The inflated cost of living

Being healthy today is becoming an expensive affair. That is why I am passionate about helping people to get educated about money as well as health in order to live the life that you want.

Debt is not so much a big deal to me. At the end of the day, you can pay off a debt in one shape or form.

What is a big issue is ‘Usury ‘or in plain English hidden (stealth) interest charges. That’s the culprit that will take your wealth from right under your nose. Last week we alluded to inflation very briefly. Let’s take a deeper view at how it affects everyone.

Only when you understand inflation can you understand why being economically aware is a powerful tool…

Imagine you graduated from university ten years ago and landed yourself a brilliant job; within a short period of time you have earned two promotions and are now grossing £60,000 per annum.

You had absolutely no borrowing’ needs except perhaps for the purchase of a house and a car. Life was pretty easy for you, as money was never an issue.

Now let’s fast forward ten years. You earn £85,000 per annum, you live in the same house, but drive a newer car which you purchased on credit. You would expect to have a better quality of life the more you earn, right? With everything else being equal, shouldn’t your life improve in line with the increase in your income? Well, if you are impacted by inflation this is not the case.

For instance, your mortgage payments are higher, your car payments are pretty meaty; your weekly shop is more expensive, the clothes you buy are more costly, your travel on public transport has increased, your gas and electric bills are astronomical, the air fare for your multiple holidays are unspeakable, to the point that you have reduced your vacation time to just one per year and take short weekend breaks for the remaining time.

Your fuel costs compared to ten years ago would make you cry, so you rather not think about it. Now you can’t afford to save as much as you did because life is just so expensive!

What changed in those ten years?

You earned more but the cost of living was affected because of inflation. (Check out this video)

The more people borrow, the more people have to spend. The more money spent, the more prices rise! And the more prices rise, the more people borrow and vicious circle starts all over again, until someone says STOP! Then the bubble bursts and everything tumbles! This has happened in Yugoslavia, Zimbabwe, recently Spain and Greece (but not at a heavy degree). We may soon see these challenges affecting the rest of the world.

Incidentally as this is a health and lifestyle blog – have you noticed the cost of food recently? Remember last week when we talked about what money really is? Food is a great example. Food is a commodity and particularly in recessionary times has more value than ‘paper’ money.

So what can we do to protect ourselves against inflation?

Next week, I will talk about how you can protect yourself against the effects of inflation.

If you have got any questions about any of the ‘Wealth Wednesday’ posts, please post them on the blog or email ‘Richard’ at info@phenomenalhealthstyle.tv

 

  DISCLAIMER: This information does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances.

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5 Responses to “The inflated cost of living”

  1. Hey Richard,
    Your blog is an education! I know what you mean about inflation and those holiday cutbacks – you forgot to mention passenger taxes and fuel surcharge – and all the while these companies are still turning profits, while I’m working out whether I can afford to do New York and South Africa or just the one destination! And, what’s up with banking fees on ‘premium’ accounts? You want me to pay you to hold my money that you use for collateral to make mo’ money? Fleecing the customer!
    Rant over – I hope you’ll get back to explaining how labour works in the financial world and how best to leverage it to create wealth.

    Happy blogging!
    Mx

  2. Kehinde Olarinmoye May 4, 2011 at 6:29 pm

    Hey Richard,

    Thank you for your insight on the definition of debt and what it all means in your last few posts. I am someone who could definitely do with the education as I am guilty of putting way too much importance on the value of money falling at it’s mercy. I would love to know more about getting out of the vicious cycle.

    I look forward to hearing your response.

    Thanks,
    Kehinde

  3. Hi Michelle

    I will definately get back to explaining how labour works in the financial world, just building a foundation. This blog is like a huge blanck canvas, and every week I am layering with broad brush strokes. Will get to the fine details soon.

  4. Hi Kehinde

    Thank you for your comment, I am glad the blog is of some benefit.
    All will be revealed soon.
    Cheers

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