If you have shopped for a home, car, groceries or virtually anything else recently, you have undoubtedly noticed an uptick in the cost of everyday items. This is not surprising, as prices increased more over the last year than they did at any time during the previous 13 years.
Inflation, which is a drop in purchasing power, is often a hot topic among politicians and economists alike. While the intricacies of it may not interest you much, long-term inflation is likely to have some significant effects on you personally.
Your dollar does not go as far
The biggest effect of inflation on ordinary consumers is the rise in necessary expenses. Put simply, when goods cost more, you need more money to buy essential items. If your salary does not keep up with inflation, you may either have to cut back or use credit to purchase what you need to survive.
You pay more to borrow money
While some inflation is typically good for the economy, banks must take steps to keep inflation from raging out of control. A common step is to increase interest rates. If you want to borrow money to purchase a home or anything else, you are likely to pay more over the life of your loan.
You may burn through savings
Because goods cost more during rapid inflation, your ability to pay for emergency expenses may diminish. If you burn through your savings and cannot make minimum credit card payments, your credit score may plummet. You may also default on loans, face foreclosure on your home or lose your car to repossession.
While you cannot control the rate of inflation, you can protect yourself from its negative consequences. Ultimately, exploring options for managing your debts, such as bankruptcy protection, may help to insulate yourself from the ravages of inflation.
Hathaway Sprague Law is experienced in supporting clients in many of the areas where the pinch of inflation may feel more like a kick. Not only is Kathryn Hathaway Board Certified in Consumer Bankruptcy, but Wayne Sprague has significant experience in foreclosure defense, (both litigation, and mortgage modification) and defending lawsuits by creditors. Call us to help explore your options!