SAN ANTONIO – Which do you have more of: credit card debt or emergency savings? For many, the answer is debt.
Bankrate’s latest survey found 36 percent of people have larger credit card balances than savings for life’s emergencies.
A big culprit is inflation. People are spending about 20 percent more on the same things they purchased four years ago. The study found that that’s causing people to save less and charge more.
Record-high interest rates hovering around 20 percent aren’t helping, either.
So, what can you do to tackle bills and the lack of savings?
“Tracking spending is (a) really critical part of getting a handle on your finances,” Bankrate chief financial analyst Greg McBride said. “You’ve got to know where the money is going, so you can know where you can cut back.”
How much emergency savings should you have? Many money advisers said you should have three to six months’ worth of living expenses to cover you in case something happens like losing your job.
McBride said six months’ worth is ideal, but it takes time to get there.
“Best way to do this is: set up direct deposit from your paycheck to a dedicated savings account,” McBride said. “Do it now.”
Even a small amount is better than none. McBride said it’s key to create a savings habit.
As for those credit cards, McBride suggested tackling the highest interest rate card first.
“If you carry a balance and trying to get out of debt, consider a zero percent or low-rate balance transfer,” McBride said.
McBride said to be sure to pay it off without piling on more debt.