I wanted to get this post out to you after reading Michael’s write up called Consider a Tiny House Backup Plan over at Tiny House Design.
In it, he discusses the unavoidable truths of inflation and the scary possibilities of hyperinflation due to central banks printing more and more money.
Although this is nothing new, and it has been happening now for several decades, it’s something you and I should be aware of. Better yet, I’d like to leave you with ideas that you can take action on to come out stronger over the years.
For me, the tiny house movement isn’t just about extremely small homes because that’s just impractical for a lot of us. It works for some of us, but it won’t for a lot of people, especially families.
So the other message I like to get across to folks is to simply live within your means and that’s what the small house movement encourages you to do. So whether you decide to live in 2,000 square feet or 200 square feet, it’s really about resisting the urge to over extend ourselves when it’s most enticing.
It’s about staying put after you receive a pay raise. It’s about resisting the urge to upgrade your car when you receive an unexpected bonus. It’s about being satisfied with your 37″ LCD television when there’s a great deal on a 47″ one.
It’s saying “no thanks” when your bank offers you a low interest loan because you’ve built equity on your home over the years. But why? Because if you can resist all of these temptations you’ll be ready to take advantage of moments where you can have your money work for you instead of the other way around.
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If you can resist all of that, over the years, you’ll find yourself with an abundance of cash that you can use to take advantage of opportunities while others wish and dream they could. Even if it means ignoring the rest of this post and just making a couple of extra payments on your debts every year so you can pay them off faster.
But if you’re a little more ambitious, here are some ways to beat inflation with the extra money you save thanks to simple living, tiny house living, or simply living within your means consistently:
- Acquire a rental property that you can rent out for a profit every month
- Buy stocks in your favorite publicly traded companies
- Purchase precious metals like silver and gold that increase in value over the long run
- Buy bonds, ETFs, or mutual funds and enjoy better returns with little to no management
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Or, you can lose all that equity and lose all that cash paying for unexpected or excessive medical costs, because the US, alone among all the “developed” nations, lacks a low cost/reasonable system of providing health care.
Your story assumes good medical insurance for all of your life, which is the case for fewer & fewer people in the US. Or somehow never becoming really ill, avoiding any severe accidents, etc.
Yes, it’s useful to live w/in your means, but it’s no protection from want, not in the US, and hyperinflation is not the greatest danger, but high costs of health care, including dental care.
I have always promoted simple living and living within your means in my books and that is a lifestyle change that can be done regardless of the size of home you live in. Choosing to live in a smaller home may not reduce your debt and may increase it if you live the same way you did in a larger home.
The reason many of us choose a smaller home or house on wheels is to avoid that 30 year mortgage and pay it off quickly or pay for it with cash so we can then put that money to better use for things that will enhance our lives and/or help our children.
To reduce your debt even more consider an off-grid home with no monthly utility payments.
If you eliminate your house payment and utility bills you would not need as much money and you will keep more of the money you make for other purposes.
I believe the best investments are investments made in your and your families security, education, and health. So put that extra money into improving your homestead and reducing your dependence on store bought products. Invest in education for your self or your children. Invest in starting a small business so you no longer have to rely on a boss for your money. Invest in a healthy lifestyle and health insurance which includes more exercise, eating right and enjoying life.
I’m not sure I’m totally in agreement with the suggestions in this article, but I totally agree with the idea of living within our means. Have you seen the documentary “The Ascent of Money” ? One simple conclusion one can draw from it is that the monetary paradigm we have been born into is led by greedy and short sighted powerful people. Your 4 suggestions entangle the person more into the monetary system. I would suggest the opposite : insulate yourself from the monetary system, i.e. become less dependent on it. Live in something you own, stay debt-free, and invest in what frees you from future recurring monetary expenses (solar/wind power generation, a garden to grow your own food, etc). Inflation and market crashes are not in our personal control, so distancing ourselves from the impacts of the greedy and reckless financial institutions is one of the first steps in my opinion. Also, are you familiar with The Zeitgeist Movement ? I think it might be very interesting to you. I would recommend the 2nd and 3rd movies of the series (which they distribute free of charge online).