How to Live with High Inflation

Sign saying inflation ahead. Image from BigStock.
We have inflation, but there is more to come.

I’ve been writing about how to prepare for inflation and hyperinflation since March 14, 2021. Seventeen months later, the question has become, is it too late to prepare?

I’m going to answer that in three parts:

  1. You have missed the opportunity to prepare before inflation struck. Everything you buy today is likely to cost you 20 to 50 percent more than it would have cost 18 months ago. It’s too late to beat the first wave of inflation.
  2. However, if you think inflation will continue and/or grow even worse, then you still have time to prepare before the next wave, as well as for future shortages.
  3. There are adjustments you can make to live with high inflation. You might not like them, but they will help keep your head above water. I strongly recommend you read this post from June 2021: How to Cut back on Spending and Live Frugally During Inflation.

Will Inflation Continue?

I think inflation will continue. Shadow Stats shows the true rate of inflation is about twice what the government says, meaning we’re at about 17 percent inflation. (That means you are living with the equivalent of taking a 17 percent pay cut.) The government can’t put the brakes on that much inflation that quickly. Plus, the Biden Administration isn’t even trying to do so. Their so-called Inflation Reduction Act is expected to have little or no impact on inflation.

Furthermore, I believe the government is lying about statistics and things will get worse after the mid-term elections as they “correct” the data. They will blame “seasonal adjustments” or “reporting errors” for underestimating the true rate of inflation, misstating actual unemployment rate, and for lying about the country being in a recession. As winter approaches, energy costs will go up. Even if gasoline stays under $4 per gallon, your electric bill and heat bill will climb. Before you know it, you’ll be paying far more to heat your house than you ever spent on gasoline.

What Can You Do?

In addition to the many good points in the “live frugally” article I referred to above, the two things you need to concentrate on are increasing your income and spending only for what you need and not for what you want. I refer you to the following Bruce Springsteen lyrics from The River which was released in 1980, the height of the last big bought of inflation:

I got a job working construction
For the Johnstown Company
But lately there ain’t been much work
On account of the economy
Now all them things that seemed so important
Well mister they vanished right into the air
Now I just act like I don’t remember
Mary acts like she don’t care

During a poor economy, you need to act like this couple. Many of the things that seemed important during the good times must become unimportant to you because you can no longer afford to waste your money on things that don’t help you survive. You need to forget about them and not care that you are missing out on them.

I’m talking about things like:

  • Extra-curricular activities and special lessons for the kids
  • Dinners out
  • Expensive foods
  • New clothes
  • Vacations
  • Personal services like hair, nails, massages, spa days, and dog grooming
  • Toys such as your boat, jet ski, classic car, etc. If something requires insurance, get rid of it and save the insurance payment
  • Streaming services, new video games, and other subscriptions. Look at your credit card bill and bank account and see how many payments are automatically deducted each month and turn off as many as possible
  • New vehicles, new furniture, new appliances and anything else new

Needs versus Wants

At a bare minimum, your needs should include feeding, sheltering, clothing, providing medical care to yourself and your family, and keeping everyone safe. What should you do to meet those minimum? Anything legal, because desperate times call for desperate measures.

As the economy gets worse, you may have to do things that make you uncomfortable, such as:

  • Move into a smaller, less expensive house or apartment, in a less desirable location
  • Rent a room in your home to someone else or let relatives move into your home and share the costs
  • Work an undesirable job you don’ t like that is dangerous, smelly, uncomfortable, or morally questionable, such as a jailer or prison guard, landfill operator, portable toilet cleaner/servicer, septic tank drainer, miner, meat processor, sex worker, etc.
  • Join the military or become a police officer
  • Sell some of your personal belonging to raise cash to buy food and pay your heat bill
  • Convert some of your preps into cash, whether that’s guns or precious metals
  • Sell plasma and/or become a sperm donor

Keep in mind, once they grow up, young kids will not care that they shared a bedroom or that they didn’t have Disney Plus. For centuries, people grew up with less than we have today and they turned out better than many in the Z Generation.

Remember also that things will eventually get better. Inflation won’t last forever. The economy will either recover or it will collapse. If it collapses, we will have a few ugly years, and then we will rebuild and recover. It’s a cycle and nothing last forever. Stay alive, stay upbeat, take steps to protect yourself and your family, and live to see the other side. Once things recover, if you miss some of those “wants” you can indulge them. For now, concentrate on survival.

Video of the Day

This video is of a young Bruce singing The River on tour in 1980, before he bulked up for the Born in the USA Tour and built the stage presence he would later come to exhibit. He was my college girlfriend’s favorite artist and we would blast The River on my car’s cassette player.