Fight inflation by spring cleaning your finances
BALTIMORE — Most Americans didn’t get nearly an 8% raise last year, but that’s how much more consumers are paying for everyday items with inflation.
The consumer price index, which measures the change in prices paid by consumers for goods and services, hit a 40-year high. Year-on-year consumer prices rose 7.9% in February, the fastest rate since 1982.
Food at home is up 8.6%. Meats, poultry, fish and eggs are 13% higher than in February last year. Energy costs have increased by 25.6% and clothing is 6.6% more expensive.
Instead of falling for sticker shock or putting everything on plastic, Ashley Feinstein Gerstley, founder of the blog “Fiscal Femme,” recommends going back to basics.
“One of the best ways to fight inflation and manage spending is to get back to our budgets,” Feinstein Gerstley said.
TIP 1: His first advice is to purge the expenses that you won’t miss or use.
“Are there any subscriptions that you no longer use or have completely forgotten about? Which can definitely happen with subscriptions,” Feinstein Gerstley asked.
Count them and separate yourself from those that don’t add value to your life.
TIP 2: Be intentional with your spending.
“What’s really important is that we understand what’s coming in and what’s going out, and what’s going towards our goals,” Feinstein Gerstley said. “So looking at last month’s spending, maybe even a few months if you’re up for seeing what I’m actually spending? And it’s easier to plan more realistically going forward.
TIP 3: So simplify, simplify, simplify
“So do you have checking accounts, savings accounts that you don’t use? Or did you intend to flip an old 401K? It’s a great way to consolidate and simplify. We can also simplify our budgets, so having fewer categories makes it easier to track and maintain and we can always add more details later,” Feinstein Gerstley said.
Try “bills” versus “fun”.
TIP 4: Make your finances flexible by spacing out payments.
Feinstein Gerstley is a partner in Affirm, a ‘buy now, pay later’ service that allows customers to set up installment plans with major retailers and 0% promotional interest rates.
The catch, however, is that consumers still have to pay on time, and regulators are now monitoring these products, fearing that consumers are racking up debt too quickly because of the ease of obtaining these loans.
“If I was going to buy this thing anyway, then 0% is worth it. If I’m only going to buy something because I can get the 0% loan which is still setting me back,” said JP Krahel , professor of accounting at Loyola University of Maryland.
Krahel’s extra debt is never a good option. Paying down debt, not piling it up, should be your top priority, but during tough economic times, families may not have a choice.
“But if prices go up, if more money has to go out at the same time less money comes in, you do the math, there’s no easy answer,” Krahel said.
Another way to cut costs is to negotiate. Call your cable company, streaming services, or other subscriptions. Most companies are willing to cut their fees if a customer is lost, and it can’t hurt to ask.