Times are tough for all of us! The last two years have been very trying between the virus and the inflation that we are seeing in our food supply and on many other items that we pay for monthly.
You have all seen the increases in food, natural gas, electricity, oil, propane, lumber, housing prices, gasoline, OTC medications, insurances, property taxes, and many other products and services.
I know some of you have gotten raises but will they be enough to keep up with all these increases? I doubt it. I believe that prices are going to continue to go up this year and possibly into 2023. I am already seeing big increases just since the 1st of the year. Many companies have come out and said they will be raising prices this month.
Most of you know that I am pretty old so I have been through times like this before. If you aren’t in the Baby Boomer generation, you probably don’t remember the worst time. The one that has always stuck in my mind was during the Carter years. Fed Chair Volcker, who served under President Carter raised the interest rates way up to 22%. Inflation reached 18%. I had a friend who purchased a home down the street from us at a 16% mortgage rate. Gasoline went up to $5.00 a gallon. We had gas shortages. We spent lots of time just waiting in line to gas up our car if we could find a station that had some. I even remember speed limits being decreased on some highways to 55 to conserve gasoline. The only thing that made any money was CD’s because the interest rates went up on them.
A number of you have written to me and asked me what to do with your money. I am not a financial advisor so I have no expertise in that field. We do the best we can with what we have learned over the years but even that is not guaranteed to work in this economy. So do your own research on it.
However, there is one piece of advice that I feel comfortable giving you. If you have any debt whatsoever, pay it off as fast as you can. The Feds said this week that they are going to start raising interest rates. When they start doing that, the interest rates on any outstanding money on your credit cards will follow. Any adjustable rate debt that you owe can go up depending on the terms. If you have a conventional mortgage your term is locked in. If you purchased a house at these lower rates over the the past couple of years, you are lucky and will have that lower rate for the life of the mortgage. Hopefully, many of you refinanced your mortgages while these rates were low.
But please, pay off those credit cards as fast as you can! If you are carrying large balances on them, it is going to really hurt when those interest rates rise! Don’t open any more! I have often talked about paying off your debt over the years. But this time, it needs to go or you will be paying a lot more to carry those balances.
President Biden and Treasurer Yellen, are saying they remember all of this from the Volcker years. We won’t let it get this bad they say. If you believe that, I have a bridge to sell you. I honestly do not know how they will get out of this. Just take a look at the debt clock for this country. https://usdebtclock.org/
I truly hope you take heed for your own good. If not, I tried.