THE new year can bring unexpected budgetary challenges.
Many programs that have offered some relief to people are unsecured in 2022, which means now is the time to prepare so that it doesn’t come as a shock to your daily expenses.
The president’s Build Back Better law was blocked in Congress after it failed in the Senate.
Congress is on recess, so we will have to wait until the New Year to move the bill forward.
Here are some changes that could affect you in 2022.
1. Student loans
President Joe Biden extends the hiatus on federal student loan repayments.
The moratorium was due to expire on January 31, 2022.
The Biden administration has extended the break until May 1, 2022.
This means that the interest rates will stay at 0%.
Payments will not resume until mid-2022.
The US Department of Education said the pause in student loan payments will help 41 million borrowers save $ 5 billion per month.
During this extended moratorium, now is a good time to update your account information, rethink your payment strategy, prioritize your financial goals, and set a budget.
2. Child tax credit
Child Tax Credit (CTC) payments continuing into 2022 remain unknown due to the fact that the Build Back Better Act was not passed in Congress.
The Biden administration wanted to extend payments until 2025, but that proposal was reduced to an additional year.
The Internal Revenue Service (IRS) sent the last advanced CTC payment for 2021 on December 15.
For parents who opted out of the child tax credit advance payments in 2021, they will be able to claim the full credit, if they are eligible, on their 2021 tax return.
If current payment amounts are not passed in Congress, future eligible parents can only receive a maximum credit once per year per child at tax time.
It would be $ 1,000 for school-aged children and $ 1,600 for young children.
3. Health insurance
If you’re 65 or older, a younger disabled person, or someone with end-stage kidney disease on Medicare, prepare for higher costs in 2022.
Here’s a comparison:
- Premium part A – 2021: $ 471 / month. 2022: $ 499 / month.
- Deductible / coinsurance for hospitalized patients in Part A – 2021: $ 1,484. 2022: $ 1,556.
- Part B bonus – 2021: $ 148.50. 2022: $ 170.10.
- Part B deductible / coinsurance– 2021: $ 203. 2022: $ 233.
- Premium part C– varies depending on the diet
- Premium part D– varies depending on the diet
4. Home insurance
Homeowners could see an increase when policies renew in 2022.
Inflation and supply chain issues have affected many industries, including the housing sector.
Insurers may apply an inflation rate to account for increased costs of labor and materials.
For example, the insurer offers coverage on the cost of replacing your house if it were destroyed.
Before purchasing or renewing an insurance policy, be sure to shop around, but remember that the cheapest policy can cost you more in the long run.
5. Interest rate
The Federal Reserve announced before Christmas that it was forecasting three interest rate hikes in 2022.
When interest rates rise, any credit card or variable rate loan tied to the Federal Reserve’s rate will also rise.
This means that it will cost you more to pay off the same amount of debt over time.
Now is the time to take a look at any credit card debt you may have and consider paying it off.
If you have a loan, check to see if your interest rate is locked in.
For example, for mortgage loans, it is worth switching from a variable rate mortgage to a fixed rate mortgage.
6. Gas, oil and energy
It will be a pain at the pump for the pilots next year.
Gas prices are expected to continue to rise.
GasBuddy predicts the national average could exceed $ 4 a gallon.
Oil prices have reached their highest levels since 2014, as the Organization of the Petroleum Exporting Countries (OPEC) claims that this “will slow the pace of the recovery in oil demand.”
This trend has resulted in higher energy prices.
Consumers will be the recipients of larger bills – we’ve covered how to reduce gas bills in our guide.
7. Favorite foods
Some of the popular pantry items like Macaroni and Cheese, Oreos, Cheerios, and Soup will see higher prices in the New Year.
The Wall Street Journal reports that Kraft, Mondelez International, Campbell Soup and General Mills are among the companies that have said they will raise prices in January.
To save money, consider switching to cheaper brands.
Tips for saving
Here are some tips for saving money and cutting costs as we approach 2022:
- Budget: Track expenses. This will make it easier for you to decide what is a necessity and what is not.
- Eliminate dining out: Cooking meals at home will save you money. Despite rising prices for branded items, consider going generic.
- Cancel subscriptions: Take an inventory of all monthly subscriptions and eliminate the ones you don’t use or can do without.
- Automated savings: Set up an automatic transfer from your current account to your savings account to which no debit card will be attached.
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