TIPS FOR KEEPING YOUR WALLET FULL WHEN PRICES ARE ON THE RISE
You’ve likely heard that inflation is at a 40-year high right now. Consumer prices increased 7.9% in February 2022 compared to the prior year. Just about everything has seen a price hike recently – don’t even get us started on the price of gas!
“The cautious optimism felt by consumers over the past summer has now been replaced with fatigue, frustration, and anxiety,” reports CUInsight, the credit union industry’s leading digital news source. “In fact, consumer optimism has dropped by one-third!”
The lingering effects of the COVID shutdowns, disruptions in the supply chain, and Russia’s war in Ukraine have added to the rising cost of living. The Federal Reserve raised its key interest rate by a quarter of a percentage point on March 23 in an effort to tame rapid inflation by raising the cost of borrowing. This rise in the interest rate will not affect established fixed-rate mortgages, student loans or other fixed-rate loans, but other variable rate products such as credit cards and HELOCs or new mortgages or other consumer loans will likely see bumps in their Annual Percentage Rates.
While it’s impossible to predict how high inflation will go or how long this period of steep inflation will last, there are some things you can do to help minimize the effect it has on your wallet:
1. EXAMINE YOUR SPENDING HABITS
Have a look at where you are spending money. Temporarily see what you can live without so all your essentials (housing, food, utilities, transportation) are covered. If you reduce your non-essential spending up to ten percent, it will help you with the rising cost of just about everything.
2. DON’T DELAY IF YOU NEED A MAJOR PURCHASE
Prices will likely continue to rise for the foreseeable future. Waiting could cost you extra money.
3. TAKE ON NEW DEBT SPARINGLY
Don’t take out new loans unless it is important or unavoidable, and if you must take out a loan, make sure it is a fixed-rate loan as variable rates remain unpredictable.
4. SHOP STRATEGICALLY
Buy generic brands and prescriptions, use coupons or cash back apps, and store loyalty programs. Use current memberships to save on gas, and shop when items are on sale.
5. LOOK FOR SAVINGS
Ask about eliminating any fees you pay for credit cards, and try to renegotiate your cable or cell phone bills. Reduce the number of music or TV streaming subscriptions you have, and cancel anything you’ve stopped using.
6. BE STRATEGIC ABOUT SAVING
Inflation brings rising prices and, sometimes, a lower rate of return on your savings. Consider investing in a high-earning CD (Share Certificate) from Ironworkers USA Credit Union. With APY (Annual Percentage Yield) rates between 1.896% and 2.25% on 24- to 60-month CDs, you can earn hundreds of dollars more than saving your money in a traditional savings account.
Give us a call at 1-877-769-4766 or stop into one of our branches to speak with one of our member representatives if you have questions about how best to navigate these trying financial times.