KANSAS CITY, Mo. — Americans are still paying more for necessities everyday due to inflation. This means more of them are relying on credit cards to make ends meet.
Interest rates have spiked because of inflation as well, making the payback even more expensive.
Currently, 46% of credit cardholders in America have debt, according to NerdWallet.
“It’s affected me a whole lot,” said Carla Williams. “I try not to use the credit card again, but you know, times are tough, so you may have to pull it out again and use it. But keep your balances low.”
Williams had to make some sacrifices lately when it comes to her personal budget and frankly bite the bullet when it comes to business. She is co-owner of Kids Logic, a childcare center located on Olive Street in Kansas City, Missouri.
“It’s one of those things where its like do I raise our rates? Because you know we have parents that are struggling also. So it’s really touchy situation,” Williams said.
Stacia Williams, a Kansas City area wealth advisor, advises credit cardholders to follow these three steps in order to pay off outstanding debt.
Get organized
"I'm never surprised when I meet with clients on how many people don't realize where their money is going until we sit down and recreate a budget together," Williams said. “Have a plan. If you dont currently have a plan, please reach out to a financial advisor — someone you trust. Work with someone that you trust in putting together a plan. Because if you don't have a road map, you truly don't know where you’ll end up.”
Pick a strategy
“You have the Avalanche Method and then you have the Snowball Method," Williams said. "The Avalanche Method is when you start with the highest interest rate and you pay that account off first. And then the Snowball Method is when you start with the lowest account balance and you make extra payments to pay that account first."
Lower your expenses — create a budget for must-haves and cut out any unnecessary spending.
“You can start to see where you can maybe let go of a subscription or two or where you can cost save — such as using more efficient transportation methods," Williams said. "Either taking public transportation methods or carpooling. And then grocery shopping — how can I lower my grocery bill, which you look at some of the off brand."
Economic factors outside of the Federal Reserve’s control continue to fuel inflation.
Because of this, experts say it is hard to predict when the economy will return to normal.
Williams says it is important to proactively budget, and one good way to do that is putting aside 10 - 15 percent of every paycheck to a 401K.
“What do I mean by free money? Employer matches. You wanna make sure that you are maximizing those. At least contributing what your employer is matching,” Williams said. “And then also thinking outside of your 401K plans and setting yourself up for other tax efficient accounts that can help you later on down the road have tax free income.”
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