Inflationary Woes, a Slightly Different Twist

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Here's simple insight on how to cope. Can we reasonably answer the question, just how bad is it? It's easier than the analysts would have your think. Contrary to popular beliefs, the true definition of inflation is, "a state of constant rising prices." You got it. We have it. It's bad! It doesn't require percentage comparison to last year's quarter, it's in our faces every time we go to the store or stop at the gas station. We know how bad it is every time we go through the checkout line. We have TROUBLE!

We are at the point that there are workers running around changing prices. Not only are prices up, but the amount in the package is less. Seeing this takes a veteran shopper. Loaves of bread in major super markets are half the size they use to be. Restaurants that used to be known for their large portions are cutting way down.

Don't take your anger out on the distributors. Both grocery stores and gas stations have large overheads and very small profit margins. Whenever the price increases from their distributor, they have to pay more in order to have the product available. It is hurting some to the point of questioning if they should stay open for business. Smaller gas station owners are closing up shop.
During most inflationary times, there is an urge to shop, shop, and shop some more. The idea is money looses its value during inflation. If you wait, it will cost you more. There is a new twist this time around. People are scared of long run consequences because of the problems with mortgages and the fear of more layoffs. No one wants long term bills they might not be able to pay. The country, as well the world, is in a big fat pickle.

The mortgage mess is just a part of it. Gas prices have been rising for quite awhile. No one has stepped in to increase the effort of alternative energy. Oh yes, we all know about alternative fuel cars. There total numbers are small compared to the whole enchilada. What most consumers are not aware of is that the price of fuel effects everything. Goods need to be shipped for distribution. When our gas goes up, other fuel products move in the same direction. Then, there is air travel. Their fuel moves up just like ours. They have been screaming lately about their need to raise rates and nick pick you with charges for the extra carry on luggage. If you are a frequent flier, don't think for a minute that it is over.

This is a gloomy picture. We have prices going up; jobs at risk; customers squeezing every nickel they have; and thousands of homes on the market with few buyers. There is no prediction as to when things will get better.

Here are some cautionary notes that will help you cope better than the average Joe. Don't get into a long-term contract for anything you can do without it. I don't care how great the deal sounds on paper today. Since the future is cloudy, there is good chance home prices might go down further, wait. Don't fall for the fancy ads for products requiring a long-term contract. I don't care how long they promise you don't have to pay, you will pay and probably extra since they held the note so long before they started getting payments.

If there was ever a time to have a secondary skill that will earn you dollars, it's now. If you don't have one, develop one. I don't care if it is knitting scarves for friends or catering school events with your prize winning cupcakes. Find one and start filing a profits and loss statement every year with your income tax. This plan will increase cash flow during the year and increase your income tax refund.

Because times are uncertain, the stock markets are jumping all around the place. Unless you have money you can live without, now is NOT the time to play in the stock market. Encourage any teens in your house to find a summer job. Incentive: they will have a better back-to-school wardrobe and it wouldn't all come out of your pocket.

Don't make any change in lifestyle, business, or long term purchases that you can't get out of real fast if the economy takes a turn for the worse.

Become an overly cautionary consumer and encourage others you know to do the same.

Laura Bell is Freelance Writer and owner of www.bellbusinessreport.com. The Bell Business Report offers common sense business advice and how-to info for running your business. It takes the everyday headlines apart, dealing with business news, and shows you how to put that information to work for you.

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