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Inflation Decreases Your Monthly Paycheck

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The Holistic Survival ShowIf you’ve been paying attention to food prices lately, and it’s hard not to, you’ve probably noticed the price of staple products (and others) seems to be rising by the month. That’s good old inflation working behind the scenes for you. Consider this. If the price of your bread and milk rises approximately every thirty days, but your paycheck doesn’t, it’s the same as if you were actually receiving a pay decrease. Whether working for an hourly wage or on salary, this status quo will decimate your personal budget in short order. That’s why we harp on the necessity of channeling your money into assets that are not cash-based – it’s the only way to keep your head above water in inflationary (perhaps even hyper-inflationary) times.

The key is to clearly understand the real term effect of inflation which, as we’ve already said, is similar to a pay cut. But certain types of investments actually gain value from the negative force of inflation and can turn your sinking money ship into a life of financial independence.

Debt is the secret. Not just any old debt, because reckless credit card driven spending will ruin you faster than inflation. What we’re talking about it long-term, fixed-rate debt in the form of a mortgage attached to a piece of rental property. That’s right. Become a landlord. Not only do you profit from immediate cash flow but the balance of principal you owe actually decreases in real terms over time, even if you’re only making interest payments.

The concept of building wealth through conservative application of debt works because inflation continually exerts downward force on the value of a dollar. You’re probably aware of the fact that dollar next year is worth less, in terms of goods or services you can buy, than the dollar in your pocket today. Apply that idea to a mortgage balance of $100,000, extend it over 30 years and you see how the principal you owe today is worth far less than the principal you ultimately pay off (or don’t) at some point in the future. That’s bad for your banker but good for you.

That, friends, is akin to a pay increase and that’s what you’re going to need to survive the coming food price spike.

The Holistic Survival Team

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