Easier to manage cost increases when you don’t have debt
I can’t turn on the tv without an ad that talks about how massive inflation is coming and how I need to buy gold (at record high prices) to hold off inflation. When I turn the channel, there’s someone telling me how the government started printing more money in the middle of the recession and how that will lead to record inflation rates. When I drive down the street I start to see the impact of these things at the gas pump. My wife is telling me our grocery budget needs to be adjusted because food prices are rising.
There seems to be a general panic happening across the country. Everyone is worried about rising costs and concerned about their ability to pay their bills. Not so much for me. Yes, I believe inflation is coming. Yes, I believe it’s going to be painful. But I don’t believe (maybe someone can convince me otherwise) that buying gold is the solution. In fact, while I don’t like seeing my daily expenses like food and gas rising, I’m not panicking about it like a lot of other people.
Don’t panic; Get out of debt
The reason I’m relatively comfortable is that I live without debt. I don’t have credit card bills. I don’t have car payments. I don’t have a mortgage. And because I don’t have all of these, I have wiggle room in my budget. I can live on half of what most people do because I don’t have all of those mandatory spending categories.
You see, several years ago my wife and I decided that we didn’t want to ever be in a position where we were crippled by a reduction in income. We worked hard to get rid of our debt so we could have more options. Once we had no debt payments we experienced a freedom we had never felt before.
It’s amazing. When gas prices went up, we adjusted the gas budget up and reduced another discretionary spending category. It wasn’t fun. We didn’t like cutting back in another area. We realized we may need to increase our income if we want to maintain the same standard of living. But we still remained calm knowing we had options.
Your costs will go up
Inflation is coming. Job losses and reduced income are coming. Medical expenses are coming. Increased insurance premiums are coming. It’s only a matter of time before one or more of these situations affects your household. Don’t wait until they happen to realize you need to do something. Act now to get rid of your debt, get ahead of the game, and establish your own hedge against inflation.