Category Credit & Debt

In 2025, many middle-aged Americans are struggling to save money because they’re spending more than they can afford—a problem known as lifestyle inflation. As the cost of living goes up and mortgage rates stay high, people are turning to buy-now-pay-later options to keep up with their lifestyles. Big retailers like Walmart are now offering these services, making it even easier to spend money that people don’t actually have. Financial experts warn that this kind of spending creates long-term debt and prevents people from building real wealth, especially during midlife when saving for retirement should be a priority.

In September 2025, the Federal Reserve made its first interest rate cut of the year to help fight stubborn inflation and ease the cost of living. This move has made borrowing money through home equity lines of credit (HELOCs) cheaper for homeowners. A HELOC lets people borrow against the value of their home, and with interest rates now lower, monthly payments on these loans have gone down compared to late 2024. With the average homeowner having over $300,000 in home equity, this opens up a less expensive way to pay for things like home improvements, paying off high-interest debt, or investing in other opportunities. As the Fed may cut rates again later this year, now could be a smart time for homeowners to consider using their home equity more strategically.

The One Big Beautiful Bill Act (OBBBA), passed in 2025, brings major changes to how students can borrow money for college—especially those in graduate or professional programs. One of the biggest shifts is the removal of the Grad PLUS loan program, which used to let students borrow enough to cover the full cost of graduate school. Starting in summer 2026, students will face new caps on how much they can borrow from the federal government. Graduate students can borrow up to $20,500 a year, with a lifetime limit of $100,000. Professional students, like those studying medicine, law, or dentistry, can borrow more—up to $50,000 a year and $200,000 total. There's also an overall federal loan cap of $257,500, not counting Parent PLUS loans, which now have a new limit as well. These changes could make paying for advanced education harder and leave many students unsure about how to cover the full cost of their degrees.

As economic uncertainty grows and inflation remains high, many Americans close to retirement are struggling financially. More than half of adults over 50 who carry credit card debt now use it just to cover basic living costs, and a growing number report that their debt has increased over the past year. This rising debt, along with market volatility, is creating serious risks for people planning to retire soon. Experts recommend focusing on paying off high-interest credit cards using methods like the avalanche or snowball strategy. Many are also considering downsizing their homes or moving to more affordable areas to free up money. These steps can help reduce financial stress and make retirement savings last longer in uncertain times.

The Federal Reserve recently cut interest rates for the first time this year, lowering its benchmark rate to between 4.0% and 4.25%. This decision shows the Fed is now more focused on helping a slowing job market than fighting inflation. Even though prices are still high, the economy is showing signs of weakness, like slower job growth and tighter credit. That’s why more rate cuts could happen later this year. Lower interest rates can make borrowing cheaper, which may help consumers with things like credit cards and mortgages. Still, many Americans are feeling the squeeze from high prices on everyday essentials like food, gas, and housing.

As 2025 brings rising inflation and high living costs, saving money has become more important than ever. Financial experts are urging people to rethink their budgets and focus on essential spending. One key suggestion is to use debit cards instead of credit cards to avoid going into debt, especially since interest rates are high. This means it's more expensive to carry a balance on your credit card. Another smart move is to pay off high-interest debts quickly. Many experts recommend the debt snowball method, where you keep paying the minimum on all your debts but put extra money toward the smallest one first. This helps build momentum and makes it easier to stay motivated.