With no foreseeable end to the effect of inflation, it’s important for people to mitigate the damage to their personal finances that all of this is causing.
by Donald Williams
For New Pittsburgh Courier
Gas prices are high. Food costs are rising. Everything is going up and it’s all due to inflation. While the war in Ukraine was the catalyst for prices to go soaring, the domino effect only seems to get worse. Experts have concluded that the increases in prices will only continue to go up.
To avoid another recession, the Federal Reserve raised its benchmark interest rate by 0.75 percent. Interest rates are the federal government’s main tool to combat inflation, with the goal of decreasing the amount of spending. Raising the interest rate is considered one of the more aggressive tactics the Fed can take and a signal to things are getting very serious.
But what should individuals and families be doing this time. With no foreseeable end to the effect of inflation, it’s important for people to mitigate the damage to their personal finances that all of this is causing.
Here are seven helpful personal finance tips that individuals can utilize immediately to protect themselves during this uncertain time:
- Accelerate purchases: An individual will want to accelerate purchases of goods and services that the individual knows will be needed in the next year, because such goods and services will be more expensive in the future. For example, an individual will want to now purchase non-perishable food/grocery items such as canned goods, toilet paper, and cleaning supplies, and will want to now hire contractors to perform home repairs, since postponing such payments will result in having to pay higher prices in the future.
- Buy goods in bulk/bundle services. An individual will want to start buying goods in bulk. For example, an individual will want to b consumable goods (examples: paper towels, toothpaste, hair products, shaving products, etc.) in bulk in order to obtain a lower per unit price on such goods now and to avoid having to buy such goods in the future at higher prices. For services, an individual will want to try to bundle phone and data, home Internet, software, and other recurring services for more favorable pricing.
- Consider home-equity loans: In order to make purchase of goods and services now and to buy in bulk, you may need to take on some productive debt.
Productive debt includes home-equity loans, which allows an individual to borrow against the equity in the home at a relatively low interest rate. The borrowed funds can be immediately used to make purchases now at prices that re lower than they will be in the future.
Furthermore, since inflation effectively decreases the value of the dollar over time, having to repay the home equity loan principal payments will be made