This is Part 1 of a 3 Part Series.
It’s the new front page story: the price of everything is going up. Starting with gas and its trickle down interference on practically everything else; most products we use have to be shipped to us. So, if the price of gas is higher, that added cost is being passed onward to the consumer. That would be you and me. I’m no stranger to dealing with inflation. We were immersed in hyperinflation going back to the Jimmy Carter years in the late 70s and early 80s. Carter’s advice was to wear a sweater inside your house as a means of coping with higher heating fuel bills. I don’t think that advice is going to cut it in 2021. We’re going to need more than a wool sweater to keep warm this winter this time around.
So, what to do? How to prepare? How to cope?
I can only tell you what hubby and I are doing, since both of us survived the super inflation years of the 1970s. Perhaps you can glean some kind of advice off of what I say. The first thing you need to do is to take a step back and objectively look at your life. What expenses can you cut so as to free up some extra money to afford the rising prices? You have to streamline your life down to the bare essentials. That means no more frivolous spending. I looked over my budget and starting cutting the expenses on things we didn’t use, need or want. You have to start prioritizing. You also have to start taking care of what you already own because the odds of replacing things may become impossible. You also have to start doing things yourself. You must forego paying for services that either you or your partner can do for themselves. DIY must now take center stage. Get yourself either a repair manual or start watching YouTube videos and learn how to get things done.
I don’t believe this inflationary period is going to be transitory as the government states. I think we are going to have a rough two years ahead of us (in my opinion). Usually the government raises interest rates to control inflation. Treasury Secretary, Janet Yellen, already hinted that rates are going to rise (click here for that info) before the Biden administration hauled her back in and forced Yellen to retract her statements. Should the Feds raise interest rates, which at some point they will be forced to do, we will see a complete collapse of our monetary system. The stock market will crash, the housing market will crash, our economy will crash. This part of the equation I have never experienced before.
Later in the day, Janet Yellem tempered her comments somewhat on the need for higher rates, saying she respects the Federal Reserve’s independence and was not trying to influence decision-making there. Yellen chaired the Fed from 2014-18. The Fed sets interest rates through its Federal Open Market Committee.
I’m doing this post on inflation in three parts: gas, energy, food. I’m starting with gas because our whole economy depends on gas and fuel. All of our consumer goods are transported. When gas prices rise, so does the costs of everything else. The manufacturer passes on their higher fuel prices to us. In addition to paying more for just about everything, we now have to worry about how we are going to heat our homes, funnel in hot water and drive around in our cars. We’ve already cancelled one vacation site because we don’t know if gas will be available along our path. We do have a fuel efficient car (37 miles per gallon) but if we can’t get gas or if gas is priced sky high, we may not be driving as much, if at all.
One of the biggest problems of the 1970s recession was home heating oil. Granted yes, we use propane to heat our home but propane is a derivative of oil. Back in the 70s my then-husband put in a wood burning stove on the first floor of our split level house. He cut vents into the ceilings of the rooms above the stove so as to bring heat up into the bedrooms and bath. Currently my now-husband and I live on one main floor. We are making plans to bring in a wood burning stove. Hubby and I have been talking about doing this for years. Now, it’s time. Our home sits on a very dense forest with lots and lots of trees available to burn for many years to come. Hubby has already started to cut down trees, stack them and age them for the upcoming winter season when we start using our new wood-burning stove.
In high inflation times such as what we are currently finding ourselves in, the best thing for anyone to do is to get themselves off the grid as much as possible. If that means installing solar panels, then by all means, start doing it. If you are driving a gas-guzzling vehicle, now may be the time to trade it in for a more fuel efficient model. If you can get one. Used cars are being priced higher than what they were worth. Ours included. It’s worth two thousand more than listed in The Kelly Blue Book. Good for us. Bad news for buyers. New cars, due to the inability to ascertain micro chips, many manufacturing factories have been temporarily halted. It may be difficult to buy or lease a new car now.
Make sure you take good care of your existing vehicle. Do the required oil changes, tire rotations and any and all other maintenance repairs your car may need. Another thing making owning a car cost prohibitive is the current rise in highway tolls, registration fees and inspection fees as well as vehicle insurance. You can try to save money by raising your deductible or if your car is old enough, cancel collision coverage. As for tolls, you can set your navigation system to get you to the places you want to go on toll free roads. The drive may be longer so figure out your best, cost effective route before you go.
Change the filters on your heating unit. If you need an annual physical cleaning, by all means, get it done! Make sure ALL of your equipment is in tip top shape. Learn how to do the upkeep and the repairs yourself. Buy reference books if necessary. Reduce your dependence on oil. Limit your hot showers and baths. Combine driving errands together. Try to get it all done in a day rather than several days over the week.
I hate to say this BUT I have a weird feeling in my gut lately. I don’t think this episode with hyperinflation is going to be like the 70s. I think it’s going to be worse. You have to be at least 50 to 55 years old to remember what the hyperinflation of the middle 1970s felt like. Senior citizens were eating dog food. Car owners had to wait for hours on lines at the gas stations, usually on odd and even days based on your license plate number. Folks, it was very bad. I was in my 20s and newly married when hyperinflation hit. My parents were self-employed and did very well financially during the late 70s so I never fully felt the impact. But I do remember very well what alot of people were going through. There were a few times my then-husband and I couldn’t get a good meal together. I started a garden back then and baked my own bread.
To make current matters worse for us, the cyber attack on our pipeline isn’t going to sit well. Already they are preparing to raise gas prices which will have a domino effect on the rest of our economy (click here for more info).
Gas prices are expected to rise following a ransomware attack targeting Colonial Pipeline Company last week that forced the company to shut down a major fuel pipeline. News wires noted that gas prices were already up nationwide by an average of six cents per gallon over the past two weeks. Industry experts are expecting further increases, particularly in the U.S. southeast. “If the interruption persists, we will see more regional impacts than nation-wide, in terms of supply and prices. The south/southeast (Maryland to Mississippi to Georgia), will likely see gas prices increase first,” the American Automobile Association (AAA) told Reuters.
Keep your tanks full. Limit driving. Hold onto your wallets. It’s going to be a bumpy ride!
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