When inflation is too high, you need to be more frugal - China Currency
When inflation hits too high and prices go up, you may be tempted to start looking for a way to cut back.
But not all inflation is created equal.
A few of the key ingredients are to be found in the United States.
While the average inflation rate for the US was 2.7% in 2017, the median rate is 5.4%.
That means if you were a typical American who pays $300 a month for a car, it would take you 6 months to pay off that car’s loan.
If you had the same income, it could take you a year.
That means you could easily spend $300 to $400 on a car and save $100 on your mortgage.
It also means that the average consumer may have to spend more than that to make ends meet.
That means that even if inflation is low, consumers may not be saving enough to afford the higher interest rates.
The bottom line is that if you want to avoid having to pay high interest rates, you must reduce the amount you spend on your personal savings.