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Talk about a less than ideal situation.
Inflation has been making it harder for consumers to make ends meet.
Recent data shows that many are racking up credit card debt to stay afloat.
If you’re struggling with inflation, it may be time to rethink your spending and boost your income with a second job.
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For well over a year now, inflation has been soaring. And it’s been putting a strain on a lot of consumers.
Let’s remember that inflation began to surge in 2021 just as the U.S. economy was starting to recover from the pandemic. But at that point, a lot of people hadn’t yet recovered individually.
In other words, living costs started rising at a time when many workers hadn’t had a chance to replenish the savings they depleted in 2020. And given that rampant inflation has been dragging on since then, it’s put a lot of people at a huge disadvantage.
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A recent survey from COUNTRY Financial found that 19% of Americans are taking on more credit card debt to cope with inflation. But that’s a move that could hurt them in the long run.
Credit card debt is bad news
The problem with credit card debt is multifold. First, the longer you carry a balance, the more it’s likely to cost you. And you may reach a point where you end up trapped in a cycle of debt you can’t bust out of.
Also, too much credit card debt relative to your total credit limit could hurt your credit score. That becomes a problem when you decide to apply for a loan to stay afloat.
Also, a poor credit score could make it more difficult to adjust your expenses for inflation. Let’s say you decide to rent a cheaper apartment to save on costs. Well, if your credit score takes a dive, you might struggle to get a landlord’s approval, leaving you trapped in your current rental that’s more expensive.
So all told, relying on credit cards to get through this period of inflation really isn’t the best move. And the sooner you make changes to ease up on your credit card usage, the better.
A more optimal way to cope with inflation
If you’ve been struggling to cover your bills, you’re not alone. But rather than keep turning to credit cards, you may instead want to look at reducing some of your spending.
This may not be an easy thing to do if you’re already living frugally. But it does pay to get creative, whether by forming a carpool to work to save on commuting costs or bartering with local businesses to save on expenses (for example, if you’re good at web design, you might offer to update your daycare center’s website in exchange for a reduced rate for your kids’ childcare).
Another option? Pick up a side hustle. The U.S. economy is in a pretty good place from a jobs standpoint, so you may have plenty of options for doing side work and boosting your income.
We don’t know how long rampant inflation will be with us. The Federal Reserve is doing its best to cool inflation by raising interest rates, but that, in turn, is making credit card borrowing even more expensive. So the sooner you’re able to stop falling back on your credit cards, the better off you’ll be financially.