Are you wondering about the skyrocketing gas prices and what they might mean for inflation? Are you noticing prices climbing and wondering how to save money in this crazy economic environment?
I for sure am.
Well, I have one tip for you. Buy big tickets items now. What? Am I advocating spending money in order to save it?
Please read on.
Now, I am not a financial advisor, so please take any financial advice on this site with the proverbial grain of salt. However, I do have a fairly substantial background in the financial services industry. In fact, it is almost funny when I think about the places that I have worked, including the equity options trading floor on the Philadelphia Stock Options Exchange :). Someday you can ask me about my nickname “The Hammer”.
One thing that we are doing to save money now in our home is considering the purchase of several big ticket items ($50 and up) that we have been thinking about for awhile.
There are several aspects of our current economic situation that may make a purchase now more of a bargain than it will likely be in the near future:
- Our economy is slow. Businesses want to sell things that have been sitting around for awhile. You are more likely to be able to bargain successfully now than in a period of economic growth.
- Our nation is not doing enough to curb spending. Recently our government printed a great deal of money. This always leads to inflation.
- The current hike in gasoline prices will soon (very soon) trickle down to a rise in consumer prices as companies pay more for transportation of goods and must pass the increase in costs onto the consumer. That means you and me!
I will use my family as an example. We are in need of a new bed, a refrigerator,either a second fridge or freezer and even a new laptop. If we buy them now, and prices do in fact increase, we will effectively make the difference between prices now and prices in the future. So if prices increase 10% over the next few months (and I have seen that happen quite a bit in recent days), then we effectively make 10%.
Now, I don’t know how you feel about a 10% return on your money, but in today’s volatile economy, a 10% return sounds great to me! I would much rather have my money in something that I need (like a bed or refrigerator) than in the stock market right now.
A few things to consider:
- This is not a warrant for rampant self-indulgent spending.I do not mean this to encourage you to spend on things that you do not need or without the approval of your spouse, if you are married. I also highly recommend bringing God into the equation for all major decisions.
- It is imperative that you have the cash available to pay for these items. I never advocate carrying a balance on a credit card. Any savings you net from purchasing ahead of inflation will be eaten up by interest faster than you can blink an eye.
- This thinking also applies to small ticket items as well. You can use these principles when buying ahead and stocking up on non-perishable food items, clothing (e.g. purchasing several pairs of shoes or socks since you know you are going to need another one down the line) or household or beauty products (think toilet paper and toothpaste).
- Nothing is foolproof. Of course, this strategy implies carries with it inherent risk that prices may go down temporarily or that there will be a sale in the future that you will miss out on.
So what do you think? I hope that this has helped you to think about a “different” way to save by spending. That is–spending now instead of later.
It is not a really big ticket item, but one of our recent purchases that you may want to read about is our new Stainless Steel French Press. And if you are interested in other ways to save money, check out my instructions for making your own coconut milk, baking in bulk, and making your own homemade seasonings.
And if you would further information on financial matters for these turbulent times, I highly recommend Crown Financial Ministries.
Shared at Frugal Friday.