Investing

In addition to the 54% of survey respondents who say they’ve cut back putting money toward their nest egg, 43% have dipped into their retirement savings due to high inflation.
If you’re in this group, it’s worth making a plan for when you’ll get back on track.
For anyone who has taken money from their nest egg early, be sure you know whether there will be tax implications due to the withdrawal.

Brandon Bell | Getty Images

‘Make a plan’ to replenish your retirement account

If rapidly rising prices have interfered with your ability to save for retirement, it’s important to try to get back on track with savings as soon as you can, experts say.

“Make a plan now about how and when you’ll do it,” said certified financial planner David Mendels, director of planning at Creative Financial Concepts in New York. “Maybe you know you’re getting a raise and you know when it’s coming, and so you say that money will go into your retirement account.”
The danger, he said, is that without a plan, “it’s way too easy to keep on sliding.”

Look for ways to reduce your spending

While smaller (or no) retirement contributions right now may help your cash flow for current expenses, “it’s critical that you think of this as a temporary stopgap,” Mendels said. “You’ll have to figure out how to reduce your spending to [increase] your retirement savings.”
If you examine how you spend your money, you may discover that there are expenses you could cut back on. 

“Don’t view it as black-and-white,” Mendels said. “Maybe you stop going out to dinner twice a week and only go once a month, or maybe you take a less expensive vacation.
“Wherever you can make costs a little lower, little by little they add up,” he said.

Dipping into retirement savings may mean a penalty

Also be aware that if you dip into your retirement savings early, there may be tax implications.
Depending on the type of retirement account and the circumstances, withdrawals made before age 59½ could come with a 10% tax penalty. For traditional 401(k)s and IRAs, if you don’t meet a qualifying exception, you’d pay that penalty on top of any taxes owed on the amount of your withdrawal.
If it’s a Roth account — whose contributions are made after-tax — you can take out any money you’ve contributed without taxation or penalty. However, withdrawing earnings could come with the penalty, depending on the specifics.
Next year, retirement savers can contribute up to $22,500 in 401(k)s, with people age 50 or older allowed an additional $7,500 in so-called catchup contributions. For IRAs, the contribution limit in 2023 is $6,500 and the catchup amount is $1,000.

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The IRS said it has hired 4,000 new customer service workers as the agency prepares for the 2023 tax filing season.
The agency plans to hire 1,000 more before the end of the year, with most training being complete by Presidents Day 2023.

Charles Rettig, IRS Commissioner, testifies during the Senate Finance Committee hearing in Washington, D.C., June 8, 2021.
Tom Williams | Pool | Reuters

The IRS said it has passed a milestone of hiring 4,000 new customer service workers as the agency prepares for the 2023 tax filing season.
Hired over the past several months, these workers have been trained to assist taxpayers, including phone support, which has struggled with high call volumes during the pandemic.

“The IRS is fully committed to providing the best service possible, and we are moving quickly to use new funding to help taxpayers during the busy tax season,” said IRS Commissioner Chuck Rettig.
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“As the newly hired employees are trained and move online in 2023, we will have more assistors on the phone than any time in recent history,” Rettig said.
The IRS plans to hire another 1,000 customer service workers by the end of the year. Almost all training will be complete by Presidents Day 2023, when the highest call volumes typically occur, according to the agency.
However, phone wait times remain high in the meantime, and the IRS encourages taxpayers to visit IRS.gov for answers to questions. “IRS employees look forward to providing better service in the near future,” Rettig added.

Enacted in August, the Inflation Reduction Act allocated nearly $80 billion to the agency over the next 10 years, with funds earmarked for enforcement, operations, taxpayer services, technology, development of a direct free e-file system and more.
As of October 14, 2022, the agency had 5.1 million unprocessed individual tax returns received in 2022, including late-filed returns from previous years, according to the IRS.
Rettig in March told the House Ways and Means Committee that he expects the backlog will “absolutely” resolve before December.

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U.S. gross domestic product grew by 2.6% on an annualized basis in the third quarter, the Bureau of Economic Analysis estimated Thursday.
That growth follows a shrinking economy in the first half of the year.
But consumers shouldn’t be lulled into a false sense of security, according to economists and financial advisors.

Dimitri Otis | Stone | Getty Images

The U.S. economy grew in the third quarter, reversing a negative trend from the first half of the year — but weakness looms under the surface and households shouldn’t be lulled into a false sense of financial security, economists and financial advisors said.
“I think investors should still continue to be cautious … and plan for more disruption,” said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California, and a member of CNBC’s Advisor Council.

Gross domestic product — a sum of all the goods and services produced in the U.S. — grew by 0.6% from July through September, the Bureau of Economic Analysis estimated Thursday. That figure amounts to 2.6% growth on an annualized basis.
“For the U.S. economy, a developed economy, that’s very respectable, slightly above average,” said John Leer, chief economist at Morning Consult, a data research company.

Why it may be ‘a chilly winter’

That GDP expansion marks a rebound from a deceleration in both Q1 and Q2. Two consecutive quarters of negative growth meets the common definition of a recession — though the National Bureau of Economic Research, generally considered the arbiter of downturns, hasn’t officially declared one.
Nonetheless, many economists don’t expect the recent growth to persist.
The headline growth in Q3 was driven by non-domestic factors, like an increase in exports overseas, Leer said. But the U.S. can’t depend on strong global demand to continue, due partly to a strong dollar, which makes U.S. products more costly to buy, as well as economic challenges in Europe, an ongoing slowdown in China, and high food and energy prices globally, Leer added.

I think investors should still continue to be cautious … and plan for more disruption.

Winnie Sun
co-founder and managing director of Sun Group Wealth Partners

He also pointed to a slowdown in residential and non-residential fixed investment, which includes things like homebuilding and construction of commercial buildings and warehouses.
And consumer spending, which accounts for two-thirds of the U.S. economy, “slowed to its weakest pace since the first quarter when spending first hit a wall in response to soaring inflation,” Diane Swonk, chief economist at KPMG, wrote in a tweet.
“Bottom Line: This may be the strongest and only positive print on GDP growth we see for a while,” Swonk wrote. “Bundle up for what looks to be a chilly winter.”
And there are concerns beyond some underlying weakness in the federal data, economists said.
Consumer prices this year have risen at about the fastest pace in four decades, pressuring household finances. The Federal Reserve has also been raising borrowing costs aggressively to reduce inflation. Higher interest rates have already pushed mortgage demand to the lowest level since 1997.  
“Export growth will soon fade and domestic demand is getting crushed under the weight of higher interest rates,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a research note. “We expect the economy to enter a mild recession in the first half of next year.”

What consumers can do to prepare for a recession

Banksphotos | E+ | Getty Images

What this boils down to: Don’t be lulled into a false sense of security, financial advisors cautioned.
While a downturn isn’t inevitable, households can take financial steps to prepare in case one comes and triggers layoffs and more market volatility along the way.
“Think of a reasonable worst-case scenario — how would you fund it?” said Allan Roth, a certified financial planner and certified public accountant based in Colorado Springs, Colorado.
1. Shore up your cash reserves
Households should always ensure they have access to cash in case things go wrong, whether job loss, home repairs or unexpected medical bills, for example. But with recession might come greater likelihood of needing to draw from that financial buffer.
The general rule of thumb is to have three to six months’ worth of expenses handy. Sun advises clients to have six months, plus an extra three months for each child in a household.
Consumers should consider adjusting their emergency-fund needs based on overall stability, Roth said. For example, someone working at a start-up company generally has a less dependable job income stream than a tenured university professor and may therefore need more cash access, he said.
“Cash” also has a broader definition than parking money in a traditional bank account with paltry returns, advisors said. Consumers can look to high-yield online savings accounts or money market funds, for example, advisors said, which currently pay a higher return.
2. Reduce your debt burden
Paying down credit-card debt and other high-interest loans — and making sure households aren’t racking up more — is also of primary importance, experts said.
Something that lends further urgency to this advice: Variable rates are likely to increase more due to the Federal Reserve’s anticipated interest-rate hikes.
“There’s a potential for some folks to lose their jobs, and you’d hate to see in two or three months people don’t have any savings, have gone into debt, and it triggers a wave of personal bankruptcies or other forms of financial hardship,” Leer said.
Clients are showing more financial anxiety these days than they have in many years — but paradoxically, many households spend more to feel better, and that may be happening on credit cards, said Sun. Credit-card balances jumped 13% in Q2 — the largest year-over-year increase in more than 20 years, according to a recent report from the Federal Reserve Bank of New York.
Sun advises focusing on paying down debt with interest near or above the inflation rate, which is currently about 8% on an annual basis. The only potential deviation would be to first save money in a 401(k) plan up to the company match, if that’s available, she added.
Households might also try to reduce their debt burden by downsizing to one car instead of two to cut monthly auto payments, for example, Sun said.
Borrowers with a fixed-rate home or other loan at 3.5% are in a good position and don’t necessarily need to accelerate their debt payments, Leer said.
3. Stay the course on investments
Investors should also stick to their investment strategy — and not panic in the face of big stock and bond losses, Roth said.
Pulling money out and ditching a well-laid investment plan locks in losses, which right now exist only on paper. The S&P 500 stock index is down 20% in 2022; meanwhile, U.S. bonds, typically a ballast when stocks tank, are down about 16% in the past year.
“We’re like heat seeking missiles,” Roth said. “We buy high and sell low.”

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Premiums in marketplace health insurance plans are rising on average, although there can be great variation among states.
The “family glitch” is generally fixed, meaning families that didn’t qualify for a marketplace plan due to “affordable” coverage at work may now be able to sign up and get subsidies.
About 13 million of the 14.5 million people with marketplace coverage receive subsidies to cut the cost of their premiums.

Fly View Productions | E+ | Getty Images

For individuals or families that get — or could get — health insurance through the public marketplace, the opportunity to choose coverage for 2023 is nearing.
Open enrollment, when you can pick a health plan for next year, runs Nov. 1 through Jan. 15 for the federal marketplace at HealthCare.gov and most state exchanges. Generally speaking, people who get coverage this way are self-employed or can’t get workplace insurance, or they don’t qualify for Medicaid or Medicare.

Nearly 13 million of the 14.5 million people enrolled in private health insurance through the public marketplace — which was authorized by the Affordable Care Act of 2010 — receive subsidies (technically tax credits) that lower what they pay for premiums. Some people also may qualify for help with cost-sharing such as deductibles and copays on certain plans, depending on their income.
Here’s what they need to know for 2023.
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Premiums are rising by 4% to 5% on average

Be aware that premiums are rising nationally next year by about 4% to 5% on average, said Cynthia Cox, director for the Kaiser Family Foundation’s Affordable Care Act program.
However, she said, there is a lot of variation among states. For example, in Virginia, premiums are dropping by an average of 18% and in New Mexico they’re rising by 14%, Cox said.

“Most fall between a 1% and 7% increase,” she said.

If you have marketplace coverage and are facing a large premium increase, you can always check to see if there’s a more affordable option available, Cox said.

More generous subsidies are still in effect

However, more generous financial help remains in place.
That is, temporarily expanded subsidies that were put in place for 2021 and 2022 were extended through 2025 in the Inflation Reduction Act, which became law in August.
This means there is no income cap to qualify for subsidies, and the amount anyone pays for premiums is limited to 8.5% of their income as calculated by the exchange. Before the changes, the aid was generally only available to households with income from 100% to 400% of the federal poverty level.
The marketplace subsidies that you’re eligible for are based on factors that include income, age and the second-lowest-cost “silver” plan in your geographic area (which may or may not be the plan you enroll in).

Be sure to give a good estimate of 2023 income

Because the amount of your subsidies is based at least partly on your income, you’ll need to estimate it for 2023 in the signup process.
Giving a good estimate matters. If you end up having annual income that’s higher than what you reported when you enrolled, it could mean you’re not entitled to as much aid as you’re receiving. And any overage would need to be accounted for at tax time in 2024 — which would reduce your refund or increase the amount of tax you owe.
“You don’t want a nasty surprise when you do your taxes the next year,” Cox said.
Likewise, if you are entitled to more than you received, the difference would either increase your refund or lower the amount of tax you owe.
Either way, at any point during the year, you can adjust your income estimate or note any pertinent life changes (birth of a child, marriage, etc.) that could affect the amount of subsidies you’re entitled to.

The ‘family glitch’ is generally fixed, starting in 2023

Workers who don’t get employer-sponsored health insurance that’s considered “affordable” — no more than 9.61% of income this year — are permitted to sign up for a plan through the marketplace. However, the measurement of affordability is based on the cost of employee-only coverage.
That’s the case even if a worker wants their dependents covered too — meaning the actual cost of family coverage could far exceed that threshold.
As of 2023, here’s how it will work: If the workplace coverage for a family would be unaffordable, the employee would need to stay on the employer plan, while the spouse and kids would be covered by the marketplace — and eligible for subsidies, Cox said.
“That means families would be split between two or more health plans, which would mean having multiple premiums and deductibles,” she said. “Not all the people in the family glitch will actually be better off moving onto subsidized coverage.”

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How college became so expensive, and its consequences on families and U.S. society, are the issues explored in Will Bunch’s new book, After the Ivory Tower Falls.
“The impact of this decision to privatize higher education, which was done with shockingly little public debate, has been enormous,” Bunch said.

Arrows pointing outwards

The average cost to attend a private college in 1970 was about $3,000 a year. Today, it costs more than $50,000.
How we got to this point, and its seemingly endless consequences on families and U.S. society, are the issues explored in Will Bunch’s new book, “After the Ivory Tower Falls: How College Broke the American Dream and Blew Up Our Politics―and How to Fix It.”

Bunch is a Pulitzer Prize-winning journalist and the national opinion columnist for The Philadelphia Inquirer.
Our discussion below has been edited and condensed for clarity.

‘We’ve chosen to privatize higher education rather than make it a public good’

Annie Nova: What do you see as the top reasons college in the U.S. has become so expensive?
Will Bunch: Some of these administrators do get debatably big salaries. Also, many schools believe the best way to compete for new students is not through price but prestige, offering luxury perks — think: lazy rivers or rock-climbing walls. But the big-picture answer is that we’ve chosen to privatize higher education rather than make it a public good. Taxpayer support for public universities has plummeted in most states. In my own state, Pennsylvania, it’s dropped from 75% of the cost to just 25%. Students and their families are asked to make up the substantial difference.
AN: What have the consequences of these high prices been?

WB: The impact of this decision to privatize higher education, which was done with shockingly little public debate, has been enormous. The most obvious impact has been the $1.75 trillion mountain of U.S. student debt, which is more than Americans owe on all of our credit cards, and which will only be alleviated somewhat by President Biden’s recent move on debt cancellation. Young people with these debts hanging over them have deferred buying or renting a home, getting a car, even getting married. Yet the even bigger impacts are political and social. Lack of college access and affordability has caused enormous resentments and grievances, among both those locked out with no degree and those who borrowed so heavily to get one.
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‘Many young people are voting with their feet by shunning a college education’

AN: Where do you see college prices going? Will they only get worse?
WB: In the 2020s, many young people are voting with their feet by shunning a college education because of a perception that it may no longer be worth it. Enrollment has dropped noticeably, even as the pandemic wanes. As a result, more and more schools — especially those in the middle of the pyramid — are looking at ways to lower tuition or offer more aid. That said, I don’t believe the price of college will fall dramatically without states lowering tuition at public universities, and without a renewed push for free community college.

Student loan borrowers stage a rally in front of The White House to celebrate President Biden cancelling student debt and to begin the fight to cancel any remaining debt on August 25, 2022 in Washington, DC.
Paul Morigi | Getty Images Entertainment | Getty Images

AN: How feasible are those changes at this point?
WB: Making public 4-year universities free or next to free would be expensive and require new funding sources. Sen. Bernie Sanders, [I-Vt.], once proposed a tax on Wall Street transactions, while Sen. Elizabeth Warren, [D-Mass.], has backed a wealth tax. Just a few additional progressive-minded members of Congress would be required.
AN: What role has the government’s student loans played in the rising costs of college?
WB: The government — both federal and state — has played a huge role that isn’t talked about. Ronald Reagan, who was elected governor of California in 1966 by running against student protest, was the avatar of the movement to privatize college. As president, his administration lowered Pell Grants and created a system where Congress pushed more college costs into loans for both students and parents, removing limits on borrowing that factored into the upward spiral of costs. The Parent Plus program, for example, has few restrictions on credit or on how much can be borrowed, and participants eager to send their child to their dream college sometimes end up with hundreds of thousands of dollars in debt.

‘Education is the secret sauce of [political] division’

AN: If it survives the court challenges, how could Biden’s new student loan forgiveness plan impact the cost of college, if at all?
WB: This seems the biggest flaw in the Biden plan, that it included nothing in the way to lower college costs going forward. That means the freshmen entering college in the fall of 2022 are presumably borrowing money at levels similar to those that created the need for this massive debt cancellation in the first place.

AN: In what ways do you blame college for making America as divided as it is today?
WB: College became the American Dream for young people after World War II — when millions saw a lost-cost diploma as a path to a better life. The privatization of college and the enshrinement of the idea that college was not a wide pathway for the middle class has created a society seething with resentments. Today, the Democrats are becoming the party of college-educated folks clustered in cities and suburbs, while the GOP plays to the grievances of the white working class. These groups have less in common, little social contact, diametrically opposed political beliefs — and increasingly hate each other. Education is the secret sauce of this division.
AN: Beside bringing costs down, how else do we mend some of this?
WB: In the book, I devote the final chapter to the idea of a universal, government-supported gap year of mostly civilian national service for 18-year-olds between high school and what comes next. This would achieve several things: It would help today’s young people, who are clearly struggling, better decide their future path. These projects — such as conservation work like preventing the next wildfire, or working in disadvantaged schools or communities — would benefit America. But these young people would also get the benefit of a common, shared sense of national purpose with kids from different backgrounds, red states and blue states. We used to achieve this, unintentionally, through wars and the military draft. This is a way to bring Americans together, without bloodshed.

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Due to high inflation, the typical American household spent $445 more in September to buy the same goods and services as they did a year ago, according to Moody’s Analytics.
That same month, 63% of consumers were living paycheck to paycheck in September, up from 57% a year ago, according to LendingClub and PYMNTS.com.
“The more consumers shop judiciously, the more difficult it will be for businesses to raise their prices aggressively,” said Mark Zandi, chief economist at Moody’s Analytics.

Soaring prices are making it hard for many Americans to afford expenses each month. Costs are rising for nearly every major expense from housing and food to medical care. Employee wages aren’t keeping up. Having the money that’s coming in each month going out just as fast is becoming increasingly common. 
Due to high inflation, the typical American household spent $445 more in September to buy the same goods and services as they did a year ago, according to an estimate from Moody’s Analytics.

A little less than two-thirds, 63%, of consumers were living paycheck to paycheck in September, up from 57% a year ago, according to a new survey from LendingClub and PYMNTS.com. In the last year, wages have increased by 4.9%, as inflation jumped by over 8.2%, according to the same report. 
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Many people are having to face tough choices to keep from busting their budgets. Yet, “the more consumers shop judiciously, the more difficult it will be for businesses to raise their prices aggressively,” said Mark Zandi, chief economist at Moody’s Analytics.
Here are some strategies that could help stretch your paycheck.  

Be strategic when spending

To navigate higher inflation, you need to be a savvy consumer. Start by tracking your spending and try to spend less or less often.

Always have a shopping list. When it comes to essentials like food, you may have already cut out dining out. But eating in is also more costly than a year ago. When shopping for food or other essential items, always have a list. This causes you to have to plan what you’ll buy before you spend. 

Delay purchases a day or two. Take time to look for the best deals and promotions, and gather coupons before you buy. Also, waiting a couple of days may cause you to realize that item you wanted wasn’t an essential purchase.

A person shops in a supermarket as inflation affected consumer prices in New York City, June 10, 2022.
Andrew Kelly | Reuters

Cancel a monthly subscription. After you set up a monthly subscription — for cable TV or streaming services, publications, gym memberships, or weight loss programs — you probably don’t think about it, but that money keeps coming out of your bank account or gets charged to your credit card. Make it stop! Take a close look at all of your subscriptions, then cut out what you don’t really need.

Lower your housing expenses

Housing is likely your biggest monthly expense, and you might be shelling out more than is ideal. Many financial experts recommend spending no more than 30% on rent, while lenders like to see you spend 28% or less of your gross monthly income on housing expenses in order to get a mortgage.
After almost two years of record-low mortgage rates, the lending landscape has changed dramatically. The average rate on a 30-year fixed-rate mortgage jumped from an average 4.14% in March to 6.92% in October, according to Bankrate. So refinancing may not be a viable option now.

Reduce electricity use. Shop around to see if there are utility providers that offer lower rates. Also little changes can add up to big savings. Use energy-efficient lightbulbs. Don’t run the dishwasher without a full load. Don’t leave the computer running. Turn down the thermostat and/or install a programmable thermostat. 

For homeowners: 

Rent out a room in your house. Check state laws and with the local housing authority to understand any restrictions and obligations. Homeowners associations can also have rules limiting rentals, so understand those policies, too. Contact your homeowners insurance to make sure you can rent and what is covered.   

Try to get rid of private mortgage insurance. If you put less than 20% when you bought your house, PMI is required. Once you have 20% equity, it can be removed. If home values have risen in your area, you may have enough equity to reach that 20% threshold. If so, ask your lender to cancel your PMI. They must comply if you are in good standing and haven’t missed any mortgage payments.

For renters: 

Consider getting a roommate.

Negotiate for a lower rent. If you don’t ask, you won’t get it. Talk to your landlord. Be honest about your financial situation and suggest a monthly payment you can afford. Offer to do repairs yourself for a break in the rent. Extend your lease at the current rate now, if rents in your area are expected to continue to rise. 

The more consumers shop judiciously, the more difficult it will be for businesses to raise their prices aggressively.

Mark Zandi
chief economist at Moody’s Analytics

Reduce credit card debt

Interest rates are at record highs and climbing. The average annual percentage rate (APR) for someone who carries a balance on a credit card is 18.43%, according to LendingTree. Rates offered on new cards is even higher, at 22.21%, the highest since LendingTree began tracking in 2019.

Switch to 0% balance transfer cards: Interest-free periods as long as 21 months are still available, while most offers last 12 to 15 months. Just be careful about fees, which can range from 3-5% of the amount of money being transferred. “If you have good enough credit to get one, it’s the best weapon against credit card debt,” said Matt Schulz, chief credit analyst at Lending Tree.

Ask your credit card issuer for lower rate: About 70% of people said they asked for a lower interest rate on their credit card got it, according to an April 2022 survey by Lending Tree. The average reduction was 7 percentage points.

Consider debt consolidation: Making one monthly payment at a lower interest rate can help you pay off your debt faster. Talk to a credit counselor from a non-profit agency for free about helping you come up with a debt consolidation or debt management plan. Find a counselor through the National Foundation for Credit Counseling at NFCC.org.

Leverage the upside of higher interest rates

If you have any extra money left over after paying for your essential household expenses, make sure to pay yourself. You can make that money work for you with a high interest savings account. The average rate on top-earning online savings accounts is 2.34%, according to DepositAccounts.com, and some of rates are as much as 3%. So if you have any extra cash, stash it away.
Are you looking for advice on how to save, spend and manage your money? Join us at #CNBCYourMoney where our guests will guide you on what you need to know in order to manage your finances in this economy. Registration is free, sign up today!

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The Fed’s moves to fight inflation have made borrowing costlier for consumers.
Here’s a breakdown of how increases in the benchmark interest rate impacted the rates consumers pay on the most common types of debt.

From credit cards to mortgages, it’s suddenly a lot more expensive to borrow money.
The Federal Reserve has raised its benchmark short-term rate 3 percentage points since March in an effort to curb unrelenting inflation, with another rate hike likely on the way next week.

“Borrowers are feeling the squeeze from both sides as inflation has stretched household budgets while borrowing costs for homebuyers, car buyers and credit card borrowers have increased at the fastest pace in decades,” said Greg McBride, chief financial analyst at Bankrate.com.
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It’s the combination of higher rates and inflation that have hit consumers particularly hard, he said.
The consumer price index, which measures the average change in prices for consumer goods and services, was up 8.2% year over year in the latest reading, still hovering near the highest levels since the early 1980s.
And “with more rate hikes still to come, it will be a further strain on the budgets of households with variable rate debt, such as home equity lines of credit and credit cards,” McBride said.

In fact, the Fed’s moves have already made borrowing substantially costlier for consumers across the board. Here’s how increases in the benchmark interest rate have impacted the rates consumers pay on the most common types of debt, according to recent figures from Bankrate.

Credit cards: Up 234 basis points

October average: 18.68%
March average: 16.34%

Credit card rates are now over 18% and will likely hit 20% by the beginning of next year, while balances are higher and nearly half of credit cardholders now carry credit card debt from month to month, according to a Bankrate report.
With the rate hikes so far, those credit card users will wind up paying around $20.9 billion more in 2022 than they would have otherwise, according to a separate analysis by WalletHub.

HELOCs: Up 334 basis points

October average: 7.30%
March average: 3.96%

Home equity lines of credit are also on the rise since, like credit cards, they are directly influenced by the Fed’s benchmark.
On a $50,000 home equity line, the interest, alone, costs another $125 a month relative to the beginning of the year. “Just like credit cards, that takes a bite,” McBride said.  

Mortgages: Up 278 basis points

October average: 6.92%
March average: 4.14%

Last month, the average interest rate on the 30-year fixed-rate mortgage surpassed 6% for the first time since the Great Recession and is now more than double what it was one year ago. 
As a result, homebuyers are going to pay roughly $30,600 more in interest if they take out a mortgage, assuming a 30-year fixed-rate on an average home loan of $409,100, according to WalletHub’s analysis.

Auto loans: Up 162 basis points

October average: 5.60%
March average: 3.98%

Paying an annual percentage rate of 6% instead of 3% could cost consumers nearly $4,000 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.
However, in this case, “rising rates are not the reason the average car payment is over $800 a month,” McBride said. “It’s the sticker price that is a lot higher.”

Personal loans: Up 90 basis points

October average: 11.20%
March average: 10.30%

Even personal loan rates are higher as the number of people with this type of debt hit a new high in the second quarter, according to TransUnion’s latest credit industry insights report.
“Those with good credit are still able to get rates in the single digits,” McBride said. But anyone with weaker credit will now see “notably higher rates.”

How to shield yourself against higher prices, rates

Amid fears of a recession and more rate hikes to come, consumers should “cut back on discretionary spending” where they can, advised Tomas Philipson, economist at University of Chicago and former White House Council of Economic Advisors Chair.
“You are going to need your money for necessities, meaning food, gas and shelter.”  

“If consumers haven’t already evaluated their budget after feeling the impact of inflation, they should be starting it now,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion. 
Cutting costs will also help avoid additional credit card debt and pave the way to increased savings, the experts said.
“Have an emergency fund at the ready,” Raneri cautioned. “Three to six months of expenses ideally, but even a few hundred extra dollars can prove valuable if unforeseen circumstances arise.”
“You need to be careful here,” Philipson added. Without sufficient cash reserves, “you are vulnerable.”
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While today’s financial uncertainties loom large, getting wealthy and staying that way is well within individual investors’ reach, say experts on CNBC’s Financial Advisor 100 list.
These tips can help you grow your net worth over time.

Pavlo Sukharchuk | Istock | Getty Images

When it comes to financial uncertainties, the list of current possibilities may seem endless.
From high inflation to a possible looming recession and geopolitical turmoil, there are plenty of curve balls that may shift the U.S. economy and financial markets.

But for individual investors who employ some tried-and-true money strategies, getting wealthy and staying that way is well within their reach, according to financial experts who landed on CNBC’s Financial Advisor 100 list for 2022.
“The biggest takeaway is just discipline,” said Kaleialoha “Kalei” Cadinha-Pua’a, president and CEO of Cadinha & Co., a Honolulu, Hawaii-based registered investment advisor that ranked No. 16 on this year’s FA 100 list.

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“You see subtle changes that people can make in either retaining or accumulating wealth, and it’s changing just a little discipline,” she said.
Over time, living a humble lifestyle can help build sizable assets, in what Mike Conner, a chartered financial analyst and managing partner at Berwyn, Pennsylvania-based Kistler-Tiffany Advisors (No. 14 on the FA 100 list) calls the “neighbor next door philosophy.” That diligence, combined with taking risks by being entrepreneurial, has the power to catapult people to high levels of wealth.
“You go in a nondescript house and they’re worth $15 million and you would never know,” Conner said.

‘Sooner is better’ with investing

When it comes to investing, the best way to set yourself up to achieve your goals is to start as soon as possible.
That’s due to the power of compounding, where the earnings on the money you invest are reinvested and generate additional earnings.
“It’s super critical to start early,” said Kenneth Ligon, vice president and portfolio manager at Professional Advisory Services, a Vero Beach, Florida, investment management company that is No. 15 on the 2022 FA 100 list.

Take two investors, one who starts investing in their early 20s and the other who doesn’t start until 30, Ligon said. Even if the first investor stops investing when they reach 30, they will still stay ahead of the other investor who starts later, due to the power of compounding with an estimated 7% to 8% annual return.
That said, even getting started in your 30s isn’t bad. “Just, sooner is better,” Ligon said.
Importantly, the power of compounding also applies to debt, Cadinha-Pua’a noted.
That’s especially important to pay attention to now, as Federal Reserve rate hikes will make the interest on those debt balances more expensive than it has been in years, she said.

Live within your means

If you’re over levered with debt, that will take a huge bite out of your savings, Cadinha-Pua’a said.
The best way to avoid that is to live within your means. Some “super savers” pride themselves on socking as much as they can toward retirement, regardless of the size of their incomes, a recent study from Principal found. To get there, they often forego pricey purchases. The survey found 49% drive an older car, 40% don’t travel as much as they would like and 39% own a modest home.
“It’s such a simple concept to say; it’s such a difficult concept to execute,” she said. “It requires discipline.”
Chances are, savings can be found by trimming back on one lifestyle category everyone spends money on: food.

Guests enjoy outdoor dining in the Manhattan borough of New York City, U.S., May 23, 2021.
Caitlin Ochs | Reuters

Admittedly, higher food costs at grocery stores and restaurants are unavoidable now, due to historic high inflation.
But paring back that spending can be done by thinking ahead and planning meals ahead of time, and opting to cook at home instead of regularly dining out and ordering takeout.
“I haven’t come across anyone yet who couldn’t pinch a little bit on the spending on that side,” Cadinha-Pua’a said.
Delaying gratification can be the hardest part of building wealth, Conner said. “For must of us, it’s a really long path,” he said.

Be willing to fail — and keep going

Because building wealth is a long game, there are sure to be stumbling blocks along the way.
The key is to realize mistakes are going to happen and all you can do is review what you could have done differently and use that to plan for the future, Conner said.
“It’s very, very unlikely that you’re going to have an immense amount of upside with no downside,” Conner said.
To that end, it’s also important to take selective risks, he said.
When it comes to cryptocurrencies, investors should play it safe and only invest an amount of money they’re willing to lose, Conner said.
But when it comes to stocks, investors may generally benefit from a diversified portfolio. The right allocation will depend on factors including your timeline and risk tolerance, but Conner said people may benefit from keeping at least 50% in stocks. That’s because the market has generally trended higher over time, and big market drops tend to precede large gains.
“Sometimes you have to take some risk to make meaningful sums of money,” Conner said. More