This influx of money into the system, better known as the money supply, has a nasty side effect. It has been referred to in the media without an adequate explanation. The more money in circulation, the cheaper the money. This means it takes more to buy the same amount of goods: rising prices, not good.
How all of this pans out is anyone’s guess at this point. There are some things you can do to ensure you make wiser choices.
Uncertain times means you need to be more careful with purchases of durable goods. Think of this as anything that will still be around after you are finished paying for it, hopefully. Making long term commitments, tying up funds, long term payments, is not wise now. Things may change where you have to move in a hurry. You may be forced to move out of your home. You may be forced to change jobs. Investors may also see chances at making money when stocks, gold/silver, make a quick change in prices. All this boils down to a needed shift in your liquidity preference. Can you get your hands on cash in an emergency or will you have wait until your escrow closes. If you are employer and you are forced to cut back, it is much easier to get rid of temporary workers than letting go long-standing employees. Having more liquid assets means you are equipped to move quicker when changes come and come they will.
Sellers of durable goods are keenly aware that buyers are thinking harder before signing on the dotted line. They are up nights thinking of lures to bring you into their market. The latest I heard was a radio commercial offering car deals with no payments for 12 months. The announcer also encouraged listeners to get themselves pre-approved before arriving at the showroom. Car dealers’ aim is to get your signature. They create an atmosphere with promises that make you not think past tomorrow. The problem is they want you to forget about extra charges they have in the contract. Anyone promising durable goods without payments in the beginning is going to charge you at the end of the contract. Don’t be lured into thinking the salesperson is your friend. The only person they are looking out for is themselves. Bigger lures are bound to appear in our future.
The best thing you can do for yourself is to ask whether or not you can get out of a commitment easily six months down the road if your finances change. If not, forgo the purchase or the hiring of the extra employee. This also applies to investments that wouldn’t allow you to withdraw your funds without a stiff penalty.
Long-term planning has probably never been so important. Think twice and wait a day or so before signing any contract. You’ll be glad you did.
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