Tips for Managing Debt, Inflation, and Rising Cost

As food, gas, and grocery prices rise, consumer debt is also rising. To cope with inflation, Americans are falling back on utilizing credit cards.

BluCurrent Credit Union in Springfield, Missouri has tips for how to best manage debt and adapt to a rising cost of living.

1. Keep Unnecessary Debt and Spending to a Minimum

Higher interest means it’s more expensive to borrow money or hold debt. Ultimately, if you start putting more on your credit card, you’re paying more for those purchases in the way of credit card interest.

The design behind inflation is to make things cost more to cause people to spend less. If you find that you’re spending more and not less, then you’ll need to make some adjustments to your spending habits. It’s always a better financial choice to cut spending down to a bare minimum than to put your purchases on credit cards. 

If you cannot avoid taking on debt, practice good personal finance habits. Work to pay down your high-interest debts immediately before you start spending money on anything else.

2. Use Automatic Alerts to Track Your Credit Card Balance

Set up automatic payments through your bank or credit union each month. Have it set to the minimum monthly balance due, if not more. You can create calendar reminder alerts on your phone or laptop. Double-check to make sure each payment goes through.

Auto-pay methods or scheduled payment reminders are the best ways to not miss a credit card payment and avoid a late fee. According to Credit Karma, some late fees can be up to $28 or more for the first time. A second late fee can rise to $39.

Additionally, you can set up automatic reminders when a credit card balance hits an amount that you’ve predetermined. Many sources will tell you that it’s best for your credit score if you utilize 50% or less of your available credit limit (i.e., $5,000 limit, the max balance should be at or below $2,500). You can set up an alert that will tell you once you’ve reached that $2,500 balance (or whatever amount you’ve deemed to be your max).

3. Try Consolidating Your Credit Card Deb

Do you have an automobile that you own outright or perhaps you have an automobile loan with equity in it? Either way, see if you can borrow money using the vehicle as collateral to pay off your high-interest credit cards.

Even if you don’t have collateral to offer, you may be able to save on interest by rolling your credit card balance into a personal loan or another credit card—you may even be able to take advantage of a $0 fee or 0% interest balance transfer promotion.

Either way, the fewer monthly payments you make, the easier it will be to maintain them; and you might just save yourself some interest, as well.

4. Having a Monthly Budget Has Never Been More Necessary

Do you have any idea how much you spend on gas, groceries, or eating out each month? If you’ve never created or maintained a monthly budget before, now is the time to do it.

Having a monthly budget will help keep your spending in check. If you have determined that you can realistically function on spending $300/month on groceries, but you just returned from the grocery store with a $400 receipt, your budget will help you see how that will affect the rest of the money that you have to spend that month.

It's one thing to create a budget, but another to maintain it. You must track your spending on a weekly basis, at minimum. By doing this, you will know whether you need to compensate for overspending from the previous week or if you have a little bit more left over that can go towards another spending category or debt.

5. Pay off High-Interest Credit Card Debt Immediately

Before student loans or car loans, pay off your high-interest credit card debt first. It has a higher interest rate and is variable, meaning it can increase as interest rates continue to climb. Make a list of your credit card debt in order of interest and pay it off, little by little.

Best Spending Tips to Beat Inflation 

According to a report from the Bureau of Labor Statistics (BLS), from 2021 to 2022, wages have increased by 4 percent, whereas inflation has increased by 7 percent. As a result, budgets are tighter for American families.

Good spending habits have never been more important. There are a few ways to stay afloat during rising costs.

Lower Fuel Usage: 

Take public transport, walk, ride a bike, carpool or keep your tires inflated and engine well-tuned so that your car uses less gas. Make commutes intentional by planning ahead, knowing where you’ll go and what you’ll need during the week. For example, if you’re near the grocery store after work, pick up what you need immediately instead of making another trip home and back. It’s also good to keep a digital list of to-dos on your phone. This way, when you’re out and about, you’ll get to hit two birds with one stone, decreasing your time at the gas pump.

Shop at Discount Grocers:

Grocery stores like ALDIs, Food 4 Less, and others offer cheaper brands and give out weekly in-store deals and coupons. Adhere to best practices when shopping within a budget. Try to buy non-perishable items (toilet paper and toothpaste) in bulk for a discounted price and track your monthly grocery spending

Cut Utility Costs:

Utilities are a large part of monthly expenses. Cut down on your energy consumption by running your washer, dryer, or dishwasher at night, when electric and natural gas rates are often lower. Install a fan in each room to help cool you off, rather than raising your thermostat.

Stick to Shopping at Sales and Price Matching:

Be patient and wait for seasonal deals on clothes, electronics, appliances, or other items. Take advantage of online price matching for retail stores like Walmart, Target, PetSmart, or Office Depot, that promise to match a competitor’s price.

Bank at BluCurrent Credit Union in Springfield, Missouri

When you bank at BluCurrent, you get access to amazing benefits, like competitive loan rates, investment options, and financial products, including BluCurrent credit cards with a zero balance transfer fee. Contact us today to learn more.