Why are we posting all this inflation and supply information? It is just as a warning to you so if you choose you can prepare for things to come. We do not want these to be taken as political statements or to create fear but merely to keep you well informed. In the past I have been accused of fear mongering by some. When I wrote an article on a pandemic just months before the pandemic hit someone said then I was fear mongering and our medical community and methods were too advanced for that to happen again. Hmmm... So, if you want to know what is coming keep reading, if not, have a great day!
The latest shortage we are being warned about it paper. I know it seems crazy that we have to import paper. It's time to bring back industry to the U.S. We import paper products from China. The cost of shipping paper, because it is lighters than other products, is more than the value of the paper. this means the price of paper products can double to the consumer. The biggest reason for the spike in the use of paper, and thus the shortage, is the increase in online orders. All those boxes you and I receive when purchasing on line are cardboard, a form of paper. Of course we all know the story of toilet paper, a paper product.
Are you familiar with the rule of 72? This is a simple formula that helps you understand inflation and the real concern, buying power. It may not seem an increase in the cost of peanut butter by 25 cents is a big deal but over time small increases will make a huge impact on our lifestyle. To calculate the impact take 72, and divide it by the annual inflation rate. The resulting number tells you how many years it will take to cut your purchasing power in half. Our current annual inflation rate is 5.3% across the board. (We know food and fuel is even higher.) 72 divided by 5.3 equals 13.5 years. In other words if you can buy two cans of beans for $3.00 now in 13 years you will only be able to purchase 1 can for $3.00, or if buying a car or a fridge the price will double in 13 years. Do you think your salary will double in 13 years to keep up? Did you think in 13 years you would be able to stash a good part of your salary in savings for retirement? Did you think your lifestyle would greatly improve in 13 years? You would be wrong if inflation is allowed to continue.
What can we do about this?
Food storage is one way to stave off inflation. As you store now you will be able to wait in the future for items to go on sale to replace what you have used. I never buy food that is not on sale except for milk, eggs and fresh fruit and veggies. Every other food I wait until a sale.
Growing you own food is another way to cheat inflation. Learn to garden now and store seeds. Learn to collect seeds for next season. We all have to eat so we will all be spending money on food. Spend as little as possible, garden.
Preserve food. Again, we all have to eat. Learn to can, freeze, dry foods now. You will make mistakes, can foods you end up not using or not liking. Start now and develop skills and recipes you love.
Pay down your mortgage. Your payment will not go up if you are locked in to a fixed rate but you will free up the cash once it is paid off or if you increase payments now you will have that cash in hand sooner than 15 or 30 years.
Sell stuff. Do you really need that fancy car, boat, RV? Do you have a closet full of clothes you don't wear? Do you have so much stuff you have cupboards full of things you never use? Sell it! Invest the money in paying down your mortgage or paying off your car. Renting a boat or RV is much cheaper than the cost of maintaining one.
Finally, ok this one is political. Know the issues and vote. Remember those we elect are not our leaders they are our servants. We have the power to tell them we do or do not want a program, a tax, a change in policy. Vote the issues and the way they will affect you. Don't vote a party or a person. Vote the issues.
What would you suggest as ways to prepare for decreased buying power?