Without you going into debt this Economic system dies! That’s one reason the interest rate on savings are so low. The PTBs want you in debt as it works great for them and sucks for you. One of the reasons I harp so much on getting out of debt is it takes you out of the “debt slave” mode. Brokers, Bankers and Wall St. know they are screwed if they can’t off load all of the junk paper to a greater fool. If MBS (Mortgage Back Securities) are such a great deal why are the being bought up by the FED and dumped by banks and the US government?
One reason I did the last post was I afraid that many people would panic buy stuff up and do what the PTBs want you to do. I found the PTBs seldom have the average person’s best interests at heart. They care about themselves first. last and always! I’m also a big believer in being flexible and adapting your plans to changes as they come up. I’m afraid flexible is not going to be good enough in the future. You have to be fluid like water and move with the current as much as possible.
You need to have direct physical control of your cash and assets not the banks. I use a credit union and I must have an account for my direct deposit checks but every “payday” I figure up my bills and leave just enough in the account to pay those then write a check to myself for cash to do all my shopping. I’ve been doing this for awhile and it’s working out better than I had anticipated. I used to use my debit card for my shopping but having to hand over cash money seems to make a big difference to me and I save more money compared to swiping the plastic card. I guess paying cash seems more real, it’s just plain harder for me to break a $20 or $50 dollar bill than pay with plastic.
If you are good with your credit card and pay it off every month, great . I’m just not good with credit cards. They are too easy for me to find a reason I need some thing right now and always a reason not to pay off the full amount! Have a system that works for you to save cash money and let’s you get and stay out of debt. I know folks that do every purchase via a checkbook. Writing out that check seems to make it real for them. Plus they have a great way to track spending. Going mostly cash just works for me.
Watching for inflation to kick in. I think the best items to watch are your bulk goods like rice, grains. beans and corn. Next I would watch chicken and dairy goods. I think once you start seeing a big price rise consistently you will know that inflation is hitting the supply system hard. Then be ready to shift your spending as your needs will allow. Such as OTC meds/First aid or Sanitation and Hygiene items. Keep a close eye on pet food as they are grains and meat based and will probably go up pretty fast as well as early. I think the stores will push up pet food quickly as people tend to buy pet food in bulk and not weekly.
I’m not railing against anyone raising prices! If input costs go higher the end price must be higher. That’s why QE (money printing) tends to be a (bad) positive feedback loop at worse and a zero sum game at best. It costs more for the bulk goods to make a finished product so a business must charge a higher price to stay in business. The value of Items have not changed but as prices go up the government taxes go up with the prices. For instance let’s say I can get a loaf of bread for $1.00. Idaho Sales tax is .06 cents for a total cost of $1.06. But if that same loaf of bread now cost $5.00 then the sales tax is 30 cents for a total cost of $5.30. This is what people mean when they say inflation is a stealth tax hike. Now imagine 10% monthly inflation and the government actually keeps pace with inflation for SS what will that do for my income tax rates and doubles my “income” but is always behind on buying power. Now I’m being taxed at an effective rate of 25% rather than 3% I pay now with my deductions. You think I’ll be able to spend much on extras or give to charity?
Middle class and poor are always screwed first when inflation happens. So set up your budget for 1/3 less buying power at best. In other words live on 2/3rds of your income and until inflation kicks in hard use that money to get your basics. Do it now and practice it and you will be mentally prepared when it happens!
A great book on the inflation/Hyperinflation is “When Money Dies” it covers the Weimar Republic and Austria in the 1920’s. You can probably get it for free via an e-book or PDF if you search the title.