How Inflation is Affecting Personal Debt

Quility's Mike Resma on how inflation is affecting American debt

Inflation is affecting grocery bills, gas, and personal, auto and mortgage loans. As everyday expenses get costlier, more Americans will fall into debt. Read on to find out how we can help you get a plan in place and stay ahead of rising costs.

If you carry debt, rising interest rates will affect your budget. Let’s get prepared.

With the Fed increasing interest rates (and with spikes planned in the future to try to curb inflation), consumer credit cards and variable monthly loan payments are increasing in tandem.

If you have a credit card or a variable rate loan, you may have already seen your monthly payment increase.

When this happens again, your required minimum payment will go up again. If you have not already adjusted your budget for these increases, now is a great time to get ahead.

Tracking your money and budgeting how you will attack these increases in required minimum payments can set you up to take less of a hit.

How to manage skyrocketing interest rates

If you have credit cards, home equity loans, an adjustable-rate mortgage, or student loans and your payments are going up, it is vitally important to track your money and utilize a spending planner to see where your money is going. This way, you can have a plan for where that money is going to come from moving forward.

One option is to get a 0% credit card to transfer your high-rate card balance to the new intro-rate card. With this strategy, you should not use the old credit card, and it will now have a zero balance when a financial emergency happens. Many people who use this strategy end up doubling their debt balances over time because they acquire debt on those old cards – don’t do this!

Instead of racking up new debt, you should meet with a team of specialists (our team of certified Debt Free Life consultants) to analyze your debt and give you a personalized debt elimination report showing you exactly where your money is going, how long it will take you to pay off your debt and recommend a debt elimination strategy that is customized to your situation.

Interest rates may have hit the highest percentage in years, but that doesn’t mean you should put off plans like buying a house, getting a new car, or having a baby. With Debt Free Life, you can lock in an interest rate of 3.5-5% (depending on carrier) for the entirety of your policy.

Now more than ever, we all need to be aware of where our money is going.

Rising interest rates, inflation running at 40-year highs, and the pay scale index not going up to offset inflation make financial freedom very difficult for many families.

To prioritize financial wellness, we recommend following three keys to financial success
  • Track your money – when you track your money, you control it. Knowing where your money is going empowers you to make the financial decisions that can help you in the future.
  • Have a plan and set goals – many families have not received proper financial planning education or budgeting techniques to help manage monthly expenses and properly save for the future. We can provide a personalized debt elimination report showing you exactly where you are and how you can get to where you want to be. 
  • Get expert guidance – the majority of American families do not have a financial advisor and do not have the help needed to pay off debt and comfortably save for retirement. Anything hard in life to accomplish requires teamwork, a coach or a mentor and that is especially true for achieving financial freedom. Fill out our short form to connect with a Debt Free Life consultant entirely online, over the phone or in-person to get your debt payoff plan started. They can help you knock years off of your debt payoff schedule.
How Debt Free Life can help you combat rising interest rates

Through our Debt Free Life® program, we’re shortening the debt repayment cycle significantly for families by using the cash value of a specialized whole life insurance policy. By redirecting inefficient funds (such as overpayments to debts or contributions to underperforming savings vehicles) into a policy that will accrue guaranteed interest and annual dividends, individuals can build the cash value of the policy to begin paying off the principal balance of their debts. 

Our certified Debt Free Life consultants will show you how to fund an asset (instead of a liability) that will pay off your debts faster and reduce interest owed to banks and lenders. You will get a personalized debt elimination report showing you exactly how the program will work for you, when you will be debt free, and how much scheduled interest you will save.

On average, we save families thousands in scheduled interest, allowing them to put that money where it matters most.

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Mike Resma is the Senior VP of Advanced Markets at Quility. To see more from Mike, follow him on LinkedIn.

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