I have talked before about inflation being at a 40 year high here, and I’ve talked about how that is affecting people’s finances here and here. More evidence of the increasing financial struggles of Americans has been published by USA Today, which is reporting that American are racking up debt to pay for necessary items like food and gas.
What they’re saying is that as prices for necessary items have increased this past year, consumers’ income hasn’t kept up, and that people are increasingly turning to using their credit cards for things like food and gas. USA Today is reporting that bank card balances (your run of the mill credit cards) increased in April of this year by 14.2% over April’s balances last year. This is a pretty significant increase (almost twice the inflation rate). What this means is that while wages have generally risen during the pandemic, prices have jumped higher-so wages haven’t kept up.
Using credit cards to pay for necessary items almost never ends well. As these things are consumed almost immediately, it never makes sense to put these things on a payment plan (with the associated interest, etc.). These things are almost always paid for with cash (or debit cards, of course). If people are starting to use their credit cards for food and gas, that means they are running out of cash and are losing the ability to purchase food and gas outright. This is beginning of the death spiral as you’re just kicking the can down the road hoping things will get better.
This also sets you up for stress, worry, and financial hardship.
If you’re finding yourself paying for food and gas with a credit card, it’s probably a good idea to give us a call to see if maybe bankruptcy is right for you. We give you a free consultation by phone, answer all your questions, and provide you the knowledge you need to navigate these unbelievable uncertain times.
Contact us today to find out if bankruptcy is right for you!