Inflation Getting You Down? 3 Tips to Control the Anxiety

3. Be Strategic With Your Credit Card Debt.

During periods of high inflation, don’t rely too much on credit cards. The average American has more than four credit (opens in new tab)cards, and the United States just hit an all-time high of $930 billion (opens in new tab) in credit card debt.

Depending on your credit score and how responsibly you use your cards, I recommend having no more than three to five credit cards. Anything more than that can be hard to keep track of and makes it easier for you to dig yourself into a hole. If you are making only the minimum payment, it could take months or years to pay off your debt and get yourself out of that hole.

When tackling your debt, there are two popular methods: the avalanche method and the snowball method. With the avalanche method, you are encouraged to tackle the debt with the highest interest rate first. This helps remove debt that is costing you the most money. This is a great method for those with high-interest debt, like credit cards.

The snowball method encourages you to pay off the debt with the smallest balance first. Once that first debt is paid, you take the money you were putting towards it and start paying off the next-smallest debt. Like a snowball rolling down a hill, this method helps you build momentum until all debts are paid. No matter which method you choose, continue making payments on your other debts as you work to pay them all off. Another strategy for dealing with debt is debt consolidation (opens in new tab). This is where you roll all of your debt into one payment. Having just one monthly payment for all of your debt can help you get a lower interest rate and pay off those debts faster.

Don’t Panic

Now more than ever, it’s important to plan ahead for your golden years. Regardless of how close you are to retirement, being prepared for unforeseen circumstances like inflation will help you live the retirement you have always wanted.

A financial professional can help you create a comprehensive plan for retirement to meet your specific goals and needs.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC (opens in new tab) or with FINRA (opens in new tab).