Your Money Is Losing Value Fast. Here’s How to Fight Inflation.

Tips from a finance guy on how to protect your money.

My girlfriend and I hadn’t been on a movie date in ages. The pandemic had us holed up like two survivors in an apocalyptic bunker.

Now that we are vaccinated, we resolved to break out of our shells. I ordered two tickets to Dune.

I about swallowed my tongue when the ticket lady said, “That’ll be $43.” Then we ordered two drinks, a large popcorn, and a big pretzel. It was another $41.

You’d think we live in Disney World. That’s $84 for a movie date and we don’t even have kids or a babysitter to hire.

I’ve never seen prices balloon like this. Your cash is losing value. I may not be Warren Buffet II, but I spent years working as a financial analyst. I know a few tricks to protect your wallet.

What is causing inflation?

The short version: it’s a combination of pent-up demand from the pandemic, too much money being printed, supply chain shortages, and devaluation of the dollar (which causes more expensive imports).

The inflation is feeding itself.

First, be cash light and don’t buy this stuff

I generally advise people to have six months' worth of cash to cover living expenses at any given time. Personally, I keep a year’s worth, but only because I’m neurotic and always expecting disaster.

Things are different right now: inflation is hovering above 5% and is showing no signs of slowing down:

This chart only tells part of the story: cars, gas, and many consumer goods have risen much faster than 5%.

Housing is skyrocketing due to the “great resignation”, which stems from people associating their current job with a negative period of their life (the pandemic) and wanting a fresh start. Additionally, nobody wants to go back to the office.

Consequently, everyone is relocating and having to find a place on short notice. It’s driving up the housing prices up to ridiculous levels.

I bought a house in August and spent $150,000 more than I’d planned. But here’s where things get tricky. My house has already gone up in value by nearly $50,000 since buying it.

I would still rate homebuying as a high-risk. You could lose your shirt or make a great investment. I’d hold off unless you know what you are doing. I’m seeing absolute garbage houses selling for unbelievable prices.

Additionally, consider waiting to buy electronics. I need a new PC but there’s a global circuit shortage which is also affecting car prices (automatic driving and fuel injection parts).

If I wanted to rebuy my current PC, it would cost nearly the same price I paid seven years ago — which is ridiculous. It would usually be 70% cheaper.

Places to store your cash

I’ve been investing heavily in stocks, particularly big tech.

Facebook is getting lots of bad media coverage and the stock price is cheaper than usual right now.

Bloggers are saying Facebook is dead — but they’ve been saying Facebook is dead for more than a decade. Meanwhile, yesterday, Facebook reported higher than expected earnings, as they have been for years.

My opinion holds that Facebook and Twitter are here to stay and will continue to rise in price over the long term. They have strong fundamentals and are embedded in our culture. I’m also optimistic about Microsoft and Amazon.

A safer alternative, if individual stocks make you nervous, buy Roth IRAs through your employer. Or just buy boring old index funds such as S&P500, which provide stable returns. No matter what, don’t just sit on piles of cash.

Protect your price points

Some retailers are milking inflation more than others. Mid-range and up grocery stores will have you paying $100 for a handful of items. Somehow bacon got crazy expensive too.

I’ve digressed to shopping at Wal-Mart and other cheaper outlets. Do I have to see the crust of humanity every now and then? Sure. But daddy is a cheapskate.

Also, if you can wait on buying a car, just get it repaired. Car prices are redonkulous but they will come back down eventually.

Increase your revenue at your job

We are getting near the annual review cycle at many companies. If you are performing reasonably well, most managers will understand the increased cost of living.

Or consider a new job. Recruiting is exploding: I know three recruiters who make six figures and one who recently got a $40,000 raise. Recruiters are aggressively placing candidates. Consider partaking in the great resignation. Just remember my aforementioned risk around relocation and housing.

Lastly, the government is going to take action

The US treasury is releasing a very special Series 1 Bond in November. You can buy up to $10,000, or $25,000 if you are married.

Historically, these bonds guarantee you 3.54% per year. However, in November, and for the first time in decades, this number is being raised to 7.12%. It’s available at Treasury Direct online and is a super safe, smart place to store your money.

You’ll need to sit on the bond for a year or face a penalty. But you can enjoy that 7.12% for years afterward regardless of any economic crashes.

Remember, nothing is for certain in any market. The bottom could always fall out. Things could continue to get more expensive — or not.

Above all, stay mindful of the changing value of your dollars. It’s probably not a good time to stuffing cash under your mattress.

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