Friday, December 19, 2008

Unsolicited Financial Advice

Just what everyone needs, right?

With the government handing out money it doesn't have at truly astounding rates of speed, my (admittedly not expert-level) economics education tells me inflation is a-comin'. Hyperinflation, meaning double-digit inflation, is not an unrealistic prospect. What's hyperinflation do? Well, six years of 12% inflation would turn the hypothetical $2 bread into $4 bread. And rest unassured, it doesn't mean your hypothetical $30k/year salary becomes a $60k/year salary in the meantime. That's what "tough times" are. Your job gets an automatic pay cut every passing month for your hard work. (And you're working hard, because if you slack off you become a targeted budget cut. 10% unemployment doesn't sound too bad until you realize it means one out of every ten people you know is reduced to surviving on charity.)

So what to do? With these four easy steps, you too can weather a recession!

1. Pay your tithing. I'll spare the explanation; if you haven't heard it a million times, there's a prerequisite to paying your tithing you need to fufill in the first, namely, belonging to the organization to which one would tithe.

2. Pay off your debts. That terrible spectre, consumer debt, becomes particularly nasty when banks start to feel a pinch. To wit, a charming example of what that means.

3. Maintain your food storage. Two reasons - firstly, if things get really bad for you, it's nice to be able to eat and stuff. Secondly, unfinished food (like bulk wheat) is always cheaper than finished, and if you rotate your food storage properly you'll use some of it, which will generally save you money on your groceries.

4. Invest in something not money. If you want your earnings to retain their value, put those earnings into something that isn't pegged to the value of the dollar. Inflation hits investments hard, but only as hard as it hits not investing at all. By clerical error, I was never enrolled in my company's 401k back in May. My company offers a 50% employer match on contributions. As of right before Thanksgiving, the money I would have invested would have lost so much value it would have wiped out the employer match completely, and a little extra besides. Imagine that with a high inflation rate. My big suggestion? Buy a home. If you have a home, invest by paying down your mortgage. When that's gone, you can worry about a retirement account.

And there you have it. With these simple steps, I guarantee you'll be exactly as financially prepared to handle the coming crisis as I am. ~_^

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