Surviving Inflation

Opinion piece by:
Michael Yeoh
(CDxO) Bangko Pangasinan – A Rural Bank, Inc.

Looking at the current world events and the unfolding of the central bank’s monetary policy of rate hikes it is trending with the data of the inflation rates tabulated from all over the world as this is a world event fueled in part by a combination of factors:

1. Monetary easing or more commonly known as Quantitative Easing (QE) since 2008 in economic terminology;

Exacerbated By:

2. Pandemic (Covid)
3. Geopolitical Conflict
4. Trade War
5. Supply Chain disruption from items 2, 3 and 4
6. Disruption caused by technological advancement or race to go electric – semiconductor shortages
7. Increase in demand for raw materials for the production of batteries to power alternative clean energy as the world is looking to go green and meet the CO2 emission target dictated by the Paris Accord (https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement)
8. Others – events that are unfolding that could prolong the tapering of inflation with just rate hikes.

Source: https://www.rateinflation.com/

I will let the numbers speak for themselves and the only way out of this mess and not let the economy burst into flames of stagflation is a balancing act that only the world economic superpowers have, provided they do so peacefully.

Wishful thinking aside, what you can do to survive and maybe even thrive during such economic turmoil and uncertainty will take careful planning and a tremendous amount of hard work in the coming months and even years if you have the stomach for it.

1. Take stock of your income versus expenditure.
2. Cut all unnecessary expenses and par down on any recurring subscriptions to on-demand services.
3. Check your credit card balance and reduce exposure as a way to par down interest expenses.
4. Dispose of all no-value creation assets which you may have laying around the house by using buy/sell apps: PH’s most reliable buy/sell app/s or sites.
5. Dispose of real estate that is just sitting around and not collecting rent especially if it is in a bad location and tenancy is most unlikely as the demographics in the area have been hit by the pandemic and have limited opportunity to recover in the near term (24 months).
6. Look at ways to develop a secondary income on top of your 9-5 salaried income.
7. Build passive income by investing what you have spare after fulfilling all of your priority expenditures (food, utilities, rent), or even consider moving back in with family until the economic environment improves.
8. Take public transport instead of paying monthly installments for your vehicle (sell it) to free up cash flow
9. Invest additional funds freed after cutting all the fat and put it into blue chip companies with healthy growth trajectory and free cash flow and let it sit there for a minimum of 5 years (refrain from trying day trading and turning into a zombie).
10. Live simple and healthy with routine and consistency at work, home, and a balanced lifestyle.

It may feel like you are sacrificing a whole lot and a major adjustment is required but all of the above can be done in a well thought of manner from the small items to the big items or concurrently with the use of modern technology and platforms readily available in cyberspace.

But if you need a guide to help you feel less deprived please check out Saving without feeling deprived.