In your fight against inflation, the safest inflation hedge you can have is disciplined management of your personal debt. Managing debt effectively may not be as exciting as investing in the latest hot stock market sector or squirrelling away gold bullion in a vault hidden in your mother-in-law's back forty, but it will give you a superior return on your effort and will free up scarce funds that you can invest productively later.

Eliminating your credit card debt should be one of your highest financial priorities. If you have difficulty meeting your minimum monthly payments, you may need consumer credit counselling services to help you structure your budget. A consumer credit counselor can help you prioritize your budget and plan more effective use of your financial resources. Consumer credit counselling services may also be able to negotiate lower payments or lower interest rates from your credit card companies. You can get free credit reports online along with tips on improving credit rating, so do a lot of research about managing credit, credit ratings, and strategies for eliminating credit card debt before you engage the paid services of a consumer credit counselor or consumer credit counselling services.

Your first priority in managing your personal debt should be to always make your payments on time, even if you only make the minimum payment on your credit card debts each month. By paying on time, you will avoid incurring larcenous late fees, which are often $39.00 or higher, and you will avoid having your credit card issuers raise your interest rates on your unpaid balances. Familiarize yourself with the fine print in your credit card agreements. Late payments may trigger an increase in your interest rate to twenty or twenty three percent per year or higher. Despite what the credit card advertisements may say, credit card companies have no interest in your friendship. They exist to make money and they will squeeze every cent out of your bank account that they can.

With inflation already eroding the value of your money by three or four percent a year, you do not need the additional burden of high interest rates on credit card balances destroying your wealth even faster. There are a number of strategies you can use to reduce your personal debt burden. 0 interest balance transfers between credit cards have been a useful tool the past few years, but these offers are becoming less common as interest rates creep higher. Any time you receive a low APR balance transfer offer in the mail, be sure to read all the fine print.

Sometimes low or 0 interest credit card offers have subtle details hidden away at the bottom of the page or in carefully crafted language to try to cloak a bad deal with smoke and mirrors. For any credit card 0 interest or low interest credit card transfer balance offer, be aware of the length of time the low rate will apply to your balance (the credit card APR will often rise to ridiculous heights as soon as the introductory credit card offer period expires), the amount of cash advance fees that will be charged for the transaction (sometimes this fee is 3% or more with no cap, which immediately makes the low interest rate balance transfer not such a great deal), and any restrictions on what the money can be used for (sometimes the low rate offer applies only to transfers made directly to other credit card accounts, but the checks included in the offer do not make it clear that if you deposit the funds into your bank account a ridiculously high interest rate will apply to the new balance of your credit card account).

Another possibility for reducing credit card debt payments is to refinance your home with a second mortgage or revolving home equity line of credit. Again, be careful to read the fine print in any offer you receive for debt consolidation home equity loans. The upfront fees will often negate any savings you might expect over your current personal debt situation.

If you are uncertain about the best course of action to take in managing your personal debt, consider engaging consumer debt counselling services or establish a relationship with a good CPA in your neighborhood. And remember that the best way to fight inflation is to not spend money in the first place. Cut your personal expenses and aggressively pay off your credit card balances and inflation will be a much smaller influence over your finances.

Return to Index