Even as the largest city in Oregon, the many neighborhoods of Portland help keep that small-town feel. You can hike world-class trails in the morning and spend the afternoon having lunch with your family at an award-winning restaurant. I became the manager of OnPoint’s Troutdale branch in April 2022, and since then, I have seen our community face ongoing challenges due to price increases on everything from baby formula to groceries and gas to housing.
Inflation impacts us all, and as a Portland-Metro area native, I am proud to be able to help my neighbors – many of whom I have known my entire life – navigate this complex time. The latest Consumer Price Index (CPI) indicates consumer prices increased 8.2% from last year as rising food costs and rent offset decreases at the pump.
To add to the pressure on household budgets, the Federal Reserve began increasing interest rates earlier this year to slow inflation. A sixth hike was ordered last week of 0.75%. As price and rate hikes continue to break records, consumers, investors and economists are worried that an economic downturn could be imminent.
While recession indicators are mixed for Oregon, it’s still a good idea to prepare your family for that possibility. Here are five steps I recommend taking to help you prepare for a possible recession:
- Conduct a financial check-up: Become educated about your family finances and overall financial picture. Look at every item in your budget. Shop around for the best family cell phone plan, internet, and cable prices. Your bundled plan might be costing more than you realize. Inventory your subscriptions and cancel any that your kids may have outgrown. Pay special attention to credit cards. Not only can interest rates top 30%, but the fees banks charge can add up. Look for a card with no annual, balance transfer, or cash advance fees.
- Create a family emergency fund: Whether your family experiences job loss or you have a sudden healthcare expense, OnPoint recommends having at least three to six months of living expenses on hand for unforeseen emergency needs to avoid tapping into investment accounts or using credit cards with high-interest rates. Reassess your family’s spending habits to uncover areas where you can save and put those dollars into your emergency fund. If you have already exhausted these methods, connect with your financial institution to see what financial counseling, debt management services, and financial education resources they offer.
- Consolidate family debt: Get on top of any unsecured debt your family may have. A loan is unsecured if it isn’t backed by an asset such as a car, property, or house. Examples of unsecured debt include credit cards, personal loans, lines of credit, and medical bills. Such debt usually carries a high-interest rate and high minimum payment. Talk to your creditors and financial institution about opportunities to consolidate that debt at a lower rate and lower payment. You will pay less each month and usually pay the debt off faster because secured loans have a fixed payment period and lower interest rates.
- Refinance the family car: Anyone who owes money on a car should check their interest rate. Sometimes, first-time car buyers without a credit history end up paying higher interest rates. If you have a history of paying on time, you might be able to refinance at a lower rate, saving hundreds on your monthly payment and thousands in interest over the life of the loan.
- Consider a home equity line of credit: A home equity line of credit (HELOC) is secured by the equity in your home. It allows you to draw funds as needed and serve as a financial backstop in emergencies. HELOCs can offer a lower-interest alternative to unsecured debt, cutting your monthly payment and saving you interest in the long run. Look for fixed portion options that will lock in your interest rate, which can be beneficial in a rising rate environment.
The economy changes every day. The key is to act now to protect your family as we anticipate future interest rate increases and higher prices. Rising inflation and interest rates can put anyone in a financial bind, so the more financially prepared you are, the better. If you need help getting started, I encourage you to stop by any one of our 55 branches located throughout Oregon and Southwest Washington. Everyone is welcome – no matter where you are on your financial journey.
Alyssa Gonzales is the Troutdale Branch Manager at OnPoint Community Credit Union.