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The Federal Reserve began to aggressively hike interest rates in February 2022, in hopes of stalling 9% inflation. The federal funds rate has risen from effectively zero to 4.35% over the course of the past year.

Ironically, it was the Fed’s very same zero interest rate policy (ZIRP), combined with trillions of dollars in COVID-19 era government spending, which initially ignited this runaway inflation. Intelligent debt management solutions are increasingly important, with American households now bearing the brunt of thousands of dollars in additional annual interest payments.

Setting Goals

Financial goals set the course for your debt management plan. Common life goals include first-time home purchase, higher education, and retirement. You will categorize financial goals according to total costs and time frame. Excessive debt levels and interest expenses, of course, will jeopardize any well-intentioned plans.

You are entitled to one free credit report per year, as part of the Fair Credit Reporting Act through AnnualCreditReport.com. You may also purchase a copy of your credit report at any time from Experian, TransUnion, or Equifax. Lastly, online portals like Credit Karma will enable real-time monitoring of your credit. Maintain a credit score above 750 to access credit at competitive rates.

Debt Refinancing

Wall Street is apparently hopeful that a looming recession will force the Fed’s hand to “pivot” and immediately begin to slash interest rates. At that point, it may be advantageous to refinance, or take out new loans at lower rates to pay off existing debt. Be further advised that predicting interest rates is typically a fool’s errand. In the meantime, you may consider contacting your current lenders to negotiate lower interest rates. A strong credit history will grant you more leverage.


Categorize assets and liabilities according to expected returns, interest rates, and balances. For example, it would be counterproductive to carry large cash balances earning zero, while also being weighed down by expensive credit card debt.

Dave Ramsey promotes the psychological benefits of his “snowball method,” whereby you pay off low balances first, before applying those savings to larger loans.