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What to Spend On When Inflation Is High?

What to Spend On When Inflation Is High?

Hey Everyone! I need a little help. Last week, I received a question about inflation spending. Basically, the reader asked if there is anything we should buy ahead of time to head off future inflation. I did some research and only came up with a few things. Okay, here is the question (edited for clarity) and I’ll share my thoughts after.

My wife and I thought of an idea to buy things early that could help avoid future inflation. For example, we bought new bed sheets and left them unopened. Imagine you want new bed sheets every 5 years. If you expect to live another 50 years, you could buy 10 sets of bed sheets and you’re set for life! Obviously, we can’t buy everything – especially food.

Question / topic for a blog: What are the things we could buy now to help avoid future inflation?  The one big item is a house. We bought our “forever” home when we thought of this idea and that will likely turn out to be a fantastic idea. What else though? Are there things we could buy now that we will want in our 50s, 60s and beyond? What things are easy to store and don’t take up much room? Have you ever thought about this?

Good Buys

Whoa, that’s a tough question for me because I dislike spending money. The obvious answer is a house. If you purchased a home before 2021, you locked in a great interest rate and probably a pretty good price. Many homeowners refinanced and got a great rate as well. Those locked-in rates are lower than inflation today. That’s free money! I don’t think there is any purchase that comes near this fantastic value. But, I thought long and hard and came up with a few things to spend money on.

  1. Home remodeling. If you’re in your forever home, remodeling it to suit your needs is a great idea. You spend once and you’ll get to enjoy the result for many years. If you wait, remodeling will just get more expensive. It might not have a big monetary return, but it would make life more enjoyable.
  2. Health. Anything that improves your health is worth it. For example, a home gym would improve your health if it helps you exercise more frequently. It’s worth it to be healthier while you’re young. It will only get more difficult as you age. I just had my annual physical and the doctor prescribed a drug to lower my cholesterol. 🙁
  3. Wine. Mrs. RB40 came up with this one. If you’re a wine drinker, building a wine collection might be a good way to spend. Unlike my health, the wine will improve with age.
  4. Membership? I’m not sure about this one. A lifetime membership to something you frequently use might be a good idea. Usually, there is a discount if you pay ahead. For example, a lifetime membership in the AARP costs $200. The annual membership cost $16 per year and probably will increase soon. Did you know you can join the AARP at any age? This might be a fantastic buy if you’re young!

That’s all I’ve got. Do you have any suggestions?

Barriers to spending ahead

Buying ahead is tough for me because of our mindset. We are trying to be more minimalist and I dislike spending money. Buying more things is contrary to our goal. I just don’t believe in spending unnecessarily. We buy what we need and don’t plan beyond 5 years. It’s a problem for us in several ways.

  • Storage: We don’t have a lot of storage space at our home. Mrs. RB40 has been giving stuff away on the local Buy Nothing group and we still have too many things at home. Both of us want to clear up the clutter in our house and buying more stuff won’t help.  
  • Degradation: Mrs. RB40 said things that have been in storage for 20 years will degrade. Even if you store it well, it won’t feel new. Also, life is unpredictable. A natural disaster can ruin your storage area and those sheets. Why take on extra risk when you don’t have to?
  • Tastes change: Another reason why I don’t like buying ahead is that my taste probably will be different in 10 years. I already have a closet full of clothes I wore years ago, and I don’t wear them anymore. It doesn’t seem wise to buy extra stuff with my track record.
  • Circumstances change: Also, life constantly changes. We are thinking about replacing our queen bed with 2 twins. This should improve our quality of sleep because Mrs. RB40 has become a sensitive sleeper. What would I do with 10 sets of queen sheets then?
  • Relocation: We plan to move after our son goes off to college. More stuff = more pain.
  • I can’t find anything: (From what I understand, this is a common problem for men.) I have a difficult time finding things in our home. I always have to ask Mrs. RB40 where something is. This month, I asked her to help me find the honey, caulk cap, tomato sauce, and several other things. Adding more stuff would only exacerbate this problem.
  • Equities beat inflation: Historically, the stock market returns outpace inflation. This isn’t true in 2022, but eventually, the stock market will come back. I’d rather invest the money than buy things that I might not use.

High inflation changes buying habits

Generally, high inflation causes people to downgrade their purchases. Consumers tend to buy cheaper stuff so their spending doesn’t increase as much as the CPI. Buying ahead could also alleviate price inflation. However, there is the opportunity cost. Usually, it’s better to invest than to stock up on consumer goods. Investment is appreciating assets and it will help offset inflation and build wealth. Consumer goods are depreciating assets.

The world is changing though. Globalization is reversing due to Covid, war, geopolitical issues, and supply chain issues. Inflation might be with us for many years to come. Maybe it’ll be the right choice to buy a few key things now instead of waiting.

In conclusion, this buy-ahead strategy isn’t right for us. But it might be good for you. What do think? What can we stock up on to avoid future inflation?

Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. It’s been working so well that I’m planning to sell our rental condo so I can invest more. Sign up for a free account and go check them out!

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