THE BLOG
06/01/2012 09:35 am ET | Updated Aug 01, 2012

The Middle-Class Solution: GET OUT!

It seems the more politicians suggest they are fighting for you, the worse the conditions become for the middle class. The middle class is shrinking at best and possibly in the process of being erased. More important than assigning who or what is to blame for income and wealth inequality is what you are going to do about what I believe is an irreversible trend in the U.S.

Director of economic growth Sherle Schwenninger shares some staggering realities in an interview with Yahoo! Finance that should alarm the middle class. Wages and income of the middle class are falling, or at best stagnant, and are not even keeping up with mild inflation. More than 8 million are receiving unemployment benefits; another 1 million have left the work force; 48 million eat with food stamps; there's slow job creation; and evidence of low-income jobs replacing what was once considered to be middle income jobs all are evidence of threats to the middle class dream. How much pain do you think will be inflicted upon this group when inflation ramps up? The rich are immune to higher prices it is the middle class that takes it on the chin.

Once upon a time, a college education ensured the middle class a good, paying job. Today 17 million Americans with college degrees are taking jobs that require less than the skill levels associated with the degree. College debt has exceeded credit card debt for the first time in history, reaching epidemic proportions of over $1 trillion. The only thing college guarantees today is mounting debt and not much more.

The solution for people in the middle class is to understand that it is no longer the safe haven of inspiration it was for their parents. Particularly, the lower and middle bands of the middle class do not make enough money to save enough and then to invest to create financial security. Your parents could earn lower amounts and because of their discipline for saving money and their disdain for debt they were able to create wealth over time.

As reported by CNN Money 31 percent of all Americans are underwater in their homes. The commerce department reported average household has jackedup spending again and is saving less than 4 percent of their income. The rise of gasoline and food prices alone can eat that up. In 2009 as the country slipped into the worse recession we have ever experience our savings rate with less income exceeded 8 percent for the first time in decades. Now we are back to our out of control ways of too much spending, too much debt and not enough income.

The definition of the middle class income is like some giant rubber band that depending on what source you look to covers a lot of income range. According to Reuters, J.D. Foster, an economist and senior fellow at the conservative think tank Heritage Foundation, "regards the upper 20 percent of earners as 'upper income' and the lower 20 percent as 'lower income.' He regards the 60 percent in the middle as middle class, with household incomes roughly between $25,000 and $100,000."

Imagine a person who makes $25,000 saves 4 percent, which is $1,000 a year, and a person who makes $100,000 saves $4,000. You can see that neither of these two examples have enough of a cushion to make the mistake of buying a Facebook IPO and watch their entire annual savings wiped out over a weekend.

Blame whoever you want for the stress imposed on the middle class but the reality is the middle class is failing because a) it doesn't make enough, b) doesn't save enough, and 3) doesn't invest wisely to grow their wealth.

Today's middle class no longer works and here is what you should do:

1) Make a decision to get out of the middle class.
2) Don't rely on the government to protect you; they can not.
3) Get your income high enough that you can save a minimum of 15 percent of your gross income and preferably double that.
4) Make long-term investments that will benefit from inflation.

Let's face it, politicians from neither side are fighting for the middle class regardless of how much they say they are; they are merely trying to get elected or re-elected. The greedy rich that some targeted as the reason and demise of the middle aren't conspiring against the middle class they are just trying to protect and grow their own wealth.

The middle class is clearly at risk and can not be fixed by the government increasing taxes on the rich. The only solution today is to take back control, depend on no one, become entrepreneurial and creatively figure out new ways to produce more income, save at least 15 percent, and then get smart about how you invest. Check out this video: "The Middle Class is Failing - Get Out."