{"id":72648,"date":"2026-05-15T16:55:24","date_gmt":"2026-05-15T16:55:24","guid":{"rendered":"https:\/\/www.europesays.com\/people\/72648\/"},"modified":"2026-05-15T16:55:24","modified_gmt":"2026-05-15T16:55:24","slug":"mamdanis-12-billion-debt-wipeout-plan-has-a-lesson-for-your-finances","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/people\/72648\/","title":{"rendered":"Mamdani\u2019s $12 Billion Debt Wipeout Plan Has a Lesson for Your Finances"},"content":{"rendered":"

Amid a difficult economic landscape, consumers are often told to improve their budgeting to clear debt and build wealth. But a recent example of a high-profile financial plan suggests that’s not necessarily the best advice.<\/p>\n

New York<\/a> City mayor Zohran Mamdani has unveiled a new budget that he says will eradicate the city\u2019s $12bn debt \u201centirely down to zero\u201d\u2014and will do so \u201cwithout placing the burden on the backs of working New Yorkers.\u201d<\/p>\n

Mamdani followed through in hitting the rich with higher taxes<\/a>, requesting a 2 percent personal income tax increase on the wealthiest New Yorkers.<\/p>\n

However, a big dent in the $12bn deficit came from a major windfall: $4 billion in aid after a partnership with Albany, according to\u00a0CBS.\u00a0<\/p>\n

If the richest city in the U.S. needs to collect billions from its neighbor to balance the books\u2014even after cutting as much unnecessary spending as possible\u2014where does that leave the average American just looking to have slightly healthier finances? <\/p>\n

Experts told Newsweek there’s a key takeaway\u2014and it’s not fewer takeout coffees.<\/p>\n

What households really need <\/p>\n

The idea that people are struggling financially because they can’t cut down on daily spending peaked in 2017, when Australian millionaire Tim Gurne used “avocado toast”<\/a> as a symbol of perceived financial irresponsibility in millennials, advising them to put their “$22 a pop” breakfast towards a down payment instead, spawning outrage and memes.<\/p>\n

Since then, the notion that personal finance struggles are an individual failure persists, as many Americans struggle to keep up with rising costs.<\/p>\n

The Bank of America<\/a> reported in 2025 that almost a quarter of all households in the US live paycheck to paycheck, with inflation growing faster than middle and lower-income households\u2019 after-tax wages.<\/p>\n

\"Mayor<\/p>\n

Anupam Satyasheel, CEO of Florida-based financing advisory firm Occams Advisory, told Newsweek that Mamdani\u2019s success \u201cinverts\u201d the idea that small changes lead to big differences.<\/p>\n

\u201cThe \u2018tax the rich\u2019 piece grabbed headlines but caused the least financial enhancement,\u201d he said, describing it as a reminder that, when it comes to personal finance<\/a>, \u201cthe biggest moves usually aren’t the ones creating the biggest impact.\u201d<\/p>\n

\u201cThe key driver was getting more money in, not more savings,\u201d he said. \u201cThe \u2018latte factor\u2019 is real arithmetic\u2014it’s just the wrong arithmetic to optimize.\u201d<\/p>\n

But while skipping a $5 daily coffee can save $1,800 a year, one raise can make thousands. <\/p>\n

As Satyasheel put it: \u201cOne of these moves can be made in a month with one serious conversation. The other requires 365 acts of willpower for a fraction of the result.\u201d<\/p>\n

\u201cIncome is the bigger factor,\u201d he advised. \u201cNegotiate, switch jobs, build a second income stream. The ceiling on income is higher than the floor on expenses.\u201d<\/p>\n

Debt and bankruptcy lawyer Ashley Morgan, based in Northern Virginia, agrees that even people who have cut most of their discretionary spending \u201cstill cannot get ahead because the math simply is not working,\u201d and added that \u201cincreasing income can have a much bigger impact than obsessing over every small expense.\u201d<\/p>\n

This \u201cchanges a financial situation much faster than trying to save a few dollars a day,\u201d she said, but acknowledged that people\u2019s ability to do this can be \u201climited,\u201d and \u201cthe current economy has very stagnant wages.\u201d<\/p>\n

Jeff Judge of Chesapeake Financial Planners in Maryland shared a story of a client who scrimped for months, cutting subscriptions, bringing lunch from home, and managed to save around $200 a month\u2014but hadn\u2019t asked for a pay rise for four years. Until, finally, \u201cone uncomfortable conversation with her manager\u201d bagged her an extra $8,000 a year.<\/p>\n

He believes that the small-savings advice is \u201cnot wrong, it\u2019s just insufficient,” and agrees that the impact of Albany’s aid on New York City’s deficit exemplifies that.<\/p>\n

\u201cIn personal finance terms, that’s a pay raise or a better-paying job,\u201d Judge said.<\/p>\n

\"StockMore Money Won\u2019t Solve Everything<\/p>\n

Morgan warned that increased income \u201cdoes not automatically solve financial problems,\u201d as often people get raises and \u201cimmediately increase spending\u201d instead of focusing on long-term financial stability, and the financial pressure remains.<\/p>\n

Judge agreed that \u201cthe lesson isn\u2019t \u2018don\u2019t save,\u2019 the lesson is proportionality.\u201d<\/p>\n

\u201cSmall savings are worth capturing once the income floor is stable, but you can’t cut your way to wealth,\u201d he said.<\/p>\n

He advised that people ask themselves if they have a \u201cversion\u201d of the Albany money, such as a second job, a certification or underperforming asset.<\/p>\n

Morgan added that people should look at whether their \u201coverall financial structure works long term,\u201d as relying on credit cards or lacking emergency savings, \u201care usually much bigger indicators of financial stress than small discretionary purchases.\u201d<\/p>\n

There also has to be a balance, she said.<\/p>\n

Living frugally and \u201cextreme budgeting\u201d may work temporarily, but most households \u201ccannot maintain deprivation for years,\u201d and \u201cquality of life matters\u201d\u2014even if it\u2019s only the treat of a takeout coffee.<\/p>\n

\"StockActionable Lessons<\/p>\n

Mamdani\u2019s approach to the budget offers tips for people who aren’t in a position to ask for a pay rise, too.<\/p>\n

Satyasheel says the mayor found $1.75bn by \u201cauditing contracts, headcount, and processes,\u201d and said the household equivalent isn’t small daily spends\u2014it’s housing, transportation, insurance, and subscriptions.<\/p>\n

Judge also highlighted the Mamdani didn\u2019t tap reserves, and households, too, should aim to never \u201craid the rainy-day fund.\u201d<\/p>\n

Americans\u2019 household debt is estimated to be more than 68 percent of the country\u2019s GDP, according to data published by St Louis Fed<\/a>.<\/p>\n

Morgan said that in Mamdani\u2019s case, the city had reviewed the budget and likely “realized they could not realistically cut enough expenses to solve the issue,\u201d adding that \u201cpersonal finances work similarly for many households.\u201d<\/p>\n

\u201cBefore making budget cuts or panicking about debt, you need to understand where the money is actually going and whether the problem is spending, income, or both,\u201d she said\u2014but, like in NYC, \u201ceither income has to increase, expenses have to decrease, or both.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Amid a difficult economic landscape, consumers are often told to improve their budgeting to clear debt and build…\n","protected":false},"author":2,"featured_media":63760,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[148],"tags":[1062,25834,995,1812,1419,4981,553],"class_list":{"0":"post-72648","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-zohran-mamdani","8":"tag-budget","9":"tag-expert","10":"tag-finance","11":"tag-money","12":"tag-new-york","13":"tag-savings","14":"tag-zohran-mamdani"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@people\/116579646077255302","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/72648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/comments?post=72648"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/72648\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media\/63760"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media?parent=72648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/categories?post=72648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/tags?post=72648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}