During Covid restrictions, many of us realized we were often postponing life activities and events – saving our money or waiting fpr a future when we thought we might have more time.
Rather than live for the present, many of us have a “future orientation” – we plan to do desired activities or buy things in the future.
But when life was closed by public health, many of us postponed life experiences and activities. Many of us became aware that we need to start living life and not postpone to a future that might never arrive.
Today, 2 in 3 adults, for example, eat out at a restaurant at least once per week; going back to 1970, just 1 in 4 did that. Today, 38% of adults will use a meal delivery service at least once per week! We’ve “upscaled” our lifestyle – but that costs money.
After “Covid cash” and loan payments were delayed during Covid, many chose to spend – and borrow on such things as new vehicles:
A consequence of this is that some people began to spend more freely post Covid – but then are running into a slowing economy (the economy, except for housing prices in some regions, is actually doing well, from a historical perspective). But their financial cushion is small or non-existent – and suddenly they can’t pay the debts they took on in recent years.
What Happened?
The post-2020 shift toward “present-focused” living, catalyzed by the existential shock of the pandemic, appears to have reshaped spending patterns in ways that are now colliding with financial realities.
🧠 Behavioral Shift: From Deferred Gratification to Present Consumption
COVID disrupted the assumption of a predictable future. Many people recalibrated their priorities:
- “Live now” mindset: Travel, dining, home upgrades, and lifestyle experiences surged post-lockdown.
- Emotional spending: Retail therapy and “revenge travel” became coping mechanisms.
- Asset liquidation: Some sold homes or tapped equity to fund experiences, assuming future stability.
This mirrors classic temporal discounting—where future rewards are devalued in favor of immediate gratification, especially after a crisis.
📉 Financial Indicators: The Cost of Living Now
The reference to rising delinquencies is spot-on. Here’s what we’re seeing in 2025:
| Debt Type | Delinquency Trend | Notes |
|---|---|---|
| Credit cards | ↑ sharply | Highest rate since 2011 |
| Auto loans | ↑ steadily | Especially among subprime borrowers |
| Mortgages | ↑ emerging | Early signs of stress, especially in high-cost metros |
| Utility bills | ~5% overdue | Up from ~2–3% pre-2020 |
These trends suggest cash flow strain, not just poor budgeting. Many households are now overleveraged, having borrowed or spent heavily during the “YOLO” rebound.
🔄 Structural Drivers Behind the Squeeze
- Inflation: Real wages haven’t kept pace with rising costs in housing, food, and energy.
- Interest rates: Higher borrowing costs are compounding debt burdens.
- Asset fragility: Home equity and savings buffers are thinning, especially for younger households.
- Lifestyle inflation: Once upgraded, lifestyles are hard to scale back—especially when tied to identity or social signaling.
This moment reflects a symbolic shift in asset valuation:
- Experiences > possessions: Travel, dining, and wellness now rival traditional assets like home equity or retirement savings.
- Liquidity over legacy: Many are prioritizing flexible, immediate access to cash over long-term accumulation.
- Debt as access: Borrowing is increasingly normalized as a gateway to lifestyle fulfillment, not just necessity.
