Money expert Dave Ramsey shared his best advice for navigating a patchy and tight economy on the Cavuto Coast to Coast Thursday, as economic data shows that the American consumer is spending more but saving less.
Slow down a bit, calm down. Ramsey told host Neil Cavuto: "If you have any wisdom, don't run your credit card debt up, because it's the highest level in almost 20 years."
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. There are concerns that more Americans are also pulling savings from their 401 ks because of increased spending and inflation, according to Ramsey.
Consumers went out and kind of had a spending temper-fit for Christmas, and are spending like crazy, but on the other hand, we are tapping 401 k s for hardship withdrawals, Ramsey explained. And so I think this is a thing where people need to slow down and back up a bit and just say, Gosh, it's tight out there, the gas pump is real. The inflation is real, and the grocery thing is real. More than half of U.S. adults feel that they are behind on retirement savings, underscoring the hardships of the inflated economy, according to a report from Bankrate.
Bankrate's data shows that 34% of workers are contributing the same amount to their retirement savings, but only a quarter of workers have been able to increase their contributions compared to last year.
16% are contributing less than last year as pay gains are out of reach. Over the past two years, 24% of workers didn't contribute to retirement savings, according to the report.
As Americans face difficulties contributing to their savings, Ramsey has advised consumers not to rely on credit cards to cushion inflation's blow.
We've seen a lot of things for a long time since we've been in this bad position. Ramsey told Cavuto: Coast to Coast that people are going to fix the inflationary problems, the pressures, with the wrong tool. The credit card is the wrong tool. It's going to cause them problems later. It comes home to the roost. It is really sad. Ramsey also noted that Big Tech's industry-wide layoffs are not a good sign for the economy, signalling the likelihood of a recession.
Those folks are not going to be out there buying airline tickets. Ramsey said they're going to be at home because they're going to be laid off.
The money expert said there are sectors experiencing prosperous growth while others are getting hammered by inflation and rising interest rates.
It's not just a certain pocket demographically, but it just seems to be thinly sliced out there, kind of nuanced, if you will, Ramsey said. So you can't just throw a blanket over all of it and say, Oh, it's all bad, or they're all spending like crazy, so we're not going to be in a problem. When it comes to Ramsey's top inflation survival tips, the expert recommends budgeting for the next 10 years, keeping your 401 k contributions and retirement savings, curbing credit card borrowing and stopping luxury purchases or frivolous spending.