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The European Central Bank (ECB) announced Wednesday that it will have to issue its first rate hike in 11 years. The rate hike comes after the US recently made similar moves. The world is reacting to our slowing economy and Americans should too.

While the White House is quick to point out that the global economy is slowing, they ignore their role in it. Shuttering energy production, shoving massive amounts of money into the economy, and failing to deal with a supply chain crisis that is more than a year long has created an economic environment that fosters massive inflation.

The Biden administration isn’t going to fix anything any time soon, so Americans need to prepare their finances for a serious downturn, but how to do that?

Shed Debt, Now

Pay off anything and everything that has a variable interest rate as fast as you can. Credit cards, variable mortgages, etc. Those things are about to get REALLY expensive as the central banks around the world massively hike interest rates in hopes of taming crippling inflation. If you don’t, the minimum payments will suck every dollar of cash you need for living expenses right out of your pocket.

Cut Spending

Unless you are investing in appreciating assets (real estate, iBonds, etc) and have time to wait for those things to show a profit, cut your spending to the bone. You will need that cash later as food, electricity, gasoline and other necessities will continue to get a lot more expensive.

Add New Revenue Sources

This is the time to find a second job or create a new revenue stream as long as it doesn’t require a major investment on your part. Once the slowdown hits, those extra jobs and investment opportunities will dry up.

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