Strategies for Managing Debt Amid Tariffs & Rising Costs

The threat of more tariffs is raising cost-of-living concerns among many Americans. For those living paycheck-to-paycheck, increased expenses could lead to a debt spiral.

“Credit cards often become the fallback when we can’t make ends meet, as cutting entertainment and other non-essentials may not provide enough cushion,” said Manuel Salazar, chief executive officer at Take Charge America, a national nonprofit credit counseling and debt management agency. “With interest rates between 20 and 30%, a few extra charges each month can quickly add up to unmanageable debt levels.”

Salazar offers five tips for managing debt when cost of living can spike at any time:

• Understand Impact of Tariffs: Tariffs can lead to higher prices on everyday goods, from groceries to clothing and household items. Understanding which products could increase can help you make smarter purchasing decisions and seek lower-cost alternatives.
• Distinguish Needs from Wants: It's more important than ever to evaluate spending with a critical eye. Focus on covering necessities while limiting discretionary purchases. Tempting offers like “Buy Now, Pay Later” may seem helpful, but they can lead to even more debt.
• Revisit Your Budget: Now is the time to reassess and refine budgets. Prices may have changed across categories, and your income or priorities may have shifted. Look for ways to cut back or reallocate funds.
• Build an Emergency Fund: Building or replenishing an emergency fund provides a critical safety net and peace of mind. Consider setting up an automatic transfer to a separate savings account, even if it’s just $10 to $25 a week. Modest contributions add up.
• Seek Help Sooner Than Later: If you’re struggling with credit cards and unsure which repayment path is best, seek free guidance from a credit counselor at a nonprofit agency.

For additional guidance, assess whether you need a debt relief program.

About Take Charge America, Inc.

Founded in 1987, Take Charge America, Inc. is a nonprofit agency offering financial education and counseling services including credit counseling, debt management, housing counseling and bankruptcy counseling. It has helped more than 2 million consumers nationwide manage their personal finances and debts. Learn more at takechargeamerica.org or call (888) 822-9193.

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