SPRINGFIELD, Mo. — The Consumer Price Index has increased by 9.1% and gas prices are up about 60%. What can you do to save money when in Missouri you are paying $4.37 a gallon?
Brad Pistole from Trinity Insurance and Financial Services has four tips that he believes can help combat the high inflation rates and save you cash.
“One of the things that’s going on right now is something called ‘shrink-flation’,” said Pistole. He said competitors are leaving the prices the same, but making the quantity inside the package smaller. A product that once had 60 items is now 50 items.
“If you’re buying something online, maybe going on Amazon or whatever, your favorite site is, make sure that you’re reading about the quantity that’s involved because either the price is going up or it’s staying the same and they maybe are giving you less quality,” said Pistole.
He also recommended comparing prices such as your monthly recurring expenses, including internet or cable television.
“Things are very competitive right now,” Pistole said. “So, you might call a competitor and say, ‘Hey, here’s what I’m paying. You know, what would you . . . be willing to offer as a monthly price on your service and see what’s there?'”
Adjusting your spending
“No one likes to cut back in cost, but we have to think about how much prices have gone up so we have to look at where could I save money,” said Pistole.
- You’re paying more for almost everything now, which means last year’s spending plan is probably not going to work for you and your family at the moment.
- If inflation is causing you to spend more than you earn, review your budget and update it accordingly.
- Consider how much you’re spending for necessities now, including saving for retirement, and compare that to how much you’re making.
- If you’re spending more than what’s coming in, think about where you can cut costs. Do you really need all those streaming service subscriptions? Can you stay in and cook for dinner instead of dining out? Can you watch a movie at home with your kids instead of spending money at the theater?
Bring Down Debt
- Along with rising inflation, interest rates have been increasing as the Federal Reserve attempts to cool the economy.
- As rates rise, carrying debt will become even more detrimental to financial stability.
- Create an inventory of all your debts, including how much you owe and the interest rates you’re paying.
- To start paying off your debt, you can either tackle your smallest balance first, called the snowball method, or you can create a debt avalanche by prioritizing paying off high-interest debt first.
- With either method, concentrate on paying off one debt at a time, while still making minimum payments on your other debts.
“Let’s say that you have $10,000 on a credit card, but you owe 150,000 on your home. A lot of people will say, well, we need to attack that 150,000 first. Not necessarily . . . the avalanche method, think about it in regard to your home loan, you may have locked in a three or 3.2% rate, especially if you did it during these low historic times before interest started to rise,” said Pistole.
“But your credit card may be 18%, 19%, 20% in interest. So it makes a whole lot more sense to pay off something with 18% to 20% interest instead of something that’s 3% or 4%. And on your home, you also get a tax deduction for having that mortgage interest there. So be wise about the way you pay things off, but you’ve got to lower your debt during this time.”
- Investing or staying invested in stocks is one way to stay on track and beat inflation.
- Save 10-15% of each paycheck in an IRA or employer-sponsored 401(k), and keeping those investments in the market is the number one way to outpace inflation.
- Putting your money in a savings account at the bank is safe, but you’ll never get a big enough return to outpace inflation. To outpace inflation, there will always be some risk involved.
- Wall Street may be experiencing a lot of volatility, but Pistole tells his clients not to make any knee-jerk reactions. A good financial strategy does not let short-term volatility impact a long-term approach.