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Coping with rising costs of living are a constant financial challenge, and right now we’re all acutely feeling its bite. In this article we discuss three strategies to help you adapt and hopefully get ahead of the demands upon your finances.


Restructure Your Debt


Cut costs by reshaping your debt. Rising cost of living can mess with your lifestyle, especially if you're drowning in credit card, personal finance, car, or other loan debt.


Some signs that your debt burden is getting ahead of you are:


  • Making only minimum payments

    Only making the minimum payment on your loans and not paying down the principal debt on your credit card each month, and;

  • Losing track of your payment due dates

    Losing track of your repayments and when they’re due and so incurring late payment penalties and damaging your credit rating.


Make a solid game plan for managing payments, trimming interest and freeing up funds to allow you to take control of your finances.


Switch credit card debt to a loan instrument that offers a lower interest rate. This could be with another credit card or through a personal financing loan.


Consolidate multiple debts under one loan for potentially lower interest rates and repayment schedule.

Review Your Mortgage Financing

Climbing interest rates can affect your mortgage repayments and it’s vital that you understand what happens to your mortgage payments when these rates go up:


In a nutshell:


  • If you've got a fixed rate mortgage then you interest rate is locked in, so you're in the clear until it's time to renew.

  • If you have a variable rate mortgage, then chances are you are going to be paying more as interest rates rise. To mitigate this, you could consider converting your mortgage to one with a fixed rate. While most lenders will allow this, make sure you fully understand any charges you may incur as these can impact the viability of making the switch.

Re-evaluate Your Investment Strategy

If your investment portfolio is composed of a balanced mix of stocks and bonds, then your investments have a good shot at outpacing inflation and keeping you on track to achieving your financial goals.


Stocks have the potential to deliver bigger returns and can be growth drivers in your portfolio but they also carry greater risk. Always do your own comprehensive research when selecting stocks in which you’ll invest.


Meanwhile, bonds can be steady earners in your portfolio offering stability when the stock market is volatile.


Don’t hold too much of your investment portfolio in cash as this might not keep pace with inflation and lose purchasing power.


With these tactics you’ll be better armed to weather the storm of escalating expenses and keep your financial ship steady, but as always, before making financial decisions please do your own thorough research, and seek the guidance of trusted mentors and of a qualified financial advisor.




ALSO READ: How Financially Secured Will You Be at the Age of 50?

This article is for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.