How to deal with the raising cost of living

That the cost of living is increasing at an alarming rate is no secret. In the past it used to be every few months that prices were revised, today they seem to be revised every week! The dollar is good for lesser of everything these days, making the barter system seem like a very feasible option for many people. How does one deal with the increasing cost of living when incomes and interest rates remain unchanged, or worse, decrease?

Temporary Solutions

As a temporary solution, credit cards can allow almost everyone to purchase the goods and services they require. But in today’s society, credit cards are becoming a major problem with the increasing number of debtors. Perhaps the first thing to do to fight the rising cost of living is to eliminate the existing debt to ensure a steadier financial growth. Debt consolidation through short term cash loans are a popular choice to repay all your debt at once and allow easier tracking of the remaining debt. Alternatively, speak to your creditors to sort out a better deal through lower interest rates, etc.

Fighting inflation by increasing income

It is easier said than done, but increasing one’s income seems to be the only way to beat inflation. But sadly, not everyone has the capability of investing to the extent that it will take to perhaps even balance the scales. Nevertheless, investing wisely seems to be the closest one can get to the barter system when people exchanged goods and services instead of paying for them with cash.

Given that the cost of goods and commodities are increasing so dramatically it does seem an attractive proposition to own these commodities instead of holding on to cash to buy them with. And here lies the logic of investing to beat inflation. Let us say that gold is expected to increase in value over a period of a few years and the banks are paying an interest rate of just 6 percent, is it not prudent to invest in gold, which will yield a return of at least 22 percent over two years? Given that inflation is at say – three percent – an investment in gold will have yielded 11 percent a year. That will have beaten inflation by 5 percent!

There are other ways to invest and increase one’s income such as investing in stocks and bonds. Though this could be a scary proposal, there are mutual funds that have a very good hedging strategy and provide handsome returns if chosen wisely.

Investing in property

Buying property to renovate and sell for a profit is one way of investing in property, but there is another, more lucrative way where one need not put down the full cost of the property. Look for property that is being developed in vacation spots and near fast developing townships. Developers accept booking amounts as much as 10 percent of the cost of the property and the rest in installments as the development of the property progresses. This could be in slabs of 10, 15 pr 20 percent of the cost of the property.

Development of the property takes a few years and the cost of the property is bound to escalate by as much as 30 percent during this time. In fact, when 20 percent of the property is sold out – or booked – the developer revises the rates. This is the time you could resell the property at the new rates and recover your investment along with a sizable profit. Your investment term could be as little as a few months to a year. This is fast becoming a very popular investment for individuals who do not want to keep their money in the bank.

The added income from these investments helps take care of the increasing cost lf living and makes life easier for people with a little initiative and inclination towards investing.

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