How to Survive and Thrive in an Inflationary Environment

By Stephen Bucaro

Inflation in the U.S. as measured by the Bureau of Labor Statistics Consumer Price Index is now running at 4.0 percent. You can find plenty of technical explanations about what causes inflation, but the simple truth is that inflation is a surreptitious tax by the government to allow them to over-spend and miss-management the economy.

The result of inflation is that every time we buy anything, it costs more. Every time we pull into a gas station, gas cost more. Every time we go to the grocery store, food cost more. The result of over-spending and miss-management of the economy by the government is to lower the standard of living for hard-working middle-class and low-income Americans.

In this article, I'm going to give you 14 things that you can do to survive and help your family survive, and even thrive, in this inflationary environment. Most people think the smart thing to do in inflationary times is to put off spending and put more money in savings. In fact, just the opposite is true.

• Don't necessarily pay down loans. If the interest rate on the loan is the same as the rate of inflation, you're basically using the money for free. If the interest rate on the loan is lower than the rate of inflation, then the actual value of the outstanding loan amount is actually declining due to inflation.

• Don't build up savings. You can't earn enough interest on savings, after taxes, to make up for the inflationary increase in the price of things you would buy later. However, be aware that the steps that the government ultimately takes to cure inflation causes a recession, so make sure you have an emergency fund in case you lose your job.

• Don't sell assets to raise money. Don't sell real estate or collectibles because they will increase in value with inflation at a higher rate than the interest that you could earn by placing the money in the bank.

• Don't put off purchases of major items like home repairs, a new car, a new computer, or new furniture, because inflation will cause these items to cost much more if you wait to buy them later.

• When purchasing a big ticket item, don't pay too high a price just because of inflationary expectations. Instead shop around, and to save money on gas, use the Internet to do it.

• Consider replacing inefficient appliances. High energy furnaces, air conditioners, and refrigerators will pay for themselves in the long run, and if you don't buy them now, they will cost much more later.

• Consider trading a low gas mileage vehicle in for a high gas mileage vehicle, maybe even a hybrid. It may take a long time to make up the cost of the new vehicle with fuel savings, but a low gas mileage vehicle, like an SUV, won't be worth anything in trade when gas gets to $6 per gallon.