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What are you going to do about inflation?

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Dr.Who View Drop Down
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    Posted: April 02 2009 at 4:48pm
The wheels are in motion. In the near future inflation will arrive.The price of everything will go up. Wages will go up too but they will lag behind. Any adjustable loans you may have will also go up; the rates on your credit cards, home equity loans or ARM's. The value of the dollar will actually go down.

What are you going to do to protect yourself?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote FluMom Quote  Post ReplyReply Direct Link To This Post Posted: April 02 2009 at 6:04pm
Dr. Who I agree. However, how can credit cards go higher...some are at 20 Percent interest rates!   The administration will hold off inflation as long as possible because this will cause stagflation like the 70's.

All of the people putting money into the stock market now and in the next 4 months will be shocked when the market tanks in late summer.

This whole thing is a mess! How do you protect yourself!
Always Be Prepared
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Penham Quote  Post ReplyReply Direct Link To This Post Posted: April 02 2009 at 6:31pm

As far as a country I don't know what our country will do. As far as for our personal family, we will continue to do what we are doing now. Not spend on extras, hold onto as much cash as we can, trying to get as good a deal on things as we can, continue to bargain shop, shop at yard sales and thrift stores, we are eating out about once a month, fixing all our meals at home, packing our work lunches, growing food.

The only thing we are spending money on is 13 year olds softball stuff and a couple of new summer outfits, the rest will be yard sale finds and thrift stores for clothing, books and other items, same for us adults. We are continuing to stock food, using alot of coupons and still trying to shop as cheaply as possible. I am just not willing to spend money because I am so unsure about the economy, we have been cutting back for awhile now and will continue.  The only thing I have been "investing" money in is things that will produce food, I have bought a cherry tree, dwarf orange tree, dwarf tangerine tree, dwarf lemon tree, dwarf lime tree, dwarf banana tree, grape vines, strawberry plants, onion starter plants, and some tomato, lettuce  and green bean seeds.  I already have an apple tree and a peach tree (that produce alot of fruit) and I know it will be awhile before the fruit trees start producing fruit (the citrus within a year) the banana longer but eventually I hope these will take care of alot of our "fruit requirements" at some point. Eventually reducing the amount of money we spend on that type food. I would also like to get a plum tree. I feel that this is one small thing I can do to help my family become a little more self-sustaining as far as food is concerned. I figure if I try to be pro-active and do a little bit in every area we will come out better in the longrun. Our cars are paid for. I would love to pay our house off, we have a little over 6 years until our 15 year note is paid off.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: April 02 2009 at 7:41pm
we have a little over 6 years until our 15 year note is paid off.
.....................................................................
 
that was smart...wish ours was on 15 yrs.  The rates are lower now.  We went 30 because
 
the taxes in Ny are so high... nearly 40% of the mo. payment.
 
here is a map showing inflation for 2007 around the world.... imagine the inflation of red
 
countries ... wow. 
 
 
........................
 
File:World%20Inflation%20rate%202007.PNG
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remember the inflation in the US is controlled by the government and will not reflect the true inflation.  If they say 5%, figure you're at 10%.  Food is not in the inflation index and I don't think energy is either.

You might be looking at a new type fiat currency, paper money, coming out of these meetings going on in europe this week.  You don't hear everything, much is going on behind the curtain.
Think the Wizard of Oz.  If this happens, you'll have instant inflation, but it will probably be phased in.  Fiat currency will become worth-less during this period.  If you want to protect your money, purchase silver eagles and gold eagles.  They will hold their value.  Remember in 1909, you could buy a good suit for an ounce of gold.  The same today, you can get a decent suit for around $1000.00 or one ounce of gold.   The writing is on the wall, if you want to protect your money, put it in something that is not going to drop in value. 

I really don't think inflation is totally bad, say we have inflation at 10X, so for every dollar you have today, you get 10 new dollars.  So as things adjust you might be living in a house that is valued at 300,000 today and a mortgage of say 300,000 also, with this decent type of inflation, your house becomes worth $3,000,000 and your mortgage is still at $300,000.  Say your wages today are $6000 a month, with the new money, you'll be making 60,000 per month, so this sounds crazy, but it can happen.  Now you see the relationship between new money and old money, you're making 60,000 per month and your house payment is still at 3,000 per month.

That is the only way it will help, actually many things can happen in the meantime and you could end up living in a tent and standing in line for a bowl of soup and piece of bread. 

The best way to check out what can happen is to look at today's Zimbabque or yesterday's Germany.  Zimby is manufacturing hyper inflation.  The stores will only accept gold for their goods.  Women are at the river panning for gold to feed their families.

The germans (in the 1920's) used the money for fuel in the winter, they put it in the fireplace to stay warm.  This time we ended up with Hitler as the end result.  The going currency in Vietnam during the war was gold leaf.  Very thin pieces of gold used as a currency.

One way the federal reserve could produce a new crop of dollars would be to take say a $10 bill and just stamp it 100 or add a zero to the 10 making it a 100 dollar bill.  That would be conservative and as time goes by, add another 0 making it a 1000 dollar note.  That would be hyper inflation.  I suppose some enterprizing people will learn how to create their own 0 adding, thereby by passing the fed.  Anyway hold on to your hat, you're in for a rough ride.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnray1 Quote  Post ReplyReply Direct Link To This Post Posted: April 02 2009 at 10:30pm
4=largo,your reasoning in sound and simple for young people.But,what do older people on fixed incomes do? Johnray1
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Turboguy Quote  Post ReplyReply Direct Link To This Post Posted: April 03 2009 at 5:24am
Originally posted by Johnray1 Johnray1 wrote:

4=largo,your reasoning in sound and simple for young people.But,what do older people on fixed incomes do? Johnray1
 
For lack of a better word: They're SCREWED.
 
In many cases it was these very people that voted the people into power that are at fault for the coming inflation. The older generation voted for P.BO because they wanted Socialized Medicine. It's yet another reason that single issue voting is always a disaster.
 
Not to mention that Socialized medicine is always a disaster anyway. When Canadians stream across the border because they don't want to sit in a line for a currently operable problem, or Pregnant British women can't get a sonogram because the government decrees that it is not necessary, there is a major problem.
 
My anxiety stems from those that rely on government for their daily bread. Welfare recipients, PNHT, Foodstamps, etc. are going to be even more screwed. When gas got to be nearly $5.00 a gallon last year many of these people barely scraped by, and I mean *BARELY!* In a huge number of these cases they got their natural gas turned off. With the inflation, how are these people going to not only pay for food, but for heat, rent, gasoline, and electric? This isn't even taking into account that oil is going to hit the high price it did before, and now there's going to be a new tax of $1.75 on every gallon of gas! It's not just the elderly that are screwed... We're all going to be screwed.
 
Remember when P.BO said to "Hope for Change?" You're going to be hoping for change alright... pocket change.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Pookey Quote  Post ReplyReply Direct Link To This Post Posted: April 03 2009 at 6:49am
Come on now, we are all hurting.  But the COLA was put in so that Social Security payments would keep pace with inflation not as a yearly pay raise for SS recipients.  It is a very simple concept, if there is no inflation there should be no COLA.  Also remember that the current generation receiving SS did not contribute near as much as they are withdrawing from the system.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote 4=laro Quote  Post ReplyReply Direct Link To This Post Posted: April 03 2009 at 7:44am
Johnnyray1, let me think about that problem for awhile.  I also am on a fixed income but years ago I realized SS was not enough and have been investing for a situation such as we are in.

I'm 67 and just got a job working for the cencus bureau, part time of course, but it will be enough to pay the taxes this year.  Only for about 3 months, then back to retirement.
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what do older people on fixed incomes do? Johnray1
..............................................................................................

Many have only S.S.  please send a few words to the Govt. wanting to nix
S.S. cost of living for the next 3 yrs.
.. and how long after that?


send your thoughts to Govt.

http://www.avianflutalk.com/forum_posts.asp?TID=22129

http://www.whitehouse.gov/strongmiddleclass/

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Post Options Post Options   Thanks (0) Thanks(0)   Quote sjf53 Quote  Post ReplyReply Direct Link To This Post Posted: April 03 2009 at 10:19am
Dr. Who,  What about buying gold?  That is....if you have the money.
 
The continuation of printing money  (backed up with what?) can only devalue the dollar
more.  Giving the the G-20, International Bankers, China, Russia and the like an excuse to the"evolutionary" change to a global currency.
 
What then will be the exchange rate of the dollar is this happens??  What would be honored?   How would this even take place ? 
 
I use to think that the dollar would be the currency used but that went out the window
with Bernanke and Geithner.  Is this a plot to say "we tried"to boost and stimulate the economy?  Then the failure or "crisis" is used as an excuse to implement their true agenda?
 
I have become cynical.
 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Penham Quote  Post ReplyReply Direct Link To This Post Posted: April 03 2009 at 11:08am
Mary, our property taxes are really, really low here in Oklahoma in our small town, we pay only $400 for the entire year, we also have our homeowners insurance seperate from our mortgage (not included with our mortgage) so our mortgage payments are really low also. If you pay a certain amount down on the house when you buy it, you can arrange your own homeowners/taxes seperately which is what we opted to do when we bought our house.
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Inflation maybe is the only way out of this crisis  

Dollar hopefully be lower bringing back manufacturing jobs

Salaries will be going up people will be able to afford houses again.

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Johnnyray1,  You posed a tough question, I have some ideas and maybe others can come up with ways for the retired or people on fixed incomes can make it during the tough times we have ahead.

If you own a house, and aren't in love with it, my recommendation is to sell it if you are in a cold climate.  Move to a less expensive area, by less expensive, I mean less overhead.  You can buy a house in Houston for a low price but the taxes you encounter are 4% of the value and every year the value will be increased, therefore eating away at your income.

Southern california is having really difficult times right now.  If you go to www.realtor.com and check some of the cities in Riverside county, you'll find a two bedroom home maybe ten years old or less for $60,000 to $70,000.  California taxes you at 1% of the value of the home, so you would have taxes of $650 per year.  Years ago the law was changed so that the taxes can't be raised every year based on valuation increases.  I don't think that has changed.  I think the same is true in Colorado, but you have to get to a place where taxes are fixed and the weather is tolerable.  You can put up with some hot days during the summer, but you can't take a lot of cold.  In winter, dress warmer and put an extra blanket on the bed to conserve heat, try not to run the heater, saving on gas bill.  Sumertime, dress lighter try just using a fan to stay cool or go to one of the free centers to use their facilities during hot days, some have exercise equipment available, free computers etc.    In winter when watching tv or reading at night, keep an extra blanket by your chair to put on and stay warm.

If you decide to relocate, and you are renting, think about buying, if you are able to buy a house for $60,000, and the taxes stay the same (see above), then the Principle, interest and taxes will be the same today as tomorrow, therefore you wouldn't see a rent increase (if you were renting), the only item that would be able to increase is your home insurance.  So most likely if you are 62 and you financed a house with a $600 a month payment, in ten years, taking insurance premium increase, you should still be with a payment of around $700 a month.  In the meantime your retirement should increase (social security).

If your income won't qualify you for the loan, consider having one of your children cosign for you, you'd do it for them if they were in a quandry.  I do not recommend mobile or manufactured homes where you don't own the land because you can set your watch by this:  everytime you get an increase in your social security, the lot rent will be increased.  You need your expenses fixed and controllable.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: April 04 2009 at 11:56am
Penham... I think I'm going to faint...  :)
..........................................................................
 
4=laro this does sound good...but I am unable to find it....
 
 but you have to get to a place where taxes are fixed and the weather is tolerable. 
 
Im thinking that I have little control over taxes but I do have control over owning my home
 
and a lot of people downsize so they can own outright.
 
Some buy a house that needs cosmetic help ...like navy walls etc...
 
moving should be in anyone's plan...from do it yourself, 3000.00 (includes hiring to move it on and off your rented truck) to hired 4-6,000.00.
 
if a person wants to remain in a home the rest of their life, owning is better... rarely could you be evicted at 90 from your own home...if, let's say....the newspapers start to accumulate a la Howard Hughes.
 
Living near to shopping, library, church, in home help, should be kept in mind....way before retirement.
 
I have to agree with Suze Orman.... never co-sign on a loan.
 
Very true....
everytime you get an increase in your social security, the lot rent will be increased. 
 
 
That is a good reason why the Govt. should keep the cost of living increase for seniors.
 
 
..............
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Post Options Post Options   Thanks (0) Thanks(0)   Quote 4=laro Quote  Post ReplyReply Direct Link To This Post Posted: April 04 2009 at 2:15pm
I don't know what you were unable to find, if it's the location, just for a starter, www.realtor.com, there are several cities in Riverside county that i've visited, try Perris, CA for one, I think Humit is another, several along I-15 corridor, not as good a buy, but in the vicinity.  Of course, a smart person will even offer a bank less then they are asking, the worst is you can get told no and have to rebid.  suzie is certainly correct about cosigning for another person, however parents do it all the time and if a parental unit is in trouble, then the child would normally help out.  I only mentioned it because some people may need a little help.  If the cost of a home is less then rent and fixed to stay that way, then that's the object.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: April 04 2009 at 4:19pm

hi...I just meant that I was unable to find that combination of weather and taxes. I hear (and see) that California is beautiful.  I've been limited to the east coast dollar wise for my search.  We loved the weather in VA, but properties in Williamsburg are extreme.  Good advice to offer lower, I did that after my first child (felt brave) and when we moved in, the neighbor smiled and said, "You stole that house."   My thinking on the cosigning is...if one can afford the payments on that cosigned loan (otherwise a person shouldn't do it) then that person might also have the down payment to give or lend (a better situation)  usually cosigning  means the bank fells the person is risky....due to age or income.

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