You’ve likely felt the effects of inflation already. Your grocery and gas bill probably felt it first. Suddenly it costs a lot more to feed the family or fill your gas tank, but these are things we need so we have to adjust elsewhere, right?
One area many people struggle is managing debt during inflation. If your wages don’t keep pace with inflation (most don’t), then keeping up with your debts may feel impossible.
Here are a few ways to help you manage debt with inflation rising.
Focus on One Debt at a Time
Keeping a structured plan is important. Continue making the minimum payments to all of your debts, but if you have any extra money to budget toward a debt, choose one. It can be the largest debt, smallest debt, or the debt with the highest APR – you choose.
Focus on paying extra money to that debt until it’s paid off and then move on to another. This allows you to pay one debt down at a time, staying focused on your strategies.
Rearrange your Budget
During times of inflation, you have to get a little creative and intentional with how you spend your money.
This is the perfect time to look for areas to cut back so you have money to pay down your debts and save money. Common areas to cut back include:
- Dining out
- Work lunches (bring a brown bag lunch)
- Coffee shops
- Impulse buys
- Nails, hair, and other grooming appointments
Any money you save, consider putting toward your debts to pay them down faster and pay less interest.
Consolidate Debt with a 0% APR
If you have good credit, try applying for a 0% APR credit card. Transfer your debt over and then make a plan to pay the debt off with 0% interest before the rate expires. This may require a little planning and/or cutting back, but if you can get by with no interest, you’ll save money.
Talk to your Creditor
If you are getting behind and/or can’t afford to keep up with your debts, contact your creditor right away. Don’t ignore the debts. Be honest with your creditors, letting them know what’s going on and what you can afford.
You might be surprised to learn that many creditors will work with you, creating an affordable payment arrangement so you don’t fall behind.
Get Help if you Need It
If you’ve tried everything and cannot find a way to stay on top of your debts during inflation, let a licensed credit counselor help.
Getting professional help doesn’t mean you’re weak or are a ‘bad person.’ Instead, it’s a way to ensure you get the plan you deserve to stay on top of your debt. Sometimes it takes the help of a professional to negotiate the plan you need to stay up with your debts during this difficult time.
Everyone is in the same boat right now. The difference is, will you acknowledge your debts and take care of them or ignore them? Contact us today.