Dear Dave,
All the talk on the news about inflation is a little scary. Is there any way to protect yourself against it on a day-to-day basis?
Garret
Dear Garret,
When people start talking about inflation, it seems like there are always some who want to start collecting gold, fill every container they own with gasoline and stick their cash under their mattresses. But listen, you can prepare for inflation and address the results without being panicked.
You are still in control of your money, inflation or not. You’ll be able to make sure your money is going toward the right things, while being able to find places where you can cut spending, if you’re living on a written, monthly budget. If you’re noticing the prices of things like food and gas rising in your area, you’ll need to adjust your budget to account for this. That way, you’ll know exactly what you’re working with, and it will help you avoid any nasty surprises.
If you’re really feeling the pinch and want to save even more, look for specific ways to lower your grocery bill or save money on gas. Maybe it’s time you switched to generic brands, or started a carpool into work. If you find great deals on canned food and things you can stock your pantry with—I’m talking about stuff you’ll actually use—go ahead and buy a little extra. Just make sure you’ve budgeted for it before heading to the grocery store. You’ll want to already know exactly what you’re going to spend, so you don’t get swept up into impulse buying. Like it or not, inflation is a thing. If you plan on retiring one day, it’s pretty much guaranteed that the cost of a loaf of bread, a tank of gas and even a cup of coffee will have gone up by then. The best way to protect yourself against inflation that’s bound to happen is to invest your money—and the sooner the better. But remember, if you still have debt other than your mortgage, and don’t have an emergency fund of three to six months of expenses, you need to take care of those things first!
— Dave
Dear Dave,
What is the main differ ence between people who follow your plan, stick with it and succeed, and those who fall off along the way?
Damon
Dear Damon,
I’ve walked with thousands of families through financial problems. Some of them were just speedbumps that needed to be smoothed out, while others seemed like mountains. The biggest factor I’ve noticed separating those who stick with it and gain control of their finances, from those who give up and go back to their old ways, can be boiled down to one simple word—hope.
Hope is stolen when we misunderstand failure and believe lies. One of the biggest lies that robs people of hope is the one that says failure is permanent. The moment we start seeing failures of the past as predictors of our futures, it extinguishes that ember of hope. Failure happens to all of us at times. It’s natural, and it is normal. The way to reach your goals, though, is to keep failure in its cage. And failure is caged when we begin to understand it isn’t permanent.
Winston Churchill once said, “Success is going from failure to failure without loss of enthusiasm.” If we believe failure is here to stay, we lose enthusiasm. And that leads to an inability to re-focus on success. People often make dumb, short-term decisions when they’re in financial difficulty. If you talk yourself into believing you’ll never be able to save enough money to pay cash for a car, you’ll lose hope and borrow the money. Debt not only robs you of the ability to build wealth, but it’s also usually the result of losing hope.
Have you done something stupid or wrong in the past that you are still reliving daily? Is that memory haunting you, and stealing your hope? Remember, the past only has power over you if you let it have that power. Don’t get me wrong. The past can hurt, and it can be disappointing. But you can either give in to it and let it control you, or you can learn from it and make a conscious decision to keep moving forward.
The choice is yours!
— Dave