Consumers have been facing a number of challenges as inflation has sent the price of everyday household items higher.
That has many relying on credit cards and reward programs to try cushioning the blow.
It is a strategy that personal finance expert Dave Ramsey is against.
“We’ve seen decades since we’ve been in this bad position. And people are going to fix the inflationary problems, the pressures with the wrong tool,” Ramsey said during an appearance on “Cavuto Coast to Coast.” “And the credit card is the wrong tool. It’s going to cause them problems later. It comes home to roost. It’s really sad”.
Ramsey has some advice to help people navigate through record inflation and data that technically puts the U.S. in a recession.
He recommends a long-term strategy where you look out to what you are doing ten years from now.
Ramsey says if borrowing on credit cards to keep a lifestyle exactly where it was in an inflationary cycle, that is not going to project well out ten years.
“Where’s that going to? Where’s that going to take me? Then that that kind of critical thinking will lead you back to doing a budget.”
“Whatever you’re doing, look out there into the future and say, where’s that going to? Where’s that going to take me? Then that that kind of critical thinking will lead you back to doing a budget.”
RAMSEY’S INFLATION SURVIVAL TIPS
- Budget for the future, plan for next decade
- Maintain 401(k) contributions, retirement savings
- Curb credit card borrowing
- Stop luxury purchases, frivolous spending
Ramsey also recommends cutting back on some areas such as buying a luxury item until this inflationary period is over.
“We have to control in our own households the controllables. What happens in your house if you’re watching this is way more important than what happens in the White House. So don’t let this outside variables destroy your future by you not controlling you,’ added Ramsey.
“What happens in your house if you’re watching this is way more important than what happens in the White House.”
Ramsey was asked about people who took out loans when rates were very low and whether they’ll come out ahead.
“When you give your income away, whether it’s at a low interest rate or not, in the form of payments, and you don’t put that same amount of money in your 401k or your Roth IRA and good growth stock mutual funds with long track records, you are dooming your future,” said Ramsey.
Dave Ramsey is the author of the book “Baby Step Millionaires.”