With economic data indicating that the American consumer is spending more but saving less, money expert Dave Ramsey shared his top tips on Thursday for navigating an “uneven” and “tight” economy.
“Slow down a bit, calm down. Be wise here, and no, don’t increase your credit card debt, which is the highest right now in almost 20 years,” Ramsey told the host Neil Cavuto.
The Ramsey Solutions founder pointed out that consumer spending on the biggest shopping days of the year – Black Friday and Cyber Monday – jumped 11% year-over-year, and air travel levels are beginning to approach pre-pandemic levels. However, Ramsey raised concerns that more Americans are also drawing savings from their 401(k)s amid rising spending and headline inflation.
“[Consumers] went out and got kind of a spendthrift mood for Christmas and spends like crazy; then, on the other hand, we’re tapping into 401(k) for hardship withdrawals,” Ramsey explained. say, ‘My God, it’s tight over there, the gas pump is real. This grocery store thing is real, inflation is real.'”
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More than half of working American adults feel they are behind on their retirement savings, underscoring the difficulties of the bloated economy, according to a recent Bankrate report.
Bankrate data showed that while 34% of workers are contributing the same amount to their retirement savings, only a quarter of workers have been able to increase their contributions compared to last year.
Meanwhile, 16% are contributing less than last year because inflation continues to squeeze workers’ budgets and exceed wage gains. Additionally, 24% of workers have not contributed to retirement savings in the past two years, according to the report.
As Americans struggle to contribute to their savings, Ramsey advised consumers not to rely on credit cards to cushion the blow of inflation.
“We’ve seen decades since we’ve been in this bad position. And people are going to solve inflationary problems, pressures, with the wrong tool,” Ramsey previously told ‘Cavuto: Coast to Coast’. “And the credit card is not the right tool. It’s going to cause them problems later. She’s coming home. It’s really sad.”
Ramsey also noted that Big Tech’s massive industry-wide layoffs are “not a good sign” for the economy, signaling the likelihood of a recession.
“These people aren’t going to be there buying plane tickets. They’re going to be home because they’ve been laid off,” Ramsey said.
The financial expert expanded on today’s ‘uneven’ economy, noting that some sectors are enjoying ‘thriving’ growth, while others are ‘hammered’ by inflation and rising rates of interest.
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“And it’s not just a certain pocket demographically, but it just seems to be thinly sliced, a little nuanced, if you will,” Ramsey said. “So you can’t just throw a blanket over all of this and say, ‘Oh, it’s all bad’ or ‘They’re all spending like crazy, so we’re not going to have a problem. “”
And when it comes to Ramsey’s top inflation survival tips, the expert recommends budgeting for the next 10 years; maintain your 401(k) contributions and retirement savings; curbing credit card borrowing; and stop luxury purchases or frivolous spending.
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Daniella Genovese and Ken Martin of FOX Business contributed to this report.
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