Iwas talking about inflation the other day with someone and they opined that inflation was ‘no big deal’. I asked them what about people on fixed incomes? They shrugged and said that having to spend a few extra dollars here and there won’t make any material difference. Not eating for a month is, to me, a material difference.
People on fixed incomes…pensions, Social Insecurity, or disability…are the ones who get it worst. Let me give some examples….
Every month you carefully budget and spend $400 on groceries. That means for $4800 you get to eat all year…January 1 to December 31. Well, at 7% inflation you get to eat until…December 6th. And thats at the official rate of 7%. They took food and fuel out of inflation calculations years ago because those prices were too volatile…they could be affected by factors that had nothing to do with economic policy. Factors like oil embargos or crop failures. In all actuality, inflation is probably higher.
But, lets run with that 7% number. At 7% inflation you’re only able to spend out until that first week of December. After that you either do without, go into debt, use reserves, or come up with more income. And as inflation goes up, that deadline of when your money runs out moves closer and closer to ‘now’. And, whats worse, is that it’s compounded over the years…7% inflation this year means your money only buys 93% of what it did, and next year that money that bought 93% of what it used to will now only buy 93% of that. (In other words, your $100 that used to buy $100 of groceries will now only buy $93 worth. And next year it’ll buy about $87 worth of what it bought two years earlier.
What can you do? Well, I’m an idiot so my knee jerk reaction is ‘go make more money’. Alternatively, you juggle your budget to accommodate the new normal…you cut back on things, buy the cheaper brand, or find a less expensive source. But for some people thats not an option. I don’t know what to tell them. Only thing I could suggest to them is that they tighten their belts now so they can get used to making do with less.
For me, inflation is a pain in the butt, but it isn’t a crippler. My living expenses are low enough that having to pay extra on gas, food, etc, won’t break the bank but it does tie up resources I’d rather have elsewhere. Additionally, I have enough necessities in storage that i can defray a bout of inflation by living out of my stored supplies. Inflation doesn’t last forever, but it doesn’t go away overnight either…those of you who can remember the late 70’s and early 80’s know what I mean.
Inflation is an insidious thing…it devalues what you have worked hard to save, assuming you’ve dumped a pile of greenbacks in the bank. This is why you always hear people talking about ‘tangibles’. A ten dollar bill may only be worth nine dollars next year, but a Glock 17 will still be worth..a Glock 17 next year. If only there was some sort of compact form of wealth that would keep its value over time against inflation.
Fortunately, most of us arent on fixed incomes (yet), so we can roll with the inflationary punches a little bit. But the smart move, in my uneducated opinion, is to to buy any big-ticket items you’ve had your eye on sooner rather than later. (Assuming they are in stock and not subject to ‘supply chain issues’.) Why? Because it’s just gonna be more expensive later.
Oh, and before I forget, someone is actually coming out with a literal gold-backed currency. No, seriously, the bill is imbued with a specific weight of gold. I’m curious if stetting the bill on fire would result a small pile of ash and a residual tiny couple flecks of gold. No doubt this will got he way of the Liberty Dollar but the idea is clever. Paper notes that are actually gold.
Wife & I have have always kept ~$6 grand in small bills hidden in the house. Might not be so ‘wise’ anymore.
The problem with guessing when to get out of that is things can stay totally wacked longer then you can stay solvent. That being said, I did just drop my emergency fund by … well, 3oz of AU, still have enough for taxes and utilities for a year. As I just inventoried my second smallest freezer and it has ~160 lbs of meat in it, I’m pretty sure I could go more then a year w/o buying anything (would miss fresh greens in the winter though, but when I was growing up you couldn’t get fresh greens in the winter up here, could hardly get them in the summer).
I have cash around the house as well but it isn’t so much for “emergencies” as “very good cash offers”, had a buddy call me a while back saying a friend of his needed quick cash and was willing to sell his set of level 4 plates and carrier for rather low price. Done of few similar deals (the “meat guy”, etc.)
Unfortunately I am on a fixed income (Social Insecurity) and am no longer physically able to work. I lost my job in August due to issues relating to my screwed up back.
I do however do some selling on fleabay, but it is getting harder to find suitable items to sell at a cost where I can make a reasonable profit. I am having to rethink my business model as to what types of items I should try to sell.
At the rate things are going, the latter part of the year may be mostly beans and rice to get by on.
God bless and keep you
Yeah , being on a fixed income and fixed pension sucks when you have a idiot (p)resident who could give a Fuck about you , he’s got his . When it all comes down , I don’t think that a lot of people will safe, from what I’ve heard. Oh , I’ve heard that the irs will be talking to people who sell on eBay and other online sites. Will they squeeze the folks on welfare?
You know they will.
They won’t even hesitate half a second before pushing the button.
But don’t forget:
“We’re all in this together”
(Like Hell we are…)
Fleabay already does an IRS form for any seller that has $1,200 or more in transaction in any year. I received my copy of the form (1099-K) in the mail yesterday for my 2001 sales.
As someone who is set to retire at the end of this month, inflation is a BIG worry. Over the years when we were talking strategy with various financial planners, always get a second opinion, I would bring up the possibility of high or even hyper inflation. They always dismissed my concerns as not being very likely and as long as the return on the IRA’s were higher than the inflation rate then ‘you’re still making money’.
I was conservative and told them keep risk low and make me 5-6% and they did. Now I will have to make 10-12% to stay ahead. Even if we cut spending to the bare minimum we will still have to worry about outliving our money. Watched my grandmother pass away in a state run nursing home, it was a hell hole, her entire retirement was $405 a month from social security. Whenever I would send her an extra $50 she would ALWAYS call and thank me profusely, it was life changing money to her.
I’m gonna sound like a heartless bad guy (maybe I am), but isn’t the “fixed income” complaint kinda like the Aesop Fable that tells the story about the ant and the grasshopper? Inflation is bad for most of us, sure, but folks ending up on only a fixed income somehow, and getting caught by inflation, should have planned for potentially bad down-the-road problems when they were younger and earning, versus taking on the I’m-a-victim-of-inflation role when it hits them, and pretending that inflation was something that no one ever heard of before or saw coming? Not always but maybe most of the time, isn’t it the choices we make along the way that move us towards where we end up eventually?
You can plan for what happens “down the road.” What happens? “Our betters” make the road longer. Maybe you’re OK with “Let them steal my money. I’ll just make more. I’m not OK with that. …You must be very young…
No, I’m not OK with let them steal my money – and not because I’ll just make more – I can’t make more, at this age, at least not like I used to – I’m North of 70
Do you plan for a life changing illness that leaves you broke by draining away all your savings paying bills?
Show us your homework on that one.
Ya, It’s called catastrophic injury insurance, been around for quite a while.
Its called Adequate Health Insurance and its not always provided by your employer (assuming you have one) or your goobermint.
Rolling the dice on health insurance is an individual’s choice, as is complaining about life when you lose that bet. But the Responsibility for your life and health is Yours, not mine or your goobermints.
You aren’t wrong but if we go down this route be prepared for the consequences in terms of much lower birth rates and higher savings rates.
I had planned on working at least two more years which would have paid off my mortgage. I am otherwise debt free. Unfortunately my body gave out first. In addition, my wife’s dementia and other health issues are at a point where she really needs someone around all of the time anyway.
And yes, I should have listened to my father 50 years ago. He sounded a lot like Dave Ramsey back before Dave Ramsey was around. I didn’t figure out he was right until a little over 20 years ago. If I had continued to make the kind of money I was making 25 years ago I would have been in good shape.
Sometimes you have to put family ahead of work and money. Life happens. I will never regret moving to another state and starting over so that my step-daughter would not lose custody of her son. It was the right thing to do.
that is the great tragedy, that everybody including myself on fixed income will be destitute when this farse of a government collapses, as it soon will. there goes 40 years of hard work. that’s what i get for believing in the system. beware the old man with nothing to lose.
With some exceptions, scraping by in retirement is just an extension of poor life decisions.
– were you on cruise control thru hi school, partying and eeking by on less grades than you were capable of?
– did you work for advanced degrees in a USEFUL discipline or work towards other USEFUL training?
– did you overly indulge your urges for drugs(including alcohol) to the point it kept you from preparing for your education or preps?
– did you get married then divorced and give half your shit away (each time)?
– did you have a litter of kids that you really couldnt afford (even if you are just now realizing how many you could afford and still have a decent end of days)?
– did you raise your kids right so that they will look after you in your declining years?
– did you make bad (or no) investment (and i include preps in that) decisions because you didnt research or understand how investments work? is this a result of 1 or more of the above poor life choices?
– did you gamble on good health and no serious accidents or genetic defects or did you buy adequate insurance?
– and most importantly, did you REALLY think that .gov would be there to help you? that may imply your poor grades in school were deserved and your poverty really isnt from a lack of trying. in this case, the various churches need to step up and walk their talk and help folks like you (and damn few of them do. they do need those new pew cushions or gym). Tho with a computer, internet, and time to surf, you dont really qualify for destitute imo.
MOST people are capable of planning and preparing for retirement. I have no sympathy for those folks that dont. I worked my ass off starting well before college and didnt have all the fun i could have had. My mom and dad did the same so maybe thats where i learned it. My result is a very comfortable (and early, <50) retirement where i have more income now than i have ever had in my life- and that is in inflation adjusted dollars. Not even considering my family's ability/willingness to help each other.
Inflation is a permanent and ever-growing government (with the help of the Fed) tax and the quicker you understand and plan for that, the better.
Everybody thinks they have a retirement plan that will outperform inflation and taxes.
Until the Gov.com punches them in the mouth with massive currency debasement hidden in various taxes, loss of services and such.
My FIL was a smart banker who retired with an “Ample Plan” some 40 years ago. Even “inflation protected” and all.
Not so fast Guido as changes and taxes and even more inflation and extra charges (or simply loss of) for services rolled in. They lived in my MIL Apartment for the past 20 years and just passed.
While I am currently debt free aside from monthly bills, my intention is to maintain my employment as a Fixed Income even with inflation adjustments is going to fall flat with “Normal Inflation” and Hyperinflation seems invited to Dinner so…
Pride goes before a fall, stay humble, stay employed and do what you need to increase your value to your employer (and get a raise).
I’ve seen some goldbacks, they were state specific, Nevada, Utah, or Colorado.
At this point they’re a little pricey, but I’d love to see it catch on.
I think the state thing is an attempt to avoid federal issues.
Yes, they have to be State specific as no one else can print currency, back by gold or otherwise. Not sure about all of them but some have interstate agreements where they officially accept the others and from what I’ve read people doing business with them will usually accept any as they are all basically the same amount of gold.
Commander, once again you have written an interesting post. Reading it and some of the replies makes me yet again feel lucky that I’m north of the border. And yes, I’m retired and have been for the last six years.
They made a big ass deal out of the fact the recipients of Socialist Security got a 6.9% raise in benefits. Big deal. The assholes in Washington according to a blueprint developed for Marxist Morons like Barack the Incapable and Joe the Incompetent. What ever is ” given” is not that which is received. Every year I’ve been on Medicare there is a yearly increase in that useless expense. First year was $136 per month. Second year it went to $148. This time it jumped to $170.50 a month. It might be cheaper but Nasty Ass Pelosi and Barack the Usless decided the only way to bring the Unaffordable Don’t Give a Shit act in under the top rate was to steal from the Medicare fund. Of course that’s pretty normal. They’ve been stealing our Socialist Security money to pay for LBJs not so great society since 1964. What we pay in to Social Security is dumped into the general fund. That money was supposed to be set aside for us. They can never and will not repay it. . Kind of funny when you understand it’s always the Party of Marx that does this. Those who refer to the entire system as a ponzi scheme are exactly correct. I think it’s time we developed a withdrawal strategy from the War on Poverty. Continually throwing money down a sewer never works. It just pisses off and impoverishes those who are stolen from. But take note. Back in the 1960s the Congress controled by Marxocrats set up a totally different retirement fund for themselves. And they’ve found workarounds so they don’t have to participate in the UDGASA. Or Obama care or the Unaffordable Don’t Give a Shit Act. Totally unconstitutional on so many levels. As Ronald Reagan pointed out. The most terrifying words in the English language are ” hello. We’re here to help. We’re from the Government”.
Always remember what rats do when cornered. That’s what’s about to happen. Stay tuned.
Here’s something else. I heard on Friday Feb 4 that old dummy has asked Congress to do the following. Give every illegal alien held in detention by the Trump policies the sum of $150,000.00. And give them immediate citizenship.
So Trump secures the border. Follows the law and strengthens the existing law. And the Dumbass temporary occupant at 1600 PA Ave Washington Dysfunctional Cesspool is going to blame Trump for his stupidity.
It would be better to use that money to give all SSI recipients $2000 per quarter to offset the inflation caused by the policies of the Dumbest proffessional Idiot that ever walked the planet. After all. WE have more skin in the game then border jumping felons who broke into our country. The money would be better spent here. Not sent off to other nations to help bring more border jumpers here. Biden needs to be impeached and removed at the earliest opportunity. If the Republican party takes over Congress next year. The first order of business from the new Congress needs to be exactly that. The impeachment and removal of an illegally installed President by virtue of a stolen election.
You realize that even giving it to SSI recipients screws the country further. It isn’t money – it’s debt. It has to be paid back with interest – but nobody has the principal OR the interest to pay it back with. It’s an enslavement system. Every dollar spent by the governments – federal, state, or local is borrowed. Your children and their grandchildren will owe that debt – forever.
It’s wrong to give it to illegals. It’s also wrong to give it to Americans.
You’re absolutely right IMO, Why does the most powerful government in history have to borrow money to facilitate business in its economy ? because the government is corrupt! simple once you read about how the system works, yet you just cant get people interested, well at least I can’t and from it being still in existence other can’t also..
I’m assuming that’s why the thinkers of yesterday detested paper money, to easy to reduce the ratio of paper to precious metals..
i agree that tangibles, especially guns keep and increase their value over time to hedge against inflation… however i bought a G17 15 years ago for $550, and another last year for $525. so… in this case i paid much more 15 years ago than recently.
ammo is another story… all of a sudden i don’t seem so foolish to my sons having piles of it while they blasted away 😉 like i tell my kids: in hard times young men look to buy guns but old men buy seeds and work the garden.
Rem that you had the use of that Glock for 15 years too- that has some value to you.
“…in hard times young men look to buy guns but old men buy seeds and work the garden.”
Spot on, brother. I just got back from buying some of this years garden seeds at the co-op. (which will be put back as i use seeds from previous years’ overbuying.)
Well my friend keep your eyes wide open. The Biden Regime is planning to take a page from the playbook of Adolf Hitler and Joseph Stalin.
He is assembling a data base of all owners of firearms. The Supreme Court has already rendered a position in this during the time of the Arkansas Travelers Regime. Data bases are consider to be unconstitutional. Does the Old Dumb bastard in the White House care? No. He has already defied the court in the Vaccine Mandate issue. Before the end of this year. Biden to insure the Marxocrat Majorities in Congress will last forever will demand the surrender of all firearms legally held by law abiding Americans. This administration as did the Obama Regime view us as the enemy of the Government. They are the government. Anyone outside the government is an enemy. They have created their own version of the Brown Shirts and the Facists in Italy. They have ANTIFA and BLM and to a lesser extent Boogaloo Boys. They have used these three Government sponsored terrorist groups in out major cities in 2020 and on January 6, 2021. They are controlled from the Speaker of the Houses office. Things are about to get sporty. We are not out of the woods yet. But then the woods are where we are at our best. The college effeminate Beta boys of this Regime never leave the safety of the cities. A mind set which they will find not so inviting in the near future.
I keep telling people never confuse the Wage/Price Spiral with inflation. They’re not the same thing.
You’re right: inflation in prices is always about double the spiral in wages.
A couple of things can be done to put a huge damper on inflation.
First we return the country to the gold standard. It prevents this Quantitative Easing Bullshit the Kenyan just loved. Then repeal the 16th and 17th Amendents. Give the state’s their representation in Congress. Which they haven’t had since 1914. Get rid of the IRS as the Marxocrat Party always weaponizes that agency. Let the state’s collect the taxes and thrn remit whst the Feds have coming. That’s the way it used to be done. Because of the 17th Amendment the Senate actually serves no useful purpose.
The BATFE also needs to be gone. After the repeal of the Volsteadt act they had to give the liquor control officers some thing to do. So the added firearms to their preview. Tobbaco was added and finally explosives. These duties can be parcels out to other agencies. No need for this one. It has a very corrupt history.
The National Firearms Act of 1934 needs to repealed in its entirety. It’s an infringement on the 2nd Amendment. Also the reminents of the GCA68 and what’s left if Bubba’s AWB. None is needed. All are infringements on out rights. Several anti gun bills signed by President George H.W. Bush also need to be scrapped. The government can save millions by getting rid of these laws and reduce the Administrative footprint of the. Federal Government. The left always love to reduce footprints so here is a major one that’s needed reduction for years.
But we need to get involved. Use your Congressional Representatives office and your US Senators. Be polite and express your opinion and your case . There is a great awakening in this country. We see it everywhere. The time is now while the Marxocrat beast is wounded.