Beware! It is a Trap! 

SJ Spence

By now, everyone has felt the pinch (or is it a punch?) from the effects of inflation. I want to remind you that inflation is a hidden tax on all people, rich and poor. Unfortunately, the less fortunate will feel the pain more than the wealthy will. Just read about the San Francisco Federal Reserve President, Mary Daly and her comments in this article. Read it here: San Francisco Fed president, who reportedly earns over $420,000 annually: ‘I don’t feel the pain of inflation anymore. I see prices rising, but I have enough.’ – TheBlaze  

The median annual income in 2021 in the USA was $45,760. This is just under 10% of Ms. Daly’s $420,000. So, what is the ordinary American to do? Well, many have been turning to their credit cards to make up the difference. Isn’t this the good ole’ American way? Buy now and pay later. But this time it is a bigger trap that is being set for the unsuspecting.  

The national credit card debt has risen over $100 billion (about $310 per person in the US) or 13% in the last year. This is the highest increase to date. The US consumer debt is now over $16 trillion (about $49,000 per person in the US). The increased utilization of credit is mostly attributed to rising prices due to inflation (or the de-valuation of the dollar). So, the trap is: increased prices without an increase in pay and then use our credit to make purchases that will eventually have to be paid back with interest. An extremely high interest rate, I may add. Now, as the Federal Reserve fights inflation, they do this by raising the federal funds rate. As this goes up, so does the interest rate on a credit card. Everyone should know that normally a credit card loan is a variable rate when a balance is carried over to the next month. And that my friends, is the trap! If you or someone you know is falling or about to fall in this trap, there some steps you can take. Remember, this period of skyrocketing prices is normally short lived, and you can survive and thrive through this. How? First, conserve your cash; can you put off making that purchase? If not, is it the best possible deal for that item? Evaluate your expenses, do you really need several streaming services? How about driving? Can you carpool to work? Condense your trips to save on gas. Do you eat out? Many are discovering that cooking their own meals are less expensive and normally better for you! That includes packing a lunch for work or for the kids going to school. Better health keeps the doctor away and reduces your medical expenses. Check out this article for more ideas: How to Combat Inflation and Protect Your Four Walls | 

Some folks are discovering side-hustles. This is easier than ever with the use of the internet in today’s world. Perhaps you have an entrepreneurial spirit that is looking for that opportunity to release that idea or skill you have been suppressing! Others are working second or third jobs to make ends meet.  

As I write this, our government is pushing through an “Inflation Reduction Act.” This bill will be introducing hundreds of billions of dollars of additional debt and adding 87,000 IRS agents (with benefits) to the government’s payroll. We all know that the first thing our government should be doing is reduce spending to begin the inflation turn-around. So, to many, this bill is counter intuitive. As an ordinary citizen, all we can do is ride this out the best we can. But I urge you to resist the temptation to “Charge It!” as it is a trap!  

In my introduction of my book, you can see where I fell in this trap before, and I will take steps to keep from falling back into it. Education is the key that leads to decisions of sacrifice and positioning of your wealth for future turbulences. Sometimes it almost seems that this is where they want you, doesn’t it? I mean that this battle we are in is unwinnable. But it is not, but you need to learn the game you are in. If you have not already, check out my book “Money, Plain and Simple; What the Institutions and the Elite Don’t Want You to Know.”  

You can get it at:  The book/audiobook is available in English and in Spanish.  

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