To be a consumer today is to be living in the most tumultuous financial period since the Great Recession nearly 15 years ago. Student loan debts are being canceled. Medical debts are being taken off credit reports. Inflation is forcing people to make hard choices about how to spend their money. The economy may be on the brink of a recession. Interest rates are rising.
Times are so confusing that fewer people believe they will be better off financially a year from now and fewer people believe they will be worse off financially a year from now. It’s a toss-up as to how things are going to go, as far as consumers are concerned.
We have been talking for the past month or two about the importance of making good financial choices and how to go about doing that. Choices means prioritizing what is most important and making sure that you are going to have enough in case of a rainy day.
Uncertainty, such as the state of the economy today, breeds fear and fear can breed a reluctance to act. Waiting it out to see if the rain is going to let up, seeing if that mole on your back gets bigger, hoping that the sound your car is making is going to go away.
But there is a cure for uncertainty — knowledge and information. Talking to people who can help you make smart decisions, digesting as much information as you can to make sure you see everything from all the angles. “The important thing is to know what you know and know what you don’t know,” said famous investor Warren Buffett.
Your financial situation is not likely to improve on its own, while you sit around waiting and seeing what is going to happen. Your financial situation improves by making smart decisions at the right time. Knowing whether to pay off all the debt on one credit card or make equal payments on all of your cards can save you a lot of money by not paying more interest. Paying off one debt may help improve your credit score and make it easier for you to get access to credit. But these are things you can’t know until you find out.
It’s completely normal to look at the headlines and think that you just have to hold on and things will get better. That may happen, but there is a better chance that you can make it happen without relying on luck.
Here are some resources that might be helpful:
- https://www.consumerfinance.gov/about-us/blog/how-reduce-your-debt/
- https://www.consumerfinance.gov/about-us/blog/how-get-handle-debt/
- https://www.consumerfinance.gov/consumer-tools/debt-collection/get-handle-debt-boot-camp/
- https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_behind-on-bills_booklet_cobrand.pdf