How to Survive and Thrive in an Inflationary Environment
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
• 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.