How Delinquency and High Interest Rates Affect Your Wallet

The Economic Slowdown and Its Consequences

According to Valor Econômico, forecasts for Brazil's GDP have dropped due to rising delinquency and high interest rates. This combination creates a vicious cycle that directly affects households' disposable income and consequently consumption. With less money to spend, the performance of economic activities also suffers, potentially leading to increased unemployment and stagnant wages.

What does this mean for you? If the economy slows down, your chances of getting a raise or even keeping your job become more complicated. As more people face financial difficulties, the level of indebtedness is likely to increase, especially among those earning less.

Increasing Delinquency and Indebtedness

Recent data shows that household indebtedness has reached a record 48.9%, with an average of 30.6% of income dedicated to debt payments. This means that for someone earning R$ 3,000, for example, about R$ 918 is being directed solely to pay off debts. If you're already in this boat, it’s crucial to take measures to avoid sinking further.

Delinquency among lower-income classes is alarming, with 84.9% of those earning up to three minimum wages being indebted. This worsens with the demand for credit, which remains high but results in exorbitant interest rates, making the situation even more difficult for those already at their limit.

Practical Impact on Your Daily Finances

With the economy slowing down and interest rates rising, you can expect increased difficulties in obtaining credit. Additionally, if you're thinking of making a large purchase, like a car or a house, it may be tougher now, as credit availability tends to be more selective and restricted. Companies are also feeling the impact, with many reporting decreased revenue.

So, what to do in this scenario? Here are some practical tips:

• Review your expenses: Take a critical look at your budget and see where you can cut costs. A financial management app can help.
• Avoid new debts: If you're already in debt, the best bet is to avoid taking on more loans. Focus on paying off your existing debts.
• Create an emergency fund: Try to set aside some of your earnings for unexpected expenses. This can help prevent new debts in the future.
• Consider renegotiating debts: If interest rates are high, it's worth talking to creditors to try for better terms.

Connecting All This to Your Financial Organization

Managing your personal finances can be challenging, especially in times of economic uncertainty. Applying the 50/30/20 method can be a good way to keep your finances in order. This means allocating:

• 50% of your income for needs (housing, food, transportation)
• 30% for wants (leisure, travel, entertainment)
• 20% for savings and debt repayment

If you find you're not able to follow this method, it may be a sign that your expenses are too high. ADXIS can be a valuable tool to help you stay focused and organize your financial life in challenging times.