The theme this week on the Retirement Quick Tips Podcast is: Inflation Is Still Getting Worse! What To Do Now

Today, I’m talking about paying off your high interest credit card debt as fast as possible. The problem with credit card debt is that the rates are already sky high and getting worse each time the Fed raises rates. Interest rates on credit cards are approaching 20% for borrowers with good credit scores, and getting higher. They’ll likely get over 20% soon, and could go up to 25% or more as the Fed continues raising rates, which they have every intention of doing to tame inflation. 

As rates continue higher, it becomes harder and harder to dig out of the deepening hole of debt, and as we saw during the financial crisis in 2008-2009, in a severe recession, that debt load can lead to bankruptcy, foreclosures, and much bigger financial problems. 

If you have a few thousand dollars or more of credit card debt, this should be your number 1 priority right now - getting rid of that debt ASAP. I like the debt snowball method for paying off debt, where you pay off the smallest size debt first and then continue from there. The snowball gains momentum as you pay off each debt and you see success right away, so you’re more motivated to continue making progress. 

This goes hand in hand with what I talked about earlier in the week, which is cutting all unnecessary expenses. This becomes crucially important when it comes to paying off debt, and extreme action should be taken, since you’ll need every available dollar to knock out that debt fast. Stop eating out. Stop the Starbucks run. Consolidate all trips and errands to cut down on gas usage. Say goodbye to all vacations and extras this summer. 

Is it fun to live an austere lifestyle? No! Is it forever? No. This is a short term austerity with big long-term benefits. Because it has the potential to save you in the next recession if you pay off your debts now. 

To speed up how long it takes you to pay off your debt, you can get creative by selling things on Craigslist or Facebook Marketplace. And commit to paying cash for everything, so you don’t add any new debt to your credit card balance. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance