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Fight inflation by spring cleaning your finances

Posted at 6:00 AM, Mar 15, 2022
and last updated 2022-03-15 06:46:55-04

BALTIMORE — Most Americans didn’t get a nearly 8 percent raise in the last year, but that’s how much more consumers are paying for everyday items with inflation.

The consumer price index, which measures the change in prices paid by consumers for goods and services, hit a 40-year high. Year-over-year, consumer prices increased 7.9 percent in February, the fastest rate since 1982.

Food at home is up 8.6 percent. Meats, poultry, fish, and eggs are 13 percent higher than February of last year. Energy costs are up 25.6 percent and clothing is 6.6 percent more costly.

Instead of going into sticker shock or putting it all on plastic, Ashley Feinstein Gerstley, founder of the "Fiscal Femme" blog, recommends going back to the basics.

“One of the best ways to fight inflation and to manage expenses is to go back to our budgets,” said Feinstein Gerstley.

TIP 1: Her first tip is purging expenses you won’t miss or aren’t using.

“Are there any subscriptions you’re no longer using or completely forgot about? Which can definitely happen with subscriptions,” asked Feinstein Gerstley.

Tally them up and part with the ones that don’t add value to your life.

TIP 2: Be intentional with your spending.

“What’s really important is we understand what’s coming in and what’s going out, and what’s going to our goals,” said Feinstein Gerstley. “So looking at the past month’s expenses, maybe even a few months if you’re up for it to see what am I actually spending? And it makes it easier to plan more realistically going forward.”

TIP 3: Then simplify, simplify, simplify

“So do you have checking accounts, savings accounts that you’re not using? Or have you been meaning to rollover an old 401K? That’s a great way to consolidate and simplify. We can also simplify our budgets, so having fewer categories makes it easier to track and maintain and we can always add more detail later,” Feinstein Gerstley said.

Try “bills” versus “fun.”

TIP 4: Make your finances flexible by spacing out payments.

Feinstein Gerstley is a partner with Affirm, a ‘buy now, pay later’ service that allows customers to set up installment plans with major retailers and 0 percent promotional interest rates.

The catch though is consumers still need to pay on time and regulators are now monitoring these products over concerns that consumers are accumulating debt too quickly because of the ease of getting these loans.

“If I was going to buy this thing anyway, then a 0% rate is worth it. If I’m only going to buy something because I can get the 0% loan that’s still putting me behind,” said JP Krahel, an accounting professor at Loyola University Maryland.

Krahel added debt is never a good option. Paying off debt, not accumulating it, should be your top priority, but during tough economic times families may not have an option.

“But if prices are rising, if more money has to go out at the same time less money is coming in, you do the math, there’s no easy answer there,” said Krahel.

Another way to cut costs is to negotiate. Call your cable provider, streaming services, or other subscriptions. Most companies are willing to reduce their charges over losing a customer, and it can't hurt to ask.