The Tightening Grip of Cash Poverty: Even Middle-Class Americans Struggle to Stay Afloat

The American dream, once envisioned as a path to financial security and prosperity, is increasingly elusive for a growing number of people. While the plight of low-income families struggling paycheck to paycheck is well-documented, a less discussed but equally concerning trend is the rising number of middle-class Americans teetering on the brink of financial instability. A recent study by community finance platform SoLo highlights this alarming reality, revealing that even those with college degrees, homeownership, and even six-figure incomes are finding themselves cash-poor, vulnerable to unexpected expenses that can trigger a downward spiral.

Ilaria D’Anca, a 44-year-old resident of Mesa, Arizona, embodies this unsettling trend. With a graduate degree in advertising and public relations earned with honors and two decades of experience as a healthcare executive, she seemed to have it all. For half of her career, she enjoyed a six-figure salary and built a solid financial foundation. However, a series of unforeseen events between 2016 and 2019 threw her life into turmoil. A career change, devastating flooding of her home and property, a draining legal battle, and a painful falling out with family members all conspired to deplete her savings.

"I had an 806 credit score and nearly $150,000 saved in bank accounts prior to this financial crisis," D’Anca recounted. "I went through every penny of it. We had three vehicles re-possessed and lost our home to foreclosure."

Adding insult to injury, D’Anca found herself ensnared by what she calls "bad financial products" – short-term, high-interest loans that prey on vulnerable individuals. "Before this experience, I had no idea of the existence of these. I had 3 traditional mortgages and government-backed school loans prior.”

Her ordeal highlights a common struggle for many Americans: navigating unexpected financial emergencies with limited resources. According to SoLo’s 2025 Cash Poor Report, Americans spent over $39 billion in fees to borrow money for unexpected expenses in the past year, a staggering 34% increase from 2023. These fees are often compounded by exorbitant annual percentage rates (APRs) that can climb into the 20% range or even higher for credit cards, exacerbating the financial strain.

When D’Anca’s pickup truck broke down, she encountered the harsh reality of these predatory lending practices firsthand. "They (lenders) were willing to pay my $2,200 bill for the truck’s fuel pumps, but I had to pay it back in full within 3 months, or the interest would go from 0% to 169% with the back 3-months of interest due immediately," she explained. "Let me tell you, I believe most Americans would take the bad loan over being stuck in a parking lot indefinitely. So, I did."

Unfortunately, the repair proved faulty, causing the truck to fail emissions. D’Anca was forced to sell it for a pittance, leaving her with only a meager $1,100 down payment for another vehicle.

Single mother Tenisha James, a 47-year-old resident of Waterbury, Connecticut, shares a similar experience of financial struggle despite consistent employment. Working full-time, she still found it difficult to make ends meet, often missing payments while waiting for her paycheck to clear. The accumulation of late fees and interest consumed a significant portion of her income, hindering her ability to gain financial stability.

James explored credit cards and payday loans but found them equally unsustainable. Eventually, she discovered EarnIn, an Earned Wage Access (EWA) company, which provided a lifeline by allowing her to access her earned wages before payday. "I got caught up and didn’t have to pay late fees anymore," James said. "Which allowed her more money to pay down debt."

While EWA companies offer a potential solution, James cautions that their terms and conditions vary. Some charge fees or limit the amount of money available until users build a history and earn points. Others rely on optional tips or donations.

"Even if I have to pay a fee of $4.95 to get my money faster and use it four times, that’s $20," she said. "That’s still half of the late fees I would pay anyway. So, I’m still saving, and I can put that money towards something else.”

Ironically, Connecticut has implemented regulations that effectively restrict EWA services, leaving James once again struggling to manage her bills. Undeterred, she created a Facebook page, Earned Wage Access 4 CT, and launched a petition urging legislators to reverse the regulations.

The SoLo survey of 2,000 adults sheds light on the demographics of cash-poor Americans. It reveals that one in seven cash-poor individuals earns over $75,000 a year. More than half (54%) are women, and two-thirds belong to the Millennial and Gen X generations (born between 1965 and 1996). Forty percent work full-time, like James, and 14% are Black American.

“Being cash poor is a way of life for most Americans; this creates vulnerability in being able to manage variable and unplanned expenses,” said Rodney Williams, president and co-founder of SoLo.

The experiences of D’Anca and James, coupled with the findings of the SoLo report, paint a sobering picture of the financial challenges facing a significant portion of the American population. The rising cost of living, stagnant wages, and the proliferation of predatory lending practices are all contributing factors.

Medora Lee, a money, markets, and personal finance reporter at USA TODAY, can be reached at [email protected].