Beware of Debt Relief Scams

High debt can be a beast, taking huge bites out of a household or personal budget and destroying any chance of financial wellness. To make matters worse, being in high debt can mean being stuck in a desperate cycle that never ends, as payback is often accompanied by high interest rates that make it nearly impossible to get ahead. Unfortunately, scammers know this well, so they target victims with debt relief scams to get at their money.

Here’s what you need to know about debt relief scams and how to avoid them. 

How the scams play out

Debt relief scams target consumers who may have significant levels of credit card debt using any, or a combination, of the following false premises: 

  • Debt repair service that greatly increases their credit score in a short time 
  • Service to remove negative credit report information
  • Student loan debt reduction
  • Promise to reduce credit card interest rates 

The target, who is desperate to get rid of their debt, will pay any price for these services. The scammer demands a non-refundable upfront fee before getting started and happily pockets this money. The scammer then fails to come through as promised, leaving the consumer even deeper in debt. 

In a variation of this scam, the bogus debt relief company will collect payments in small increments, promising to bring the target’s credit score up and their debt balance down over a short period of time. The target will continue making payments to the fictitious service until they finally smell a scam, which might ultimately cost them thousands of dollars in losses. 

Red flags

Debt relief scams can be difficult to spot because there are legitimate debt relief services available for debt-straddled consumers. However, there are several signs you can watch for to let you know when you’re being targeted by a scammer. Most importantly, it’s crucial to remember that overcoming a significant amount of debt takes lots of time. 

Look out for these red flags to help you identify a debt relief scam: 

  • The service guarantees to bring your credit score up by a specific amount of points in a short amount of time.
  • The service promises to get rid of factual credit report information that’s on your credit file.
  • The service demands an upfront payment.
  • The service claims to be affiliated with a credit card company, but the card company does not recognize the service. 
  • The service advises you to cut off all communication with creditors. 

The do’s and don’ts of credit repair

If you’re looking for a legitimate credit repair service, these tips can help. 

Do: 

  • Research the debt relief service you consider using very thoroughly. Look for a secure site, a phone number and street address on their website, as well as positive reviews from past clients. You can also do a quick Google search of the company’s name and the word “scam” (such as, “ABC Debt Saviors Scam”) to see what the internet has to say about them. 
  • If the service claims to be affiliated with a credit card company, give the card company a call to see if this claim checks out. 
  • Ask for a clear explanation of all fees and conditions of the service before signing up. This includes the timeframe for the service, the total you can expect to pay and any risks you should know about before using the service. 
  • Consider other options for paying down debt, such as credit counseling, negotiating for a lower interest rate from your creditors or taking out a [debt consolidation loan] [or personal loan] from Advantage One Credit Union.

Don’t:

  • Never pay an upfront for a debt relief service.
  • Don’t believe a service that guarantees to bring up your score by a certain amount in a specified timeframe. There are no guarantees when it comes to debt relief. 
  • Don’t agree to let a company enroll you in a debt relief program without fully knowing any details. 
  • Don’t believe a service can get rid of negative information on your credit file. There are laws dictating how long specific information must stay on your credit report, and a debt relief service can’t change that. 

  • Your Turn: Have you been targeted by a debt relief scam? Share your experience in the comments. 

Step 2 of 12 to Financial Wellness: Creating a Budget

Now that you’ve tracked your spending and kept a careful record of where your money goes over the course of a month, you’re ready to move onto the next step of financial wellness: creating a budget. Budgets play a crucial role in promoting financial awareness, which then helps to facilitate more responsible money choices. This discipline will benefit you individually, as well as all who are part of your household. 

Let’s get started by taking a look at how to create a budget and review some popular budgeting systems and how they work. . 

Create a budget in 5 easy steps

  • Track your spending and income. This includes all your financial documents, such as your account statements, bills and pay stubs. [If you’ve followed Step 1, you’ve already completed this step–nice work getting ahead of the game!]
  • Tally up your totals. Calculate the totals of your monthly expenses and all your streams of income. If your income exceeds your expenses, you’re in a good place. However, if your expenses exceed your income, or the numbers are too close for comfort, you’ll need to trim some discretionary expenses to make it through the month without falling into debt if an unforeseen big expense happens. 
  • List your needs. Your needs include anything that is essential for living and basic functions, such as rent or mortgage payments, savings, food and clothing. Needs always take priority in a budget. As you list each need, write down its corresponding cost. Sum up the total of your needs when you’ve finished. 
  • List your wants. This includes anything that is not essential for living, like entertainment costs, brand-name clothing and eating out. Here, too, note the monthly cost of each item on your list and add up the total when you’re done. 
  • Assign dollar amounts to your expenses. Open a new spreadsheet and copy your list of expenses, starting with fixed-cost needs, then non fixed-cost needs, and finally, your wants. Assign an appropriate dollar amount for each of these costs, making sure the total does not exceed your estimated total for monthly expenses. 
  • Review and tweak as necessary. You will likely need to adjust the amounts in each expense category at least once a year to keep your budget relevant. Likewise, you will hopefully be able to increase the amounts in the income column as you move upward in your career path or find additional income streams. 

Budgeting systems

While every kind of budget involves tracking expenses and committing to a maximum spending amount each month, there is a wide range of budgeting systems to fit every kind of personality and money management style. 

The traditional budget doesn’t involve much more work than the steps described above. After working out a number for every expense category, you’ll simply need to track your spending throughout the month to ensure you’re sticking to the plan. You can use a spreadsheet for this purpose, or utilize one of the popular budgeting apps, like Mint or YNAB, and do it digitally. 

The money-envelope system works similarly. However, instead of simply committing to sticking to your spending amounts for each expense category, you’ll withdraw the amount you plan to spend on all non-fixed expenses in cash at the start of the month. Divide the cash into separate envelopes, using one for each of these expenses. Then, withdraw cash from the appropriate envelope when making a purchase in that category. There’s no way to blow your budget with this system; when the money in the “Dining out” envelope runs dry, that’s all for this month!

The 50/30/20 budget is simpler, but requires more discipline. Set aside 50 percent of your budget for your needs, 30 percent for wants and the remaining 20 percent for savings. Of course, you’ll need to make sure your income and expenses will work with this kind of budget. Does 50 percent of your income cover your needs? If yes, this budget allows for more individual choices each month and less accounting and tracking of expenses. 

A well-designed budget can provide its creator with a sense of financial security and freedom. When you stick to a budget, you’ll always know you have enough to get through the month and save for the future. Start budgeting today!

Your Turn: Do you stick to a strict monthly budget? Share your best budgeting tips with us in the comments. 

Baby Steps Millionaires: How Ordinary People Built Extraordinary Wealth—and How You Can Too

Title: Baby Steps Millionaires: How Ordinary People Built Extraordinary Wealth—and How You Can Too

Author: Dave Ramsey

Hardcover: 224 pages

Publisher: Ramsey Press

Publishing date: Jan. 11, 2022

Who is this book for? 

  • Anyone looking for straightforward and practical advice on building wealth. 

What’s inside this book?

  • An inside look at how Dave invests and builds wealth. 
  • True stories of people just like you who’ve dug themselves out of deep debt and built wealth. 
  • An extensive look at Dave’s own Baby Step 4 toward becoming a millionaire.

4 lessons you’ll learn from this book:  

  1. How to take baby steps, immediately, toward becoming a millionaire. 
  2. How to break barriers that are holding you back from building true wealth. 
  3. Basic financial concepts written in simple terms. 
  4. Simple steps for getting out of debt. 

4 questions this book will answer for you:  

  1. How can I become a millionaire?
  2. Is there any easy way to build wealth? 
  3. Are financial concepts reserved for the elite?
  4. What can I do — RIGHT NOW — to start getting rid of debt? 

Your Turn: What did you think of Baby Steps Millionaires? Share your opinion in the comments. 

Your Complete Year-End Financial Checklist

As 2021 draws to a close and we prepare to usher in 2022, take a moment to go through this year-end financial checklist for ensuring your finances are in order before the start of the New Year.

  1. Review your budget

Is your monthly budget still working well for you? Are you stretching some spending categories or finishing each month in the red? Take some time to review your budget and make any necessary changes.

  1. Top off your retirement plan

If you have a 401(k), check to see that you are taking full advantage of your employer’s matching contributions. If you haven’t contributed as much as you can, you have until the end of the year (Dec. 31, 2021) to catch up; to a limit of $19,500. If you turned 50 this year, you are eligible for an additional catch-up contribution of $6,500. If you anticipate getting a holiday bonus, consider putting this money toward your debt. 

Likewise, if you have an IRA, you have until April 15 to scrape together the maximum contribution of  $6,000, with an additional $1,000 if you are age 50 years or older. 

  1. Check your progress on paying down debt

 Give your debt an annual checkup by reviewing your outstanding debts from one year ago and holding up the amounts against what you now owe. Have you shed debt from one year ago, or is your debt growing? If you’ve made no progress, or your debt has grown, consider taking bigger steps toward paying it down in 2022, such as consolidating your debt with a [personal/unsecured] loan from Advantage One Credit Union.  

  1. Get a free copy of your annual credit report

The end of the year is a great time for an annual credit checkup. It’s a good idea to review your statements each month to check for fraudulent charges, but you can also request a free copy of your credit report from all three credit agencies once a year. Get your free annual credit reports here, and take a close look at each report. Look for accurate, updated information and any errors, like charges you don’t remember making, or other signs of possible identity theft. If you find any wrongful charges, be sure to dispute them immediately.  

  1. Review your investments and asset allocation

Take some time at year’s end to rebalance your portfolio and to see if your asset allocation is still serving you well. You may need to make some changes to your mix of stocks, bonds, cash and other investments to better reflect the current state of the market.  

  1. Review your beneficiaries

Has your family situation changed in the past year? If it has, be sure to switch the beneficiaries on your accounts and life insurance policies to accommodate these changes. 

  1. Complete open enrollment and select your employer benefits

The end of the year coincides with open enrollment for health insurance policies. This is your chance to select the employer benefits you want for the coming year. If you miss this window, you will be stuck with the benefits you chose last year or with no benefits at all. 

  1. Review your tax withholdings

It’s a good idea to review your W-4 annually and see if the amount of tax being withheld from each paycheck needs to be adjusted. If you’re not a numbers person, ask your accountant for help. Changing up the numbers just a bit can make a significant difference in your tax bill at the end of the year. Or, if you usually get a large refund, adjusting the amount withheld can mean enjoying a larger paycheck throughout the year instead of giving the government an interest-free loan to be paid back in one lump sum at year’s end.  

The doors are closing on 2021 and it’s time to give your finances a full checkup. Use this checklist to make sure your money matters are in order before the start of 2022.

Your Turn: What’s on your financial checklist for the end of the year? Tell us about it in the comments.

8 Holiday Shopping Hacks to Help You Save Big This Season

Ready, set… charge! The holiday shopping season is here, and between inflated prices, the rising cost of gas and the urge to splurge this time of year, it can be harder than ever to stick to your budget. Here, we’ve listed eight holiday shopping hacks to help keep your spending under control while still finding the perfect gifts for everyone on your list. 

  1. Make a list and check it twice

It’s not just for groceries—this tried-and-true shopping hack can really help you keep costs down this holiday season. When you shop with a list in hand and you’re careful to stick to it, you can make responsible shopping decisions instead of buying anything and everything that catches your eye. 

  1. Compare prices

In the age of apps and the internet, comparison shopping is a lot easier than trekking across town from store to store. All it takes is a few quick clicks to check if the item you want to purchase is available elsewhere, and for less. You can also use a price-checking app like ShopSavvy and BuyVia to make the search for the hottest deal even easier. 

  1. Don’t shop alone

Grab a friend when you shop to help keep you on track. You can share your intended budget with your friend, or let them know which gifts you’ll be looking for on this particular shopping trip and ask them to gently remind you to stay within budget and on-plan as you browse. A friend can also come in handy when you find a fantastic BOGO (buy one get one free) offer, but only need one item — go splitsies to gain some savings. 

  1. Take advantage of rebates and refunds

Wouldn’t it be awesome to get paid to shop? When you make a purchase through a rebate app like Earny or Rakuten, you get cash back for every purchase you make.

Why not get paid from the retailer, too? Some retailers offer refunds for late deliveries or will give you money back if there’s been a price change on an item since you’ve purchased it. Use a free app like Paribus to scan your receipt and search the web for price drops and to track policies that may help put more money back in your pocket. 

5. Buy discounted gift cards

Gift cards are a great way to save time on gift-shopping — and money, too! You can find discounted gift cards on sites like GiftDeals, Raise and CardCash for big-name brands of all kinds, including Lowe’s, Old Navy, Starbucks, Amazon and dozens more. Best of all, the person receiving the gift card never has to know you snagged it at a discounted price.

  1. Shop with coupons

No need to touch a pair of scissors to take advantage of coupons in 2021! Before completing an online purchase, do a quick search of sites, like RetailMeNot, to check for available coupons that can bring down the price. You can also use a browser extension, like Honey, which will automatically find and apply coupons while you shop.

7. Shop early

It’s always a good idea to get your shopping done well before the holidays to keep from overspending when you’re harried and pressed for time. This year especially, with delivery delays and supply shortages expected to last into 2022, it’s best to tackle your holiday shopping before Thanksgiving. When you shop with a clear head and when the store shelves are still well stocked, you’re more likely to stick to your budget and make responsible spending decisions.

  1. Buy electronics on Black Friday or Cyber Monday

Black Friday and Cyber Monday deals are rarely worth the hassle — with the exception of electronics. While most big-ticket items, like furniture and home appliances, are usually cheaper during other sale events, the Black Friday and Cyber Monday deals you’ll find on TVs, laptops, audio equipment and other electronics will likely be the best you’ll find all year. If any of these items are on your list, plan your purchase for Black Friday weekend for steep discounts. 

The holidays are coming, but that doesn’t mean you need to kiss your budget goodbye. Follow the tips outlined above to save big on gift-shopping this year. 

Your Turn: What’s your favorite holiday shopping hack? Share it with us in the comments. 

6 Steps to Crushing Debt

You and debt are so over. You’ve just about had it with those endless piles of credit card bills and those hideous numbers that never seem to get any lower. It’s time to kiss that debt goodbye!

Getting rid of high debt will take hard work, willpower and the determination to see it through until the end, but it is doable. Here, we’ve outlined six steps to help you start crushing debt today. 

Step 1: Choose your debt-crushing method

There are two approaches toward getting rid of debt: 

  • The snowball method, popularized by financial guru Dave Ramsey, involves paying off your debt with the smallest balance first and then moving to the next-smallest, until all debts have been paid off. 
  • The avalanche method involves getting rid of the debt that has the highest interest rate first and then moving on to the debt with the second-highest rate until all debts have been paid off. 

Each method has its advantages, with the snowball method placing a heavier emphasis on achieving results at a faster pace, which then motivates the debt-crusher to keep going, and the avalanche method, focusing more on actual numbers and generally saving the borrower money in overall interest paid on their debts. There’s no right approach, and you can choose whichever method appeals to you more.

Step 2: Maximize your payments

Credit card companies are out to make money, and they do this by making it easy to pay just the minimum payment each month, thus really paying only the interest without making progress on the actual principal, thereby trapping millions of consumers in a cycle of endless debt. Beat them at their game by maximizing your monthly payments. Free up some cash each month by trimming your spending in one budget category or consider freelancing for hire and channel those freed-up or newly earned funds toward the first debt on the list you created in Step 1. Don’t forget to continue making minimum payments toward your other debts each month!

Step 3: Consider a debt consolidation loan

If you’re bogged down by several high-interest debts and you find it difficult to manage them all, you may want to consider consolidating your debts into one low-interest loan. A personal loan from Advantage One Credit Union can provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest payment to make each month. Or, you can transfer your credit card balances to a single card with a low-interest or no-interest introductory period. Be aware, though, that you will likely get hit with high interest rates when the introductory period ends. 

Step 4: Build an emergency fund

As you work toward pulling yourself out of debt, it’s important to take preventative measures to ensure it won’t happen again. One of the best ways you can do this is by building an emergency fund. Ideally, this should hold enough funds to cover your living expenses for three to six months. Start small, squirrelling away whatever you can in a special savings account each month, and adding the occasional windfall, like a work bonus or tax return, to beef up your fund. 

Step 5: Reframe your money mindset

Sometimes, like when there’s a medical emergency or another unexpected and expensive life event, a consumer can get caught under a mountain of debt through no fault of their own. More often, though, there is a wrongful money mindset at play  leading the consumer directly into the debt trap. 

As you work on paying off your debts, take some time to determine what got you into this mess in the first place. Are you consistently spending above your means? Is there a way you can boost your salary or significantly cut down on expenses? Lifestyle changes won’t be easy, but living debt-free makes it all worthwhile. 

Step 6: Put away the plastic

Credit cards are an important component of financial health and the gateway to large, low-interest loans. However, when you’re working to free yourself from debt, it’s best to keep your cards out of sight and out of mind. You can set up a fixed monthly bill to charge one or more of your cards to keep them active, but only do this if you know you will pay off the charge in full before it’s due. Learning to pay your way using only cash and debit cards will also force you to be a more mindful spender. 

Kicking a pile of debt can take months, or even years, but there’s no life like a debt-free life. Best of luck on your journey toward financial freedom!

Your Turn: Have you kicked a significant amount of debt? Tell us how you did it in the comments. 

Get the Hell Out of Debt

Title: Get the Hell Out of Debt: The Proven 3-Phase Method That Will Radically Shift Your Relationship to Money

Author: Erin Skye Kelly

Paperback: 320 pages

Publisher: Post Hill Press

Publishing date: July 20, 2021

Who is this book for? 

  • Anyone who is fed up with living in debt. 
  • People seeking to get rid of credit card debt without paying a fortune in interest.
  • Readers who want to improve their money management and find most personal finance books boring.

What’s inside this book?

  • An honest, incisive and often humorous guide for paying off debt.
  • An outline for the three phases of getting rid of debt.
  • The two most important tools of money management.
  • Kelly’s own journey toward a debt-free life.

3 lessons you’ll learn from this book: 

  1. How to pay off a large amount of consumer debt.
  2. How to create and maintain wealth. 
  3. How to change your money mindset so you’ll stay debt-free.

5 questions this book will answer for you: 

  1. Why do people tell me to consolidate and refinance my way out of debt when this advice only takes me deeper into debt?
  2. Is it possible to kick my debt for good?
  3. What practical steps do I need to take to get rid of my debt?
  4. Is financial stress an inevitable part of life?
  5. How can I find true financial freedom?

What people are saying about this book: 

  • “Erin has a brilliant way of explaining, step-by-step, how to radically shift your finances for the better.”  — Peter Mallouk
  • “Erin understands that wealth is about so much more than money. It is about creating, living, and leaving a legacy of love and happiness.”  — W. Brett Wilson
  • “With a welcomed irreverence and absolutely no judgment, Erin shows us all of the nuanced, messy, and dysfunctional ways we stumble and fall into debt. But then! Then she shows us how to get up and stand tall before we kick, claw, and fight our way out of it. It’s you against your debt. Read this book if you’re ready for your gloves to come off.”  — Jesse Mecham

Your Turn: What did you think of Get the Hell Out of Debt? Share your opinion in the comments. 

Why You Need to Be Financially Fit

Individual Americans spend hundreds of dollars a year and at least as many hours on keeping themselves physically fit but too many people neglect their financial health. Just like physical health, being financially fit is crucial to your well-being, your future and your quality of life. 

Here’s why being financially fit is so important and how you can overcome common barriers to achieving financial wellness. 

Financial wellness: a ripple effect 

Being financially fit is about more than just having enough money in your account to cover your expenses and put away something for tomorrow. Managing money responsibly will affect many aspects of your life:

  • Marriage. According to a recent study by AARP, financial problems are the second leading cause for divorce in the country. Money brings resentment and arguments into a marriage. In a study reviewing over 740 instances of marital conflict between 100 couples, money was found to be the most common topic couples argued about.  
  • Mental health. Money stress can severely affect your mental health, causing depression, restlessness, anxiety and more.  
  • Physical health. Stressing over finances can also directly impact your physical health, leading to recurring symptoms like headaches, fatigue, upset stomach, insomnia, high blood pressure and an increased risk of heart disease and stroke.
  • Work life. Being bogged down by money worries can make it difficult to focus while at work, which can bring down productivity levels and hamper career growth. In addition, prospective employers tend to review the financial wellness of new hires as part of their background checks; high rates of debt and a poor credit score can cost an employee a new job. 
  • Parenting. Managing money irresponsibly can mean not having sufficient funds to pay for a child’s education, private lessons, medical needs and more. 

What are the leading causes of money stress? 

According to a survey by Credit Wise®, 73% of Americans rank money issues as the number one stressor in their lives. Here are the top causes for financial stress: 

  • High-interest debt
  • Insufficient savings
  • Medical bills
  • Living paycheck to paycheck
  • Lack of retirement planning

Stressing over money is never fun. Stressing over money, when any of the above applies to you, takes on its own form of angst by adding a level of long-term anxiety. It takes time, sometimes years, to undo the damage of any of these stressors but it can be done!

Barriers to financial wellness and how to overcome them

We’re convinced: being financially fit is super-important. But what happens now? Why are 80% of Americans in debt?  Why do only 39% of Americans have enough saved up to get them through a $1,000 emergency? 

Unfortunately, while many people may understand that financial fitness is crucial to their wellbeing, there are several barriers that make it difficult to follow through on their convictions. 

First, many lack the basic financial knowledge necessary to responsibly manage their money. Second, many people mistakenly believe that budgeting, saving and being more mindful of how they manage their money are too time-consuming and tedious. Finally, some people may have fallen so deeply into debt, they’ve begun believing they will never be capable of ever pulling themselves out. 

Here are some simple steps you can take today to help you achieve and maintain financial wellness:

  • Get educated. There is no shortage of financial literacy available to the interested consumer, from financial literacy blogs to personal finance books, podcasts, online classes and so much more. Learning how money works, the power of a long-term investment and how much you’re really paying each time you swipe that high-interest credit card can help you make better choices. 
  • Have the money talk with your partner. Whether you’ve only been sharing expenses for half a year or you’ve been married more than a decade, it’s important to be on the same financial page as your partner. Talk openly and honestly, being careful not to be judgmental in any way, and discuss your individual and shared long-term and short-term money goals. Then come up with a plan for how you intend to reach them together. 
  • Pay all bills on time. If you can’t take aggressive steps toward paying down debt just yet, be sure to make the minimum payment on each credit card bill each month. 
  • Create a budget. Giving every dollar a destination makes it easier to spend mindfully and cut down on extraneous expenses. 
  • Start saving. There’s no such thing as a sum of money that’s too small to put into savings. Every dollar counts, and once you get the ball rolling, you’ll be motivated to pack on the savings until they really grow. 

You give your abs a great workout each day now it’s time to get those money muscles into shape! Follow the tips outlined above to stay financially fit at all times

Your Turn: What are your best tips for maintaining financial wellness? Tell us about it in the comments. 

Bitcoin and Cryptocurrency Trading for Beginners 2021: 3 Books in 1

Title: Bitcoin and Cryptocurrency Trading for Beginners 2021: 3 Books in 1: The Ultimate Guide to Start Investing in Crypto and Make Massive Profit with Bitcoin, Altcoin, Non-Fungible Tokens and Crypto Art

Author: Nicholas Scott

Paperback: 397 pages

Publisher: Independently published

Publishing date: April 11, 2021

Who is this book for? 

  • Aspiring cryptocurrency investors who are looking for advice on entering this unique market. 
  • Experienced cryptocurrency investors who want to expand their knowledge of cryptocurrency, non-fungible tokens (NFTs) and crypto art.
  • Readers who don’t want to take the risk of investing in cryptocurrency, but are interested in learning how it works. 

What’s inside this book?

  • A down-to-earth beginner’s guide into the world of crypto investing. 
  • Advanced analysis of the cryptocurrency market. 
  • Tips and tricks for making it big through cryptocurrency.
  • Strategies for choosing the perfect coin and keeping your investments safe. 
  • A step-by-step guide for creating and selling your own NFTs. 

3 lessons you’ll learn from this book: 

  1. How to make your first cryptocurrency investment.
  2. How to build the perfect cryptocurrency trading strategy.
  3. The 6 secret qualities of a high-value NFT.

5 questions this book will answer for you: 

  1. What is cryptocurrency and how does it work? 
  2. Is it a good idea to invest in cryptocurrency? 
  3. What are NFTs and why are they the currency of the future? 
  4. How can NFTs be used in the digital world?
  5. What is crypto art? 

What people are saying about this book: 

  • “Don’t know what a Bitcoin is? Confused by cryptocurrency and art? These three books explain what they are and how to invest in them. The author also explains how crypto art can be a profitable investment.”
  • “I found this book understandable and well written. I found the part on the NFTs really interesting. I used to be skeptical about NFTs, but after reading this book, I understood how they work and how they can be used as an investment.”

Your Turn: What did you think of Bitcoin and Cryptocurrency Trading for Beginners? Share your opinion in the comments. 

Q&A: Why Are Prices So High Now?

Q: I’m trying to heal financially as life returns to pre-pandemic norms, but the rising cost of many commodities, like groceries and gasoline, is making a financial rebound a challenge. Why are prices skyrocketing right now?

A: The jump in prices of many goods is proving to be a formidable challenge to millions of Americans who are attempting to recover from the pandemic. There are several compounding factors triggering the rise in prices across multiple industries, and the upward trend is likely to continue for a while. Here’s what you need to know about the sky-high prices dominating the post-pandemic economy.

How much more do groceries cost compared to a year ago?

A trip to the grocery in 2021 doesn’t come cheap. According to new data from NielsenIQ, all 52 tracked food categories are more expensive now than they were a year ago. The cost of fresh meat, for example, jumped by 8.6% from May 2020 to May 2021, while processed meats are up by 9.2% and the cost of eggs has seen a nationwide increase of 8.2%.

What is causing the increase in grocery prices?

A confluence of factors is causing grocery prices to rise.

For one, the pandemic has caused a shortage in many materials due to a prolonged disruption in the labor force and supply chain, which has increased demand, and the prices of these goods, to rise. Grocery items, in particular, also saw a surge in demand due to the many Americans cooking at home while on lockdown during the pandemic. Many industries are still suffering from these shortages and don’t expect to recover for a while. In fact, the Bloomberg Commodity Spot Index, which tracks 23 raw materials, is at the highest level it’s been in nearly a decade.

Second, there is a shortage in the labor market now, which can likely be attributed to the inflated and extended pandemic unemployment insurance, which made many laborers reluctant to return to work. Employers are forced to offer more pay for attracting workers, and they pass this extra cost on to consumers.

Finally, the increase in prices can be linked to the rise in transportation costs as gas prices continue to rise, which we’ll explore more in a moment. Again, this increased expense is passed on to the shopper through higher prices on consumer goods.

Why are gas prices so high?

It’s sticker shock at the gas pump these days, with prices as high as $4 per gallon in some parts of the country.

There are many factors contributing to the rise and fall in gas prices, of which the fluctuating price of crude oil is most prominent. According to the U.S. Energy Information Administration (EIA), approximately 60% of the money we pay for a gallon of gas goes to cover the costs of the crude oil that went into making it. Another 25% pays for the costs of refining, distributing and marketing the gas, while the rest pays for federal taxes, and state taxes in some states as well.

Crude oil prices, in turn, rise and fall in direct correlation of multiple factors. Most recently, here’s what’s causing the price of crude oil to peak:

  • Basic rules of supply and demand. The last few months saw a loosening of COVID-19 restrictions around the globe. This led to an increase in the demand for gas, and in turn, for crude oil. In contrast, at the height of the pandemic, demand for crude oil fell sharply — and so did its price tag.
  • The presidential election. Crude oil prices have spiked by an average of $0.75 per gallon since Nov. 3, 2020. The oil markets evidently see the current administration as one that will inhibit U.S. oil production, which leads to a tightening on the global oil market. Traders responded by driving up the price of crude oil.
    Seasonal market changes. The price of crude oil tends to rise and fall with the seasons, where prices generally rise in the spring and summer months as more motorists hit the road, thereby increasing demand. The changeover to summer gasoline blends also leads to a jump in gas prices at this time of year
  • Change in the value of the dollar. Oil is priced in U.S. dollars within the world market. When the dollar is strong, relative to other currencies, crude oil is cheaper for Americans and more expensive for the global market. When the dollar is weak, as it is now, oil becomes more expensive for Americans.
  • Strong discipline among the OPEC+ nations. When the nations which are part of OPEC+ stick to their agreement to cut back on oil production, prices increase.

What can I, as a consumer, do about the rising cost of goods?

Unfortunately, as a private consumer, there’s not much you can do to bring down the costs of common goods. However, there are steps you can take to help you manage these costs in a financially responsible manner.

First, you’ll likely need to make some changes to your monthly budget to accommodate the higher costs of groceries and gas. Shuffle your spending categories by trimming discretionary expenses until you have enough money to cover the costs of food and transportation.

Next, incorporate cost-saving techniques you may not have needed to use until now to help you manage these increased expenses. Think couponing, shopping the seasons and the sales, buying items you always use in bulk, and cutting back on pricey grocery items you can do without. To save on gas costs, consider walking to work or to do your errands, carpooling when possible, or using public transportation more often.

Rising prices might be hard on the wallet, but with some proactive steps, you can still stay on top of your finances and help bring your financial health back to pre-pandemic norms.

Your Turn: How are you budgeting for the rise in the cost of groceries and gas? Share your tips with us in the comments.