Jun202012

9 Comments

Don’t Get Hyped Up Over Hyperinflation (video)

It seems that every time I write or talk about the importance of paying off debt, someone comes along to challenge me.

“Why,” they ask, “should I pay off debt when I’ll be able to pay it off for pennies on the dollar when hyperinflation comes along.”

In an odd way, it’s like they’re looking forward to it. Almost giddy, in fact.

I’d like to establish a handful of truths about hyperinflation.

First, no country that has ever experienced hyperinflation is suddenly filled with well-off, debt-free homeowners.

“Woo-hoo! Come to Zimbabwe!  We’ve got hyperinflation!”

No, hyperinflation is absolutely devastating and if you pay off a mortgage or other large amounts of debt with your cash, it just means that you’ll be using up the limited amount of money you have at a time when prices are skyrocketing at 100% or more per month.

To put that in perspective, a gallon of milk costs around $2.79.  At 200% inflation, that price becomes $8.37 a month later and a whopping $25.11 by the second month!

Another truth to keep in mind is that your income will not increase!  In fact, with the devastation wrought by runaway inflation, you may very well lose your job or business.  If you’ve spent a large amount of your nest egg paying off debt, you will have to rely on whatever is left in order to survive.

Well-educated professionals in Argentina found themselves digging through dumpsters and trash cans for food.  A college education and a good career will not protect you.

A third truth is that it will be far, far better to face hyperinflation debt-free and with money in the bank.  Yes, the money will not have the same value, but 100K in the bank is way better than $500, or nothing.  It is still worthwhile to pay off debt and save money now.

It’s even more worthwhile to purchase hard goods such as food, water filtering systems, firearms and ammo, and other survival goods and gear now while prices are reasonable.

In this video, I go into more detail, with the help of my whiteboards!, about what hyperinflation will mean to the average family.

Is it possible to prepare for this worst case scenario?  In my book, Survival Mom: How to Prepare Your Family for Everyday Disasters and Worst Case Scenarios, I detail 13 ways to prepare.  Here are a couple of those tips:

1. Pay off any debt that has an adjustable
interest rate as quickly and as soon as possible.
Unsecured credit card debt, in particular,
is vulnerable to increased interest
rates that would demand more and more
income from a family already strapped to
cover the most basic necessities.
2. While interest rates are low, investigate the
possibility of refinancing your mortgage. If
your mortgage rate is already low, and
fixed, focus debt repayment on anything
that has an adjustable rate.
3. Consider ways to decrease your transportation
expenses. Should gasoline prices
soar out of control, you may be very happy
for a job that is within walking or biking
distance. Can you sell that second or third
vehicle and pocket the savings in gas,
upkeep, and insurance? Be strategic and
purposeful in deciding which vehicles to keep, sell, and/or purchase.

There may be links in the post above that are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission, which does not affect the price you pay for the product. Regardless, I only recommend products or services I use personally and believe will add value to my readers.

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I'm the original Survival Mom, and have been helping moms worry less and enjoy their homes and families more for 5 years. Come join me on my journey to becoming more prepared to handle everyday emergencies and worst case scenarios.

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(9) Readers Comments

  1. This is the third time today I have seen info about hyperinflation.

    Guess I need to get my preps in gear. Wanting to learn to pressure cook/ can – meat especially.
    Trying to stay ahead buying “next year’s” clothes for my 12 month granddaughter.

    Thanks for the presentation.. Pam

  2. We have debating this for a while and are completely unsure on what to do, since we cannot decide which maybe a better scenario: keep renting our house or look for a house to buy? With the way the economy is going, it is a troubling question and we are looking for insight and any contributing advice.

    • If you will live there at least 5 years and can truly afford it. Then i would buy. We were young and bought a house not taking into consideration all the other stuff we had to pay for. First shop around and get pre approved. Then make sure if it needs a little work you can do it or afford to have it done. It was a huge wake up call needing to fix stuff and not having the know how or money.

  3. No matter what it alawys feels good to not owe a million people money. If we focus on what we need need, we will be happier in the long run. I am looking at all the video games and junk we have and want to sell them. Husband doesn’t want to. I need a new car but we are waiting 4 months until the other car is paid off. All the “stuff” does not enrich or make our lives better. Going on a walk is much nicer then playing video games or watching tv.

    • I agree! We turned off our satellite dish 2 years ago and haven’t regretted it one bit. This includes our teenage daughters! We read more, go outside, and even have a good garden going this year! We still have a lot to get rid of, but it’s a great start!

  4. I got rid of ALL the credit cards 3 years ago-I cannot tell you the relief of never seeing another credit card bill. If I can’t pay cash, I don’t need it. I have a friend who went through bankruptcy 5 years ago, and you already know that she has run the cards up again. I try to keep some cash available for an emergency. But the joy of being able to pay the car & house insurance in full when it is due is fantastic I buy a prepaid master card at the grocery store in the amount that I need for vacation reservations or car rental. When I come home, no bill shows up 15 days later. I did buy a big screen TV and sometimes I wonder why. I got the iPhone. I like it, it is very convenient-but when the first one was stolen, it was $360 to replace. (AT&T did not offer insurance at the time.) I should have stuck with any cell phone I have learned that debt is slavery. No thanks.

  5. Way to break it down Lisa! Great Vid!

  6. A third truth is that it will be far, far better to face hyperinflation debt-free and with money in the bank….

    im sorry but no, its NOT far better to have money in the bank during hyperinflation. hyperinflation absolutely decimates cash holdings and ultimately leads to the end of the currency itself. one should have a portion of their cash OUTSIDE OF THE BANKING SYSTEM, one to three months of expenses, and the remainder in hard assets. a country experiencing hyperinflation will likely see bank holidays and capital controls. your cash in the bank will be trapped, and then killed off

  7. Pingback: Sunday SHTF Survival Summary Week 5 | The Home For Survival

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