4 Tips for Overcoming Financial Hurdles
Ride out the economic crisis with these tips!
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As the economy continues to churn in turmoil, many Americans wonder just how the country’s downgraded credit rating and uncertain unemployment outlook will personally affect them.
The past month has seen significant fluctuation in the stock market, and consumers are heading into autumn with fears that the country is falling into a second recession.
Standing on the brink of another economic crisis should prompt consumers to take steps to secure their finances as the following financial hurdles could be just around the corner.
Rising interest rates
Another recession could see a spike in interest rates, raising the cost of credit. Consumers should closely monitor their monthly credit card statements for notices concerning rate changes. Card companies must provide 45 days’ notice before raising their interest rates as a result of the CARD Act of 2009.
Job loss
With the unemployment rate hovering just under 10%, it will take quite a while before we see significant improvements in the job market. Keep in mind, the unemployment rate doesn’t account for those people who are self-employed and have had a significant reduction in income, nor does it include workers who have accepted new positions with pay that is a fraction of their former salaries. You may believe you are irreplaceable to your employer, but no one is immune to layoffs. Now is the time to secure your finances by paying off any outstanding credit card debt and building a substantial emergency savings fund.
Stagnant salaries
Employers are facing rising healthcare costs and reduced consumer spending, which could be a recipe for disaster for workers looking to increase their salaries. End of year incentives and annual merit increases will continue to be limited, so people looking to earn more annually must consider creative ways to utilize their talents to supplement their income with work outside of their nine to five jobs.
Increasing personal debt
Consumers struggling financially, as a result of the economic environment, might be tempted to use their credit cards as a way to supplement their income. If you have gotten to the point where you rely on your credit cards to cover basic living necessities like groceries, gas and electricity, your finances are on shaky ground. You should consider professional resources for dealing with your debt.
The current economic anxiety is a serious motivator to reconsider your money management practices. Re-examine your household budget and spending level. Find at least one area of your budget to significantly reduce your spending and dedicate those funds to paying down your debt and building up your savings.
Don’t wait until you’re in crisis to take action. Creating a solid financial foundation for yourself will ease your mind during the possible rough days ahead.
For more financial tips check out these articles:
6 Mistakes to Avoid When Paying Off Debt
Preparing for Retirement: 3 Big Financial Mistakes
Your Finances: A Guide to Your Fifties
Clarky Davis is a debt management expert and spokesperson for CareOne Debt Relief Services. Her expertise is founded on her own personal experience in racking up debt and learning to live within her means while paying it down and saving—and this meant leaving the bars and $15 martinis behind and finding ways to have fun, without breaking the bank. Get more advice from Clarky at http://www.careonecredit.com/
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