You don’t need to hear it from us – the price of just about everything has been rising due to inflation. Supply chain snarls, labor shortages and government policy have all contributed to one of the highest inflation rates the U.S. has seen in nearly 40 years. While there’s no magic solution to avoiding higher prices, these four tips may help reduce some of your bigger and smaller costs.
1. Wait on buying a car or other extremely inflated product
If you’ve looked at car prices recently, you might still be picking your jaw up off the floor. By some estimates, the average used car now costs over $27,500. Thankfully, these outrageous prices may be a temporary phenomenon caused by the current computer chip shortage. If you can put off buying your next vehicle – or any other products that are overpriced due to temporary shortages – price relief may arrive in the future.
2. Look for cheaper alternatives where available
Inflation doesn’t affect all goods and services equally. While certain things may have surged in price, some alternatives may remain much more reasonable. For example, in the grocery store, beef and pork prices have generally seen much higher price increases than on chicken, turkey and vegetable products. If you tend to shop on autopilot for your usual favorites, now is the time to seek out better deals on other options.
3. Consider growing your investments, not your bank accounts
Inflation is tough on savers. That’s because your cash – whether it’s in a bank account or under the mattress – will decrease in value due to rising prices unless you’re earning a return that’s at least equal to the inflation rate. Therefore, if your emergency fund and other cash needs are in good shape, look into putting your extra money into something with a higher return such as savings bonds, mutual funds or other investments.
4. Reevaluate your homeownership strategy
Homeownership can offer important protection from inflation. When you own your home, you don’t have to worry about rent increases, which are often influenced by inflation. If you’re not currently a homeowner, this period of rising rents may be the right time to buy your own place. And if you own a home and have an adjustable-rate mortgage with a rate that is set to adjust soon, now is a good time to consider refinancing into a fixed rate to protect your monthly payment from potentially increasing.
There’s no silver bullet for beating inflation, but hopefully these tips will help you better protect your budget. If you would like a free mortgage consultation to discuss your options for buying a home, locking an adjustable rate or taking home equity out as cash, get in touch today.
Draper and Kramer Mortgage Corp. and its employees do not provide financial planning or investment advice. This material has been prepared for general informational purposes only and is not intended to provide and should not be relied on for such advice. Do not act or refrain from acting on the basis of this material without first consulting a qualified professional for advice.