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Feeling the Pinch of Inflation? Don’t Expect Relief Anytime Soon, One Expert Says

Paychecks aren't stretching as far anymore, but these tips can help.

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All eyes are on the Federal Reserve this week. After a slew of rate hikes, the Fed has been holding rates steady for almost a year as a part of its strategy to lower inflation. During this time, we’ve seen mortgage rates top 7% and credit card APRs hover above 20%. And even though savings rates can yield some extra money, borrowing rates on credit cards and loans coupled with higher prices are making it harder for many to get by. Some are even draining their savings and slipping deeper into debt.

When can we expect a break?

“A lot of people are getting very frustrated with high prices and the current costs of just living,” said Alaina Fingal, an accountant, founder of The Organized Money and a CNET Money expert review board member. Fingal is hearing firsthand from her clients and followers on social media how inflated costs and higher interest rates are hurting their bank accounts.

Here’s what to keep in mind as the Fed makes its next move this week, and Fingal’s tips on how to stretch your dollar a bit further right now.

People are spending and saving less 

The Fed’s moves -- or lack thereof -- are drilling a hole in wallets. Not only are people grappling with high prices, but they’re also paying more to finance purchases, a necessity for 16% according to a recent CNET survey.

“Consumers are buying less and holding off on big purchases because of high prices and rates.”

On top of this, Fingal says that consumers are pulling money from their savings and aren’t saving as much money as they have in past years. This matches what we found in a recent CNET survey, which showed 20% of US adults are using their savings to cover essential expenses.

Many are also delaying buying a home in today’s high-interest rate and high-priced market. Some are even delaying other big decisions like purchasing a new car or starting a family.

“A lot of people would love the American dream of owning their own home. But they don’t want it at the cost of their sanity,” Fingal said. Instead, they’re choosing to continue renting or stay with family or friends to save money.

But the question is for how long?

Read more: Why Have Brand-New Home Sales Suddenly Tripled? I Put on a Hard Hat to Find Out

Will the Fed cut rates this week?

There hasn’t been much progress in seeing a decrease in the inflation rate, Fingal said. And most experts believe the Fed will hold rates steady this week, there’s a chance that could change in July.

“We expect slower growth and inflation in the months ahead, which should provide the Fed with sufficient comfort in reaching its 2% inflation target to begin cutting rates in December,” Sid Vaidya, an investment strategist, previously told CNET Money.

Borrowing rates will stay high until the Fed signals it’s preparing for a rate cut. And even if rates dip, you won’t see the changes overnight. But with inflation sitting at 3.5%, still above the Fed’s 2% target, some experts don’t agree. They’re not convinced we’ll see rate cuts any time soon, if even this year.

“The Fed has remained vague on when it’s going to cut rates,” Fingal said. “And they continue to postpone.” Fingal mentioned that earlier this year some experts predicted three interest rate cuts in 2024. But the inflation reports haven’t reflected these predictions. 

After last month’s Fed meeting, Federal Reserve Chairman Jerome Powell said the inflation data received so far this year have been higher than expected. “Although some measures of short-term inflation expectations have increased in recent months, longer-term inflation expectations appear to remain well anchored,” he said. Therefore, the road to lowering inflation will take longer than expected, he added.

“We aren’t going to see much of an impact or make as much progress as was predicted a few months ago,” Fingal said. “Rates have remained the same since the middle of 2023, even though they were predicted to decrease.”

How people are getting by financially

Dollars aren’t stretching as far right now, and grocery prices have the highest “sticker shock,” according to our inflation survey. So how are people getting by? Many are finding creative solutions to spend less or save more, Fingal said.

“Everybody is feeling this frustration,” Fingal added. “It’s causing us to think outside the box.”

Trimming expenses with minimal effort

Beyond budgeting to find room to cut costs, Fingal is seeing her clients experiment with ways to cut their grocery bills that aren’t time-consuming and don’t require dedicating hours to clipping coupons or shopping for the best deals.

One of her clients has turned to Pinterest to find interesting ways to make recipes with a set number of groceries so she can test out different recipes without spending more on groceries or turning to takeout. Buying in bulk can also help you save a little more on essentials.

If you’re spending too much on subscriptions or your internet bill, some budgeting apps, like Rocket Money, can help you negotiate lower monthly bills. CNET banking editor Kelly Ernst tried this service recently and was able to save $300 on her annual Spectrum bill. Just know that you’ll pay an upfront fee (a percentage of your savings) for services like these.

A different take on side hustles

Fingal is also seeing a trend in looking for more innovative ways to boost your income, whether it’s finding new ways to earn money on TikTok or turning a hobby into a side hustle.

For example, maybe you love pets and want to start dog sitting to help increase your income. Or if you love working out, like I do, maybe you can work at your local gym or become a fitness instructor to earn more.

Yes, taking on extra work can be overwhelming, but if you find a way to overlap a passion with a paid opportunity, you might get into a situation that’s a win-win for your work-life balance.

Prioritizing savings when every penny counts

If you’re struggling to save money or struggle with overspending, you’re not alone. It can be difficult to factor savings goals into your budget when you’re already putting most or all of your money toward essentials. But without an emergency fund, you may find yourself turning to debt more frequently when surprise expenses pop up.

Trends such as loud budgeting and savings challenges can help you find ways to divert your money from spending that is no longer serving your life and can keep you motivated to stay on track.

And you don’t have to start with lofty goals. Getting into the habit of savings is more important, even if it’s just $25 to $50 per paycheck. An extra $100 per month in a high-yield savings account can slowly add up, thanks to the power of compound interest. You can also check out money apps or bank accounts with savings automation to help you mindlessly save small amounts of money that you won’t miss having in your main checking account.

Watch out

Once you’ve cut back on your spending, make sure you have a debt repayment strategy in place. If you’re paying only the minimum on your credit card bills, for example, your debt is likely growing due to steep interest rates. Consider a balance transfer to give you more time to pay down your balance without interest, a debt consolidation loan to lower your minimum payments or a debt payoff strategy like the snowball or avalanche methods to help you put more of a dent in your balance, sooner.

Read more: Should I Save Money or Pay Off Debt First? Expert Tips to Help You Do Both

Still, Fingal is hopeful. Watching her clients come up with new money-saving tips and tricks based on her money guidance keeps her feeling optimistic. She wants people to continue raising awareness about these issues and sharing solutions that are working.

“People are waking up and facing all of these financial challenges,” Fingal said. “Finances are on at the top of everyone’s mind right now. And I think the biggest thing that we can do is keep the conversation going.”

Dashia is a staff editor for CNET Money who covers all angles of personal finance, including credit cards and banking. From reviews to news coverage, she aims to help readers make more informed decisions about their money. Dashia was previously a staff writer at NextAdvisor, where she covered credit cards, taxes, banking B2B payments. She has also written about safety, home automation, technology and fintech.
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