talked with others about investing or making a plan to get out of debt.

Never rely entirely on yourself to make every decision. You will most likely end up not making any decision and doing the same thing repeatedly…and yet you expect different results. This is the definition of insanity.

We all have our own pool of resources to pull from. For sound money advice, I recommend Trim Financial Manager. Their Concierge service connects you with a financial coach who can put you on the path to financial prosperity.

Making a money plan can help you accomplish these potential goals:

  • Spending less than you earn
  • Canceling subscriptions you don't use or paying for overpriced plans
  • Creating savings goals to pay cash for large purchases (vacation, new car, mortgage down payment)

We all have different needs and goals, so don't be afraid to pursue a different solution if the current plan isn't working.


Avoiding these seven money traps is your escape plan from the struggling middle class. By changing a few habits and adjusting your life perspective, your life outlook can be more exciting with the promise of a better tomorrow.

What's your most common money trap? Which is the hardest for you to avoid?

Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.