Don’t Let Inflation Bite You In The Rear
A few days ago I had my neighbor complain to me about the recent rent increase in our apartment complex. The rent was increased from $1100 a month to $1125. That $25 increase was preceded by a $25 increase 6 months ago. From what I’ve seen, the rent has been systematically increased twice a year for $25 each time.
As he complained about how he cannot afford the increases in his budget, I couldn’t help but to think that this is his fault. How is it his fault you ask? Well, it’s his fault because he hasn’t planned for these increases in his budget.
Let’s face it, inflation is not going away any more than death and taxes. In this case, the owner of the apartment complex has expenses just like everyone else. The owner has bills, taxes, and employees to pay. These expenses are going up for him, which means your rent to him has to go up to cover the increases.
As such, you must account for inflation in your budgets and retirement planning. In America, the inflation rate is about 3%. That means everything will get 3% more expensive every year. Remember that nothing is safe from inflation. Every single thing that you buy is going to cost more in the future.
What this should tell you is that you need to be making 3% more money every year to cover these increases. Because if you don’t, you will find that you cannot keep up with your current standard of living.
There is a very important point here and you should be sure to grasp it. You must always be growing your income streams to keep up with inflation. I cannot stress this enough. There are millions of Americans out there living on fixed budgets. These fixed budgets are like having a bag with holes in the bottom. They will only continue to shrink unless you refill them.
I constantly hear people complain about how their bills are going up. I just accept it and know that I can pay for the increases because my income streams are increasing. People would be much better off finding ways to make the money to pay the bills than by complaining about how high they are.
Written by admin on September 7th, 2006 with
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