Back in Debt

Dear Dr. Per Cap:

During the pandemic, I paid off all my credit card debt and even saved money, too. But now that we’ve seen the worst of COVID, I’ve reverted to my old ways of outstanding credit card balances and minimal savings. Help!


Too Much Debt

Dear Too Much Debt,

To quote one of my favorite songs from the 80s by the band Chicago, “You’re not alone.”

Stuck at home and flush with stimmy money, Americans collectively paid down more than $125 billion of credit card debt during the pandemic. Meanwhile, the worst of the COVID lockdowns saw the average personal savings rate, as compared to disposable income, peak as high as 33%.

Click ahead to 2024 and total credit card debt in the U.S. has now surpassed pre-COVID levels and the average savings rate has dropped below 4%. Part of the backslide comes from an inflation-induced spike in food and energy prices that squeezes us all. Meanwhile, higher interest rates have raised the cost of borrowing for not just credit cards, but also homes and vehicles, too.

And let’s not forget some of it has to do with folks just making poor financial decisions.

I encourage you to embrace the new year with a renewed sense of financial purpose. While COVID certainly presented some highly unique opportunities to pay off debt and save money, don’t ignore your own determination and effort that also contributed to getting your finances squared away. Regardless of the stimmy money, you still demonstrated willpower by making those extra credit card payments, while resisting a lot of unnecessary purchases, too.

If you did it once, you can do it again. So, tap that budgeting app you haven’t used lately and make a financial plan for 2024. Ease up on the credit cards by focusing on your needs, instead of wants. And if you expect a sizeable tax refund this spring, plan on putting a good chunk of it toward paying down your credit cards.

Another tip is to embrace the 50-30-20 rule. I’ve shared it in this column before because it’s one of the easiest, most effective budgeting methods I know. It works by limiting your fixed expenses that don’t usually change from month to month like rent, car payments, and insurance to no more than 50% of your monthly income. Flexible expenses that you can control like food, gas, and utilities should fall within 30% of monthly income. And that leaves the remaining 20% for savings.

Try it, and when you pay off the debt, you’ll see that the world’s got troubles worse than you. Sing it, Bill Champlin!


Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email