That's no secret. The pandemic and inflation have hit our wallets, and as a result, Americans are charging more to their credit cards. Billions more. But what does that mean for our economy? And what's the best way to get out of debt? Treleven Sarah Makowitz has the answers from experts. Pandemic restrictions have eased, but a lot of the inflated prices that came as a result have stuck around, pushing Americans to swipe, swipe and swipe again. All of this has led to a new record high of nearly $1 trillion in credit card debt nationwide. That's rising by over $60 billion in the last quarter of 2022.
But how did we get here? Economists and financial planners have some ideas. On the fourth quarter of last year, it finally surpassed the pre pandemic. Americans are paying more for everything, and they've tapped and in many cases now depleted their savings. They feel like they have no place to turn but credit card swiping the credit card to pay for life. So we know that our plastic is carrying more. But what does all this debt mean for our economy? Interest rates are rising and that that's going to affect business investment and consumer spending decisions. But so far, consumers still seem enthusiastic about spending and. And buying things and willing to run up their credit card debt. If you're someone battling this debt right now, eventually that Bill is going to come in. But Jen will says you might want to be careful before you open up another credit card for more spending.
The best advice I can give is never use a credit card to pay for a want. The average interest rate right now, we're told, is over 19%. Find those introductory offers, those 0% introductory offers where you can move balances for a short period of time. But don't do it unless you have a plan to snowball and really attack that debt. As for what's next, there's no guarantee, but Gen. Wealth advises you plan for what you can control. What matters most is not the economy, but your economy. And figuring out your budgets is more important than what's going on in 2023 in the US economy. And while we are seeing inflation begin to slow down, economists say the high prices aren't going anywhere anytime soon.
Reporting. I'm Sarah horback lowitz. Sarah, thank you now. Well, overall, FICO credit scores continue to trend up through 2021. According to the data company Experian, many scores in Southern states, including Arkansas, are worse than the national average..
a debt management plan or dmp can help you feel more in control of your finances if you're struggling to repay your debts it allows you to make a single monthly payment towards your debts based on what you can afford and after you've covered your essential living costs so let's take a look at some of the benefits and risks of a dmp a dmp can be a more affordable way for you to manage your debts and at step change we don't charge any fees for managing your plan or for contacting your creditors the whole of your monthly payment goes towards repaying the money you owe and you'll be able to track your progress as you move out of debt when your dmp is up and running you'll make your payments directly to us and then we'll distribute it among your creditors then each year you'll need to review your finances and your plan with us this is important not only to make sure that a dmp is still suitable for you and for your circumstances but to also prevent your plan from being stopped so hopefully that sounds good however there are several risks that you'll need to consider a dmp shows your creditors that you're willing to pay back the money you owe and in many cases they'll stop adding interest and charges to your debts but this isn't a guarantee and they can still continue to apply interest and charges to your debt and take further action including taking you to court it's also worth remembering that because you're making lower payments towards your debts your credit file may be affected and it may take longer to pay your debts back finally it's important to get expert debt advice to make sure it's suitable for you we offer free debt advice online or over the phone we'll help you put together a realistic budget and recommend the most suitable debt solution for you if we think a dmp is your best option after getting that advice we'll give you the advice you need and be here to support you every step of the way
a debt management plan or dmp can help you feel more in control of your finances if you're struggling to repay your debts it allows you to make a single monthly payment towards your debts based on what you can afford and after you've covered your essential living costs so let's take a look at some of the benefits and risks of a dmp a dmp can be a more affordable way for you to manage your debts and at step change we don't charge any fees for managing your plan or for contacting your creditors the whole of your monthly payment goes towards repaying the money you owe and you'll be able to track your progress as you move out of debt when your dmp is up and running you'll make your payments directly to us and then we'll distribute it among your creditors then each year you'll need to review your finances and your plan with us this is important not only to make sure that a dmp is still suitable for you and for your circumstances but to also prevent your plan from being stopped so hopefully that sounds good however there are several risks that you'll need to consider a dmp shows your creditors that you're willing to pay back the money you owe and in many cases they'll stop adding interest and charges to your debts but this isn't a guarantee and they can still continue to apply interest and charges to your debt and take further action including taking you to court it's also worth remembering that because you're making lower payments towards your debts your credit file may be affected and it may take longer to pay your debts back finally it's important to get expert debt advice to make sure it's suitable for you we offer free debt advice online or over the phone we'll help you put together a realistic budget and recommend the most suitable debt solution for you if we think a dmp is your best option after getting that advice we'll give you the advice you need and be here to support you every step of the way
(upbeat rock music) – He sees it, he
wants it, he buys it. – Four cars in four years? What is up with you? – I know what's right,
I know what's wrong, sometimes I just
don't give a (bleep). – Do you have any idea
what I'm gonna make you do? – Get the hell out of here.
– I am serious. (couple laughing) (upbeat rock music) ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ – My name is Candice. I am a secretary for
an education institute. – My name's Clint, I'm
an operations coordinator for a liquid bolt company. Me and Candice
got married young, pretty sure we got
married when we were 22. We think we're coming
up on five years. – Clint never stops spending. – When I get something in
my head and it's something that I want, I don't think
about it and I just do it.
– I don't wanna be
spending the money but he has to buy
everything new. Big screen TV- – Nice definition. – [Candice] He had to
get the surround sound. – Can't have a TV
and not proper sound. – Various video game
consoles in the past, motorcycles, cars,
everything he wants he gets. – Candice definitely monitors some of the spending
that I've done. – There's online banking and I
can view that at the instant. Like where he has gone
to the strip joint. – She'll be online,
she'll be like, oh you're there are you? She's like a stalker like- – Guess who showed up there?
(Candice giggling) Some days I hate
him but I love him. Clint doesn't open any bills, nor does he go online
to check anything. – I have no clue as to
what's in the bank account.
The bill fairy comes
down and pays our bills. (Clint chortling) – I will pull from
our line of credit or go into overdraft. – But that doesn't bother me. Credit is pretty much what makes the world go
'round I guess I would say. – [Candice] Now we
have purchased a condo that closes in a couple months. – Again, that was
probably more my idea. – Clint doesn't realize that we have to come up with
the deposit before we move in. There's other things that
contribute to being emotional. He can't have kids naturally. That's extremely
emotional for me. I'm frustrated, I can't do IVF
because of Clint's spending. – I think mine and
Candice's relationship is more at risk with the baby situation than
the debt situation. – If we get further
and further in debt, I think that Clint and I
will eventually part ways. Because we won't have kids which is something
that I really want. He'll have all his stuff
but he won't have me. (upbeat rock music)
(cars honking) – [Narrator] This month, I'll help this couple
move from red to black.
I've been solving money
problems for over 20 years. Tackling everything from
high finance to low income. I help people understand
money and debt which is still a huge
mystery for most folks. And it's the number one
reason couples split up. So now, I'm making house calls. (upbeat pop music) When it comes to spending, Clint is like a kid
in a candy store and Candice is powerless
to stop the binge. The way things are going, they can't afford
to start a family. It's time for these two to
get their priorities straight. Hi, Gail Vaz-Oxlade. – Hi I'm Candice! – Nice to meet you!
– Nice to meet you too! – I'm Clint. – Nice to meet you Clint.
– Nice to meet you.
(upbeat pop music) – You're a bit of
a boy, right Clint? You're a boy man, you sit here and you
play shoot-em-up games! (Candice giggling) So Clint, how many
hats do you have? – Pardon?
– One, two, three, four, five, six, seven,
eight, nine, ten, 11- (air whooshing)
– We'll go to a store, Clint is like a woman, he will
try on fifty million things. He's got a hat fetish,
shoes, clothes, everything. – One of the things that I
notice about the two of you is that there's a definite
discrepancy in your stuff. His robe is beautiful. – Oh yeah.
– Her robe is ratty. – I'm sorry. – This is pretty well
your relationship. Very often what happens is, no matter what I do to
help on the financial side, I actually can't
solve the problem because the problem
is between them. That's not your case. It's very clear that
you're very tight and you love each
other to death. When will you know
you have enough? Enough clothes, enough hats- – Honestly I probably
won't ever do that.
– $80,000 in consumer debt. Are you kidding me? – I know where
the money's going. – No you don't! Neither of you knew
where the money was going and I'm gonna show you
where the money's going. You don't know where
the money is going. (somber electronic music) There's your $80,000 in debt. You went off and
had an IVF treatment at an interest rate of 32%. These people are
stealing from you. If you can afford a baby, you should be able to pay
for your IVF straight up. – Yeah.
– Okay? 'Cause there's some planning
that goes into parenthood. And then you have all this
money on this credit card. At almost 20%. So you're not pro-actively
managing your credit, you're not figuring out how to
get your interest rates down. – No. – And your car loan Clint? At your payment, it'll take
100 months to pay it off, over eight years.
(melancholy guitar strumming) 'Cause you carry
forward negative equity. – Every time that we
trade in these vehicles, we lose money and
it just added up, added up onto his previous loan.
– Four cars in four years? Too many cars. What's that car
actually worth today? – Like $15,000.
– Okay. So that $15,000 car, you're gonna have to
drive for eight years and you're gonna
pay $51,000 for it. Ooh look, finally we got
something you understand. By the time it's all paid off, the way you're
doing it right now, you're $80,000 will have
cost you almost $145,000.00. – That's crazy. Yeah that kinda made me
step back and kinda look at what am I doing, why would
it be at that amount? – Okay so right now, you're housing is about $1,200, which is about 30%
of your income. And that's okay, you can spend up to 35%
of your income on housing.
But that's about to change. Clint, what's your new
mortgage payment gonna be? (somber jazz music) What's your property taxes? What are your
utilities gonna be? (Clint sputtering)
(Candice chuckling) What's the condo
gonna cost to insure? (Clint clearing throat) Maintenance and condo fees, you know what your
condo fees are gonna be? – Yeah, cheap. – Okay, so you actually
haven't got a clue. You just bought the
most expensive thing you're ever gonna buy
in your whole life. And he didn't even think to
check what it would cost? What is up with you? Every month you're overspending
by $2,755 every month. And if you keep it up, in five years you'll
be $677,000 in debt. (both chuckling)
(Gail snapping) – When he's silent it's 'cause
he's actually in trouble. – So my question is, is
that where you want to go? – No.
– You're sure? – Very sure.
– Very sure. – Okay, so will you do
anything I ask you to do? – Anything. – Over the next few weeks, I'm gonna give you a
series of challenges to do.
You do the challenges
to my satisfaction, I'll give you up to $5,000 to
help put a dent in this mess. If you don't do the
challenges to my satisfaction, you don't get the money. If you have the wrong attitude,
you don't get the money. – Okay
– We're gonna get your spending in line, okay? We're gonna put your debt
repayment on the front burner. And we're actually gonna try and get your guys
working together. You don't need
credit cards anymore, you can go get them
for me right now 'cause they're going bye bye. Coming up, challenge one leaves
Clint searching for words. – Get the hell outta here. – I am serious.
(couple laughing) ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ (upbeat techno music) – Clint laughs off
his overspending. – I put the bills
underneath my pillow, wishing for the bill fairy.
(chuckling) – [Gail] But wife Candice
doesn't find it so funny. – I resent the fact that
he doesn't pick up on that we're in so much debt. – What does $80,000
worth of debt mean? How many cars is that? – One good one.
(Candice laughing) – I can see why
you have trouble.
With that debt,
they can't afford the medical assistance they
need to start a family. So the stakes are as
high as they can be. – He'll have all his stuff
but he won't have me. – [Gail] For the next month,
this couple will learn to live on a strict cash budget. No more credit cards. They'll complete
weekly challenges to tackle their money
and relationship issues and if they're
willing to change, I'll reward them with
thousands of dollars to pay down their debt. No changes, no money. You guys are
overspending by 75%. – (chuckling nervously) Oh man.
– So instead of the $4,000 a
month you have been spending, you will have only $1,000 to
spend on your variable expenses which is things like,
$100 a week for food. $100 a week for transportation. $25 a week for entertainment. Clothing and gifts? – Oh God it's
gonna be like zero. – Five dollars a week.
(Candice laughing) – Okay, oh God. – $17 dollars for other,
this includes your pet food. – Okay.
– Okay? Because your living on cash,
you have to write it down. Here's a budget binder. Make sure you track
every penny you spend. – Okay. – I feel that I'm
gonna have to step back and reevaluate things
that I feel are a need.
– It's time to hear about
your first challenge. You're actually spending
more on your transportation than on your housing. And that's because of that
silly little car go-around where you keep carrying the
debt from one car to another. So, since your car is all fire
and important to you buddy? You're gonna live in
your car for weekend. – What?
(Candice giggling) You're joking.
– I'm not. – Get the hell out of here!
– I am serious. – I love you!
(Candice giggling) – Because your car is the
most important thing to you- – Get the hell outta
here, are you serious? – I'm dead serious.
I mean, you're prepared to put your entire
financial situation at risk for the sake of a
car so, you know, you might end up having to
live in your car one day. So see what it feels like. – Yeah, that caught me
off guard completely. That wasn't even in my
spectrum whatsoever. – Part two is, you don't
know sweet diddly squat about the place you're buying. You need to know
what it's gonna cost for you two to
live in this place. So that you have a
budget that works. And you're gonna use his figures because your challenge this week is you're so hell-bent
on having a baby, you're job is to make a budget
that incorporates the fact that you wanna have a baby. So your costs are gonna go up, you have to figure all that out. Make it so, I'll
see you next week.
(upbeat funk music) (Candice knocking) – Yeah okay. To sleep in the car was
absolutely horrendous. I could not get comfortable. The thoughts I had last
night for the most part is pretty obvious, it's not
the smartest or brightest thing to spend more money on something
you spend a couple hours in than you know, keep a
roof over your head. – Hi I'm-
– With that in mind, Clint researches
the occupancy costs of their brand new condo and Candice adds up
the baby expenses. – Did you ever use formula
and what was the cost? – An average container, at
least $20, sometimes $30. – How many diapers- When I was doing
my IVF treatments, all I was thinking was of
the immediate you know, gratification of
becoming pregnant. – The day care costs are
obviously the one big thing. That's a huge thing
you have to consider, you look into beforehand. – I'm glad that she forced me to look at how much it
would cost to have a child. – Did you find out
about the condo? – Yeah, I was in
the dark for sure.
– Yeah.
– And the questions you asked me last week?
– Right. – I'd definitely
be landing them. – Okay good. And so, what was the
whole experience like, living in a car? – It gave me time to think
about what was going on and things like that-
– And what did you think when you thunk? – That I put us in, you know,
not the best of situations. – I thought for sure
that he would be like, F this, I ain't staying
in this (bleep) car. – Right, you were a good boy. – He was. – How did you find
doing the budgets? – I had to do a couple years
in order to get it to balance- (Gina laughing)
Yeah. Yeah it won't balance now. – When I did your budget I
couldn't get it to balance. – Okay. – You were several hundred
dollars over a month. You have a lot of debt and it's at a very
expensive interest rate. See all the stuff around here? These are all people
that needed money. So the first part of this week's challenge
gives you a choice.
Either, you sell $15,000
worth of your stuff to pay down the debt.
– Okay. – Or you find a way to
make an extra $700 a month. Somewhere generating that
on a consistent basis. – Between the two of us? – Between the two of
you to cover that. Part two is, to go to
a financial institution and say we need to do
a consolidation loan. And I need the lowest
possible interest rate. – Am I glad the bike's going? Hell yes!
(Candice chuckling) ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ – You're actually
spending more on your cars than you're spending
on your housing. Clint has been facing
up to the reality of his financial situation. You're gonna live in
your car for a weekend. (Candice chuckling)
– What? – I thought for sure that
he would be like, F this! I was definitely proud of Clint. He did a complete 180 from
last week to this week.
– [Gail] That means
his wife Candice can start thinking
about the future. But with all that
expensive tech, I can't balance their budget. Candice and Clint had to
either come up with $15,000 by selling things or make an extra $700
a month between them. Their decision surprised me. – Clint and I decided to go with both option that she gave us. So we decided to sell my car. I know that taking the bus, it's gonna save
me a lot of money. Also I've spoken with my mom and I've decided to go
there and do my laundry. And I'm going to& be
her new cleaning lady and I've gotten a part
time job on Saturdays. It's just admin work
for a law office. (dirt bike revving)
(upbeat rock music) I was surprised that
Clint put up his bike but it's just sitting there
costing us money a month. – I love riding, it's
a nice escape but, I'll have time
for that later on. – I have visions of him
breaking his neck so, am I glad the bike is going? Hell yes!
(Candice chuckling) And Clint has two leads
for an extra part time job.
– For the time being, to help us get out of
our rut and you know, get things moving
forward a little bit. I can sacrifice some free time. – [Gail] And Clint found a way to turn another bad boy hobby into a source of income. – Tattooing, there's some more
things I could probably do. Get some business cards made
up, I don't know, flyers. I'm not scared of work at all. (jazzy pop music) – What'd you sell? – The car, my bike and yeah,
I got some employment leads. – Good. – And I got another
part time job- – Wow!
– With my old work, just on Saturdays.
– Okay well, you know what? If that's what it takes to
get you out of this hole, bust your butt now and then
you can have the life you want. Did you get the interest
rates on your loans down? – We went to a
different credit card, it's 5.99% for the
first two years. We're gonna roll
everything into it. Line of credit, credit card,
credit medical, all that. – So like, okay,
you did all of this? You put lots of thought into it.
So why didn't you do any
of this stuff before? – We needed somebody
to kick us in the ass. (both chuckling) – So, that's it,
that's all it took? – No, that's not all it took.
– No. – It's something that we'll
have to work on every day. – So are you ready for your
relationship rescue challenge? – Sure. – All I can tell you about
that is have a good breakfast. – Are you kidding me?
– That is (bleep) nasty. ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ – [Gail] A few weeks ago,
Clint couldn't have cared less about his spending or his debt. – He sees it, he
wants it, he buys it. – [Gail] And his wife Candice had made poor
choices of her own. You went off and had a treatment
at an interest rate of 32%. But instead of making excuses,
Clint decided to man up. – I guess part of being an
adult is managing your finances. – Before I award them up to
$5,000 to pay down their debt, they have one last
challenge to complete.
(upbeat rock music) As they work through my
financial obstacle course, they'll have to stick
together for better or worse. – You made a commitment
to each other but your financial
irrepressibilities has put your future
on the ropes. Now one of you has to go
on the ropes for the other. Chose who does the
ropes challenge. Candice has stepped up. Yeah like that, keep your feet straight
like that in the middle. (Candice giggling) – The ropes were really,
really hard for me.
I wanted to stop
like a million times. I can't-
– Yes you can! – I feel like I'm gonna be sick! – You can, you're
good, you're good. – I think what kept
me going was Clint. – That's it, perfect! – In this challenge,
Candice can't work so Clint has to carry
the load all on his own. Crossing the creek caught me
off guard, it's very deceiving, you wouldn't think it
has that much power but it'll take you
out man, no problem. – [Gail] After two tough events,
it doesn't get any easier. – What the (bleep) is that? – The century egg. – Whoever sat out the ropes
course eats this challenge. – Thank God!
(Candice giggling) – [Gail] This Chinese delicacy
is made by curing an egg in a casing of mud and straw
for weeks or even months.
– The freaking thing is brown! – That is (bleep)
– Are you kidding me? – Nasty.
– Are you kidding? Should've done the ropes. Oh! (Candice gagging) (Clint coughing) I'm good, I can do it.
– Did you do it? I think it was great that
Clint ate that egg for me because if it was me, it
wouldn't have gotten done. – I think the biggest
lesson learned was, patience is important
to wait for something and not just go out and
grab it and forget about whatever consequences might be, whether there'll be enough
money for it or not. (gentle guitar music) – So that egg was
pretty gross wasn't it? – The egg was extremely gross. – But you did it. – I did it, yeah. – Proving yet again that
you're the man and you will do whatever it takes
to get the job done.
– Say it again.
(Candice giggling) – You are the man. – Thank you.
– You're welcome. What'd you learn this month? – I learned to
budget and I learned that Clint and I
can work together and when we work together
we can accomplish anything. – Candice learned a
lot, what did you learn? – Mainly being able to process
what is actually a need and what's a want. – [Gail] Not only have
they learned to prioritize but with a few simple
steps, Candice and Clint made a huge leap in
conquering their debt.
By consolidating most of
their remaining debt at 6% and paying it off in 20 months, they'll save themselves
over $56,000 in interest. When I got here, you were
overspending by $2,755 a month. You thought the kind of car
your drove was more important than just about everything else. And you couldn't work
together to save your lives. So that's all changed. How do you think you did
on a scale of one to five? – Four.
– A four? What do you think Candice? – I think a five! – You do, well you're right. – Oh thank you very-
– Hey, hey, hey! – Thank you.
(all laughing) – This made me realize that it
doesn't just work itself out you have to work hard at it and you have to
get a grip with it.
– I'm really, really happy
to see how well you did. I have for you also
a romantic getaway. – Thank you very much.
– Thank you so much! – You're very welcome. Now I'm getting my hugs.
– Thank you so much Gail. You've shown us a
brighter future. And now, he's gonna
be a perfect man! (Candice laughing) (upbeat rock music) ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ ♪ Money money money
money money money money ♪ (machinery whirring)
(logo beeping)
A reader writes in I know there's a judgment against me for a credit card debt, but there might even be more what can I do? This letter is really revealing not for what the writer says but because of what he doesn't know. It's very common for smart Americans to forget to ask some basic questions, like how much debt do I actually owe? Who do I owe it to? and What's the deadline before bad things
start to happen to me? Look I get it, figuring out your finances is way down the list of fun activities. I've been a financial counsellor and author for more than two decades and even though this stuff fascinates me, I know other people
look at budgeting like they look at flossing their teeth it's important but
it's really boring. Here's the thing no one will help you floss your teeth but there's professionals who can help you with your finances. It is important
to get a debt analysis so you can learn what you need to do and it's even easier
than flossing because all you do is call Debt.com
