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After my articles about Brazil’s battle against inflation during the 1980s went live (here and here), I got some requests for more practical, day-to-day tips to defend from soaring prices. Here are a few more recommendations for living in a turbulent economy.
First, a disclaimer: this is not financial advice. These are just common-sense, real-life ideas and advice. The world is absolutely crazy, and everything is highly volatile, so I strongly recommend that you dig deeper into the topics of your interest to learn more.
Also, there’s no way to predict the future. Even though history repeats, there’s always something different, something new. But history still provides enduring lessons to prepare and better survive crises (maybe even thrive). Overall, the most important is to remain flexible, well-informed, and critical. Let’s see about the rest:
Live below your means.
This is getting harder and harder due to the rapid rise of costs, lowering wages, and wealth concentration. Decades of abundance, privilege, and entitlement also make it difficult for many to voluntarily lower their standard of living, especially in developed countries.
People will be forced by circumstances to tighten the belt, and that usually implies more suffering than if done preemptively. At the very least, do some research and study ways to cut your expenses. For instance, if you have to move, previous research can land you in a better situation than if done in a rushed and forced way. It’s the same for health, transportation, education, and so on. (Check out this article on our sister site about living beneath your means.)
Cut the fat (and the crap).
That’s easier (and free): revise bills, contracts, and present and future obligations. Negotiate what you can, looking for fixed rates whenever possible. Check for hidden costs and fees, and be wary of subscriptions to services, apps, streaming, and others, especially automatic renewals and non-refundable.
Downgrade or change plans and providers. Premium services are cool and convenient but come at a price. Think “future”: it may not make much of an impact on your monthly bill now, but any saving will down the road, especially over longer periods. Do it now and start saving now.
Keep some cash at hand.
Having some cash means both opportunity (to invest) and negotiation power (flexibility). These can override inflation in some cases. More important, though, this is a real-life prepper defense for sudden shocks that tend to temporarily crash the system.
It’s worth repeating: these are not just inflationary times: we’re actually entering some bat-crazy and volatile times. Everything is hanging by a thread, so don’t get caught unprepared. When SHTF, we only have what’s in our possession.
Shopping second-hand (or third, fourth…) is very common during periods of crisis. And it’s a good way to get access to important or even hard-to-find stuff (or any stuff) for reasonable prices. As times get hard, the market for used items is likely to boom.
Sure, if shortages persist (or worsen) and costs keep rising, used articles will go up, especially stuff people want. But it tends to rise less and be more affordable than new items in general (don’t get caught by what happened recently to used cars). There’s usually more margin for negotiation, too.
Sell the unused.
Get rid of stuff you’re not using. Clothes, toys, tools, everything. Doing this generates cash and frees up space. If you haven’t used something (new or old) for some time, it’s highly unlikely you will in the future. Make a list and let go.
Inflation is neither even nor linear.
Inflation doesn’t hit everything the same, and it doesn’t necessarily grow linearly. For instance, prices of essentials like shelter, food, and energy are already rising at a much higher pace than non-essentials.
This may get worse and crazier as wars, lockdowns, droughts, and other issues cause production and supply chain disruptions. Geography also affects prices (rise or drop): rent, energy, water, and taxes mostly, but also other items, including food and transportation. And it happens in cities and rural areas, only in different ways and degrees.
Dealing with these aspects requires flexibility and quick action. It’s hard, time-and-energy consuming to keep looking for and researching options, doing the calculations, and moving around. I’m bringing this up so you get prepared for this constant and exhausting exercise because it may be required at some point to save money or preserve the standard of living of your family.
Beware the data.
Official numbers and statistics are heavily manipulated for reasons of social control and political interests. It’s always like that during crises. Besides, today the system is so complex, vast, and fractured that it’s hard even for benevolent institutes to get actual, reliable data out (and it will likely be discredited and/or censored). The only numbers that matter are in the stickers and bills: keep an eye out, but focus on your own real-life data.
Debt: friend and foe.
As a general rule, debt is bad. One exception is if it’s used to buy assets that increase in value or generate income. That’s what wealthy people do. Also, if rates are fixed or kept low by contract, inflation will eat away the burden of debt payments. It’s wealth transfer in reverse.
It’s not easy nor as straightforward to calculate these things, especially when everything is changing fast. Besides, we live in a debt-based system, so it’s hard to break rank. Unless this can be handled properly, it’s best to avoid debt in general and bad debt in specific (e.g., rolling credit card debt), especially as rates and fees are sure to rise to keep banks happy.
Land, real estate, precious metals, fine art, jewelry: hard assets can offer some protection against inflation. Even vehicles tend to appreciate in value, keeping some purchasing power (though they also require maintenance and other costs, just like land and real estate). Stocks are viewed by some as a good investment during inflationary periods.
None of this is clear-cut or simple as it seems, though. Also, some assets can actually crash in value during volatile periods. Prices can rise faster than wages, and most safe investments can’t keep up. Big moves in these areas should be made with care and study to avoid costly mistakes and losses. If in doubt, consult with someone who really understands the math, the rationale, and the market.
Don’t buy bulk (not yet).
I’ve already told many times how everyone would hit the supermarket on payday and buy everything they could. Otherwise, the money would end long before the month (or even week) did. We’re not at that point yet. We may not even get there. But inflation is already eating up purchase power.
Notwithstanding the threats to the supply chain, I’m already purchasing a few extras of selected items whenever I hit the grocery store. This is beside my emergency stockpile to save a little month-to-month on everyday stuff like house cleaning items, pet food, medicines, and personal hygiene.
Stock up on spares.
This differs from the above as it applies to stuff used for housekeeping, vehicle maintenance, hobbies, and others. Having spares of items that require periodic replacement can help save money and extend the usage of devices and appliances. It’s better to be a year early than a day late.
As an example, in 2020, I purchased extra parts and replacements for my bikes, my scooter, my tools, and other home devices. Items like tires, chains, brake pads and batteries, oils, etc. Some of those have doubled in price since then. Others have become unavailable. That saved me some money and – most important – kept the stuff running.
Wants vs. needs
I hate to break it, but the time for wants is over. It’s been over for a while, actually, just hasn’t sunk in yet for most. People should already be in a mindset of austerity. Everyone needs food, shelter, health, energy, clothing, and so on. The rest? Not so much.
Resist impulse buying. Think long and hard about taking up new hobbies, expensive vacation trips, and that latest-model EV or smartphone. A good strategy is to postpone the decision or financial commitment. Keep in mind that non-essentials tend to drop in price during these periods. Sacrificing now can pay later.
Generate income flow.
This always pops up, so it doesn’t require an explanation. Start now, as these things usually take time to start paying back. If, for whatever reason, you’re not feeling like taking action now, at the very least, look into potential forms and alternatives for generating extra cash in the near future.
If doing so will require equipment, like tools, machines, courses, or other stuff, it might be a good idea to invest now (also because shortages could make it impossible to find these in the near future). Just don’t go out overspending on unnecessary stuff. Keep it real.
Prepare for secondary effects.
Inflation and economic upheaval tend to cascade and bring all sorts of secondary developments, exactly the kind that affects our lifestyle and everyday routines: overall decadence, widespread misery, unemployment, crime (yes, even in rural areas), rises in drug and alcohol abuse, home violence and so on.
This is the time to make your property more secure and less attractive to lawbreakers. They will come, and this will happen without warning, as most crime waves do. Add prevention measures now, and get into more “third world” habits like keeping your home and vehicle locked at all times, and so on.
(Check out our free QUICKSTART Guide to the four levels of disaster to learn more about how this could all play out.)
Read the fine print.
Hard times require extra attention and care with small letters and hidden pitfalls. Everyone, from common people to businesses and corporations (and the government), tends to look at the details because marginal gains and hidden costs/gains matter a lot more than during periods of abundance. This can lead to unforeseen expenses and headaches with disputes and legal counseling.
Beware of camouflaged inflation.
Prices may remain stable, yet quantities may drop. Or, as is more frequent, prices increase and quantities are reduced. This is common in the early stages of crises and even has a name: “shrinkflation.”
Most times, it will be camouflaged by companies in the most creative ways, so pay attention when shopping. Services tend to get stripped down, too, among other “shrinking” tactics. Again, always read the fine print.
Beware of scamflation.
Pay attention because this will become big in the near future, and knowing about it may save you time, money, and lots of headaches. When the economy goes bust, people get desperate. While the system also becomes a lot less efficient, there are still laws and consequences.
Hence, while many will turn to crime (many), others (a lot more) will walk the fine line and try and increase their gains and margins through frauds and scams, both virtual and real. Believe me here: a lot of people and businesses will go that way soon.
The best defenses are being well informed and constantly aware. Shop at known places and remain attentive at all times to avoid frauds (such as gas station skimming and tampering, utility worker robberies, and so on. Also, lay low and invest in systems and strategies to protect against identity theft and online financial frauds. Constantly research these topics to stay informed about new frauds and scams.
Look outside for opportunities.
Everything is changing fast, and it’s hard to see clearly ahead. But crises don’t mean destruction only. Even a global downturn can bring great opportunities, especially for those living in wealthier countries.
The USD is the cleanest shirt in the dirty laundry and still the WRC. The EUR and other currencies also hold strength relative to others. Some countries with great potential are currently heavily undervalued. This might be a good time for Americans and others to look abroad for investing options.
Playing safe isn’t always obvious.
There was a time when people switched away from gas to diesel vehicles as a way to spend less while driving more. Then, a crisis in fuel hit, and diesel became scarce. The government prohibited the use of diesel for private’s autos, channeling the entire output to transportation and essential services. Cars and trucks stayed in garages for months.
Another example: moving to far places might impart in lower rent, energy and food costs, but extras for transportation, health services, education, etc. This is very personal, but the lesson is to try and look further ahead and weigh the pros and cons (and total costs) of all options before making critical decisions.
Stay informed about finance and the economy.
As the situation in the economy and finance changes, the institutions (banks, funds, investment agencies, etc.) will come up with new and different products for investors, more adapted to the context. Early on, it tends to be messy, especially if shocks and crashes wreak havoc on the market. Being conservative may be a safer strategy.
Eventually, though, it can be a good idea to look for ways to invest according to your profile, keeping in mind that there’s no miracle to beat inflation. As general rules, if something seems too good to be true, it probably ain’t – and during hard times, more than ever, if something smells fishy, it probably is.
What are your thoughts?
Do you have any tips you’d like to add to Fabian’s list? Let’s talk about it in the comments.
Fabian Ommar is a 50-year-old middle-class worker living in São Paulo, Brazil. Far from being the super-tactical or highly trained military survivor type, he is the average joe who since his youth has been involved with self-reliance and outdoor activities and the practical side of balancing life between a big city and rural/wilderness settings. Since the 2008 world economic crisis, he has been training and helping others in his area to become better prepared for the “constant, slow-burning SHTF” of living in a 3rd world country.
Fabian’s ebook, Street Survivalism: A Practical Training Guide To Life In The City , is a practical training method for common city dwellers based on the lifestyle of the homeless (real-life survivors) to be more psychologically, mentally, and physically prepared to deal with the harsh reality of the streets during normal or difficult times. He’s also the author of The Ultimate Survival Gear Handbook.
You can follow Fabian on Instagram @stoicsurvivor
Tried-and-True Tips for Surviving a Turbulent Economy is written by Fabian Ommar for www.theorganicprepper.com