Pandemic Economics: How To Manage Your Debt and Spending

Americans are returning to normal spending habits for the first time since the height of the COVID-19 pandemic, but are they paying off debt as fast as they’re accumulating it?

Consumer debt has risen to $14.6 trillion in the first three months of 2021 — with student and auto loans especially high, according to recent article on Bloomberg Wealth.

In the second episode of Protecting Your Finances During COVID-19, host Karen Boothe along with bankruptcy attorney Heather Culp and retired e-commerce executive Kim Edwards discuss how the pandemic has influenced the current economic climate and how the finances of the average American has been impacted.

COVID-19 relief support from the federal government has helped many pay down some existing debt. Credit card balances have taken a dip for the second year in a row.  Many still find themselves pushing most of their loan repayment responsibilities  down the line. All the while, many industries are experiencing price hikes and limited supply.

Tune in to learn how we got here, and how to keep track of spending amidst complicated economic times.

Featured on the Podcast

Name: Heather Culp

What she does: Heather is an attorney at Essex Richards in Charlotte, North Carolina. She and her colleagues have significant experience helping North Carolinians, their businesses, and their families through their financial challenges. Heather has over 20 years of experience and has helped clients navigate the 2008 recession and rebuild.

Name: Karen Boothe

What she does: Karen is the Founder  of Engage Forward LLC. Engage Forward exists to consult and educate all clients about how to obtain sustain and maintain financially healthy lifestyles. Karen is committed to helping her clients to develop and transform into a better version of their current state.

 

Name: Kim Edwards

What she does: Kim, a former e-commerce executive, retired from her career early at the age of 39 and now spends her time traveling, investing, and learning. Previously, she served in executive level roles at Wayfair, Converse, and management level roles at Amazon and Walmart.

 

💵 Key Takeaways 💵

Top takeaways from this episode of Protecting Your Finances During COVID-19  

➔   Pay down outstanding debts. If you have money left over after paying all your monthly expenses, consider reducing any outstanding debts you may owe. 

➔   Don’t spend what you don’t have. Some Americans have been opting to pay with credit cards instead of cash during the COVID-19 pandemic. This can be great if debt is paid off right away.If neglected, it can quickly become a financial burden. Pay for expenses using the money in your bank account, or pay off your credit card right away to minimize debt. 

➔   Know your spending habits. Keep track of your finances. Plan ahead for one-off purchases. Credit card statements  can be a great tool to keep track of monthly and yearly purchases. The bottom line — know how your spending aligns with your budget.

 

💡 Episode Insights 💡

[1:26] Americans are borrowing more than ever: Karen summarizes key points from a recent Bloomberg article stating that American consumers hit $14.6 trillion in debt in the first three months of 2021. While mortgage interest rates are low and credit card balances have actually declined sightly, student and auto loans continue to be big issues.

[3:41] Student loan payments are still frozen: Heather discusses how the moratorium on federal student loan payments has benefitted many people.

[7:56] Limited supplies are fueling inflation: Karen speaks on the strained supply and demand chain, particularly in the auto industry. She shares her own experience with finding a rental car.

[9:32] Choosing credit cards over cash: Karen explains how people using less cash as a response to preventing the spread of COVID-19 could be a factor in prompting more credit card usage, and therefore causing an increase in credit card debt

[11:24] People are putting off paying back debt: Karen questions if Americans are putting off paying  some of their debts  in favor of spending now.

[12:38] Know what your true budget is: Kim encourages the responsible use of credit cards as a method for keeping track of expenditures. Heather touches on alternative methods of  tracking finances.

 

About the Podcast

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For more information, you can visit Essex Richards at www.essexrichards.com. You can reach attorney Heather Culp at hculp@essexrichards.com or 704.377.4300 and Karen Boothe atkarenb@engageforward365.com or 866.948.9199.

This podcast was recorded and is being made available by Essex Richards and Engage Forward LLC for informational purposes only. By accessing this podcast, you acknowledge that Essex Richards and Engage Forward LLC make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast because laws, regulations, and policies are changing every day. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of Essex Richards or Engage Forward LLC. This podcast should not be used as a substitute for competent legal or financial advice from a licensed professional in your state and should not be construed as an offer to make or consider any investment or course of action. You should direct any specific legal or financial questions to a legal or financial professional licensed in your state. You should direct any specific legal or financial questions to a legal or financial professional in your state.