Inflation is running at 7.5%. What’s your move?
Inflation is hitting historic levels meaning this is the kind of stuff you tell your grandchildren about someday. Even depreciating assets, like your car, boat, or RV, have appreciated over the last year and a half by a LARGE margin.
The rate increase in inflation may subside, but it is not going away anytime soon. Everywhere you look, everything is more expensive, as if somebody suddenly flipped a switch. We all wish there was a quick fix. There isn’t. In fact, to adequately fix inflation at this point, would take a level of fiscal and monetary policy resolve that does not exist.
So, what should you do to protect yourself, your business, and your family? We’re here to help get you where you’re trying to go. Take a look.
Know Your Debt
Take a hard look at any debt you have, personally or in your business. Expect any variable interest rates, like revolving credit lines, to increase going forward. Try to pay these down or refinance them with fixed-rate terms.
The Inflation Impact on Annual Income
Make every effort to ensure your income sources keep up. Currently, inflation is running at 7.5%. Negotiate a salary increase, raise the lease rates on your rental properties, and raise prices on the goods and services you sell in your business. If you are retired, take a hard look at your investment portfolio, especially the bond portion, and consider a more creative stance.
You should also carefully consider and evaluate any purchases you need to make. Vehicles are routinely selling for THOUSANDS above MSRP. Resist the temptation to overpay for things you don’t need. Ask yourself: “Is this a true need now or a want that can wait?” I bet the answer the majority of the time is: “It can wait.”
Put Your Cash Reserves To Work
Finally, maintain adequate cash reserves even though you cannot get any return on cash. By adequate, I mean not too little and not too much either. Ensure you have money for any large expenses, emergencies, or opportunities that may come your way. Try to stay out of debt as rates start to rise. But if you hold onto too much cash, inflation will erode its value. It’s frustrating to be in this inflationary predicament. The federal government and our policymakers have done a poor job managing inflation, and now we all get to pay the price. But as always, the key to personal success is keeping your head down and doing what you can with what you have.
Cheers to those Americans who understand this. Our future is in their hands.
Those are my thoughts, have a great Thursday!