Inflation hit a 40-year high of 9.1% in August 2022, further diminishing the American dollar and increasing the price of everything from gas to groceries. According to data from Lending Club, 61% of Americans are now living paycheck to paycheck.
It doesn’t help that consumers are turning to their credit cards to help pay the bills. In the second quarter of 2022, consumer credit balances have reached an all time high of $887 billion. This at a time when the average interest rate on credit cards is at a whopping 19.11% according to WalletHub.
Credit debt can be a finance killer. It gobbles up your cash flow, makes the things you buy more expensive, causes more stress, and is just NOT FUN!
This is where our Money Management tool can come to the rescue. Using the “snowball” method, you can run a scenario which will help you see which debt to pay first and how long it will take to get out of debt. Basically, in this method you pay the minimum on all your debts except for the one with the smallest balance, to which you would make extra payments. Once that debt is gone, use the money from that payment to attack the next smallest debt and so forth.
When you use the snowball method, momentum – not math – is key to eliminating debt. When you pay off a smaller debt you experience a win – an endorphin confidence boost – which helps you stick with it to conquer the next debt.
Be sure to look out for a short video that explains the debt feature in more depth as well as tips throughout the month. And, of course, if you want more hands-on help, give me a call. I’m happy to help.