Since 2020, multiple stimulus checks and the Cares Act has helped thousands of Inland Empire residents minimize the sting of COVID-related financial issues. As expected, the pandemic abruptly changed many aspects of daily life. The move to remote jobs, unemployment and underemployment, and the grinding halt to travel affected the budgets and cash flow of businesses and consumers.
However, recent changes in interest rates and the end of government assistance may leave residents in Rancho Cucamonga, Pasadena and other areas struggling financially. Terrence Fantauzzi can help you determine if you can benefit from bankruptcy.
Current Economic Influences
Economic experts have been expecting the economy to dip for more than a year. There have been many factors negatively affecting the economy.
COVID-19 and its variants are among the most influential factors in today’s economy. Millions of potential employees are unavailable to work. Workers often demand to remain remote and resign from their position rather than return to the office. This results in understaffing and employer productivity issues.
Supply Chain Disruption
Thousands of warehouse and factory workers refuse to return to work. As a result, manufacturers cannot supply component products. A shortage of transportation and product delivery personnel affects the supply chain and disrupts distribution.
The threat of embargoes, tariffs, and other economic sanctions due to the political climate increases the risk of a financial dip. The stock market volatility reflects the potential risk, and organizations move to respond to the possibility of a recession.
Waning Financial Boost
An unexpected financial boost from the pandemic helped millions of American households get through the last few years. Many took advantage of that by paying down debt and making purchases that stimulated the economy. The current inflationary period could result in the pendulum swinging from a growth environment to one of greater financial pressure. With no more stimulus checks on the horizon and forbearance policies ending, more homeowners and households may become delinquent.
Higher Mortgage Rates
Lenders typically offer lower rates when inflation is low. In 2020, the average mortgage rate for a 30-year fixed rate was 3.7%, and it dipped to 2.68% that December. For most potential homeowners, lower interest rates mean they can afford more house.
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index measures the average change in prices paid for products and services over time. For example, as of September 2022, food costs increased by 11.2%, and energy prices had risen nearly 20% since September 2021. The increase between August and September 2022 was +0.4%. When the CPI reflects inflation, the Federal Reserve raises interest rates, and other lenders follow their lead by increasing their interest rates. As of October 2022, the rates have more than doubled. The average interest rate for a 30-year fixed-rate mortgage was more than 7%.
Inflation rates outpaced wage increases for the majority of Rancho Cucamonga consumers. If you are a homeowner with an Adjustable-Rate Mortgage, your monthly mortgage payments have likely skyrocketed. Depending on your loan, it could have increased by hundreds of dollars a month since the beginning of the year. Most budgets aren’t flexible enough to adjust for that type of change, which means something has to give.
Unplanned expenses are rarely cheap, such as a trip to the emergency room, a broken water heater or unexpected roof repairs. With inflation hitting 40-year highs, you may be looking for ways to cut costs and save money. Here are some practical ways to reduce costs.
Review your spending
Daily trips to the corner coffee shop, buying the latest trending gadget, and other unnecessary purchases could take a large bite out of your paycheck. The first step to stretching your budget is to look at all your unnecessary purchases. Review at last month’s numbers and try cutting them down by 30% this month. Consider going out for coffee three days a week instead of six and canceling one streaming service.
Open a Savings Account
If you don’t already have one, open a savings account. Set up automatic transfers from every paycheck into that account. It doesn’t need to be a lot, maybe just the price of those three coffees you cut back on each week. Over time it adds up and can give you a cushion in an emergency.
Look at Subscriptions and Contracts
Smartphone plans, streaming services, and club memberships are examples of everyday items that you can modify or remove from your monthly expenses. Consider moving to a more competitively priced mobile plan and pay for basic services and memberships instead of the premium options.
Turn Off Sales Notifications
Speaking of smartphones. You may get notifications or emails from your favorite vendors whenever they have a sale or promotion. Consider unsubscribing to these for a few months. This will reduce the temptation to make unnecessary purchases, keeping more money in your wallet.
Implement Energy-Saving Options
As daylight hours shrink, we’ll turn the lights on earlier in the evening. LED lightbulbs can help you save on power bills each month, and they last for years, minimizing the lifetime costs. Check the temperature of your fridge and freezer. The refrigerator doesn’t need to be set lower than 38 degrees Fahrenheit, and the freezer doesn’t need to be below 0 degrees Fahrenheit. Anything cooler than that is wasting energy.
Rancho Cucamonga Bankruptcy Attorney
If you have cut spending to only the necessities and you’re still relying on credit to stay current on monthly bills, contact Terrence Fantauzzi and schedule a free, no-obligation review. Bankruptcy can help you get out of debt by eliminating your debt or developing a payment plan you can afford. If you’re drowning in debt, bankruptcy is a lifeline. It offers you the chance to get back on track. If you’re interested in a fresh start, call us today at 909-552-1238.