So what does all of this mean to those of us who are not in the privileged class? It means that you should watch for a sale on a rice cooker and buy a fishing pole. First and foremost, the cost of living will rise very quickly and your wages won’t.
The first part of an inflation based recovery isn’t pretty, the last part is down right revolting. That being said, here is what to expect and a few things that you can do to brace yourself.
There are times when refinance makes sense and this is one of them. If you have good credit, I anticipate that you could cut expenses by refinancing to the lower rates that will soon be offered. This should apply only to those loans that you simply can’t find a way to pay off. Be cautious about refinancing costs, as the crooks didn’t all retire.
Take a long hard look at your current monthly bills and determine whether there are ways to cut back, at least until this mess levels out. Ever heard of hedge funds? Start your own by cutting back everywhere possible on non-essentials. I’ve covered this before, but Starbucks and new vehicles aren’t essentials.
If you have money in savings accounts, certificates of deposits, or other similar low yielding investment vehicles, your actual yield is negative. (Yesterday’s article).
Move that money to pay debt on existing loans. Worried about not having any cash for emergencies? Take out a line of credit against your home as a hedge for instantly available emergency capital that only incurs costs and interest should you need to borrow money in a pinch.
Inflation pacing assets become mandatory in the coming months. Real estate will once more appear to climb in value as the dollar shrinks. Some areas will be very slow to recover due to past massive job losses and inflated inventories of housing and commercial property. You must be the judge of a particular area’s economic health.
Have some tips? Comment away.
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