Inflation sucks for the vast majority of Americans. It costs you more money to buy the same amount of goods as you did last year. No consumer who needs to put food on the table for their family wants to go through the pain of inflation. It also makes building wealth that much harder.
I’m feeling the effects of high inflation in 2022 as well. When I first started my financial independence journey, I saw 2% inflation prints and I knew how to lower my costs by 2% on a year by year basis so I never worried about inflation. However, I never thought that I would ever see hyper inflation in my life.
Hyperinflation was something that happened in the 70s and 80s. Even though I know how to stretch a dollar, that doesn’t make it any better. Inflation hurts, especially if it’s a high inflation rate such as in 2022 and possibly even in 2023.
Inflation sucks. Especially because wages don’t keep up. The double edged sword is that if wages do keep up, then inflation even worsens. More people have more money to spend. There’s a reason why consumer sentiment is lower today than it was in the Great Financial Crisis (source).
People are realizing just how much inflation sucks. It doesn’t just suck, inflation actually hurts you. Whenever I go out and spend money now, it physically pains me. I can feel just how much I’m losing out and how much more I have to pay this year than the year before.
There are much more ways that inflation just downright is intolerable.
9 Ways Inflation Sucks
There are many more ways that inflation sucks but here are the top nine ways how it affects the everyday consumer. Inflation is a global phenomenon, not just contained in the United States. High inflation affects consumers across the globe.
1) Inflation Sucks: Rent and Mortgage Costs Are Skyrocketing
One person who I know literally had her rent increased by $800/month come renewal time in June 2022. That is insane. It’s $800/month extra in after tax dollars. Meaning, you have to earn something closer to an additional $1,000/month in order to afford rent. A basic living expense.
That’s why inflation sucks. It makes just existing that much more expensive. Living is expensive enough in the first place. Inflation almost made situations unlivable. It’s a disaster. It’s one thing for luxury goods to go up in value. Only the rich will and should buy those things.
However, it’s a completely another thing for living expenses to be more expensive. Luckily, I moved in with a roommate in 2022, and therefore my housing expenses actually went down. However, that’s an anomaly. Many people had their rental rates skyrocket come lease renewal time.
With rising interest rates, homeownership is also even harder than ever. People simply can’t afford a 6% 30-year mortgage on a $500,000 house.
2) Restaurant Costs are Skyrocketing
More and more restaurants are raising their prices by $1 per entree, at a minimum now. You may think that’s a lot of money. However, raising the prices $1 on a $10 menu item is a whopping ten percent increase in cost. Some are even raising it an extra $3.99 per entree.
Inflation sucks. You need food in order to live and carry out your day to day activities. Restaurant costs are skyrocketing and it doesn’t seem to be slowing down. Gone are the days where you could get a bowl of Chipotle for $7.25 a bowl. Now, it’s at least $10 per meal.
That’s what I’m facing. Inflation sucks because people are raising prices all around you and especially restaurants. They have a staff shortage problem to keep up with demand. Then that increase in costs gets passed down to you, the consumer.
I hardly go out to restaurants anymore. It’s not worth it to me to spend $100/night when I could’ve enjoyed the same night for $50 just a year ago.
3) Inflation Sucks: Fuel
As someone who grew up in Texas, I am NOT used to paying $3.99+ for a gallon of oil. This year was the first year that I paid over $4 per gallon of oil. It was shocking that I paid closer to $45 per every fill up. During the coronavirus pandemic, I was used to paying $18 per fill up.
Inflation sucks because cars are a necessity in America. Cars aren’t needed in America because Americans are lazy. Cars are needed because places we need to get to are 10 minute car drives away. Short enough distance for a car, too long of a distance by foot.
It doesn’t feel good to pay that much to fill up your car. Even the fuel efficient cars where you get 35 mpg still needs at least $40+ to fill up. So then with high fuel costs, Americans are even cutting back on vacations. Something that literally provides joy.
Fuel costs is not something to take lightly because it will eat at you at the pump. Driving is not something I do often these days.
4) Wage Increases Haven’t Kept Up
Most raises in Corporate America is 2 – 3%. If you get a 2 – 3% raise but inflation goes up 8.5%, did you really get a raise? Even though the impact of inflation is generally minimal because the dollar income growth due to inflation is higher than the dollar expenses growth, it still doesn’t make it any better.
Consumers are buying even less things even with raises because raises aren’t enough to keep up with the rising cost of living. Inflation sucks. And then you try to invest your money to give yourself a raise but then we reach a bear market of 2022 where that’s not even possible either.
Savings accounts don’t keep up with the Fed Funds rate, although they have been great places to park cash in 2022. Now’s an even more crucial time than ever to start side hustles and do everything and anything you can in order to give yourself a raise.
Your financial future depends on it.
5) More People are Starting Side Hustles and Second Jobs
The government loves to tout how great the labor market is with the rising non-farm payroll numbers. However, what they do leave out is a lot of people are getting second jobs. One non-minimum wage job should be enough to feed a family in America. However, that’s no longer possible.
So then you have to start a side hustle and a second job just to make ends meet. Not build wealth, not to move up in life. But to remain stagnant at where you are right now. Progress makes us the happiest. When we’re stuck in just a single place, we tend to be dissatisfied with life, in general.
Inflation sucks in that people are having to spend their free time in order to generate cash flow to build wealth with. Although some side hustles are very fun and much worth the effort required to create them, it sucks that we have to pursue those opportunities now.
At some point, there has to be a point where we should be able to enjoy the fruits of our labor. Not continue working just to stay afloat.
6) Grocery Bills
Grocery bills have gone through the roof in high inflationary times! What used to cost $50 now costs $100. And it’s not like we can cut back on groceries because we need it just to survive and live! Inflation sucks because the one place where you’re supposed to have affordable options is now expensive.
A pack of water simply doesn’t cost $3.99 anymore, like in the good old days. I definitely cut back on any extraneous spending in the grocery store and only buy the necessities. There is less need for me to buy groceries anymore because I generally now eat less than before.
However, that doesn’t mean I still don’t feel the pain whenever I visit the store. Going to the store to buy ice cream isn’t as simple as before. Meticulous planning is necessary. Just for a simple ice cream decision! Inflation sucks and I hope this high inflation rate subsides soon.
7) Asset Prices are Down
It would be one thing in a high inflation environment where the purchasing power of your dollar goes down. However, it’s another thing when you try to grow that money to increase that purchasing power even further and then get smacked right down in the face. You end up losing money!
After losing money, you realize your losses are even higher after taking into account inflation! That’s why inflation sucks. The US economy generally never avoided a recession when the inflation rate was above 5%. We’re at 8.5% in recent times. That’s a cause for concern. Stagflation is a possibility.
Even housing has been softening in 2022 and equity prices don’t seem to be slowing down in declining in value. The stock market hasn’t performed to historical standards of 8%/yr during high inflation times. Due to the tough investment market, I’ve been parking my cash in a savings account.
Building up an emergency fund matters more to me than ever before.
8) Savings Account Yields Haven’t Kept Up
In 2022, saving account yields have been increasing. Some are actually even in the 2% range now, which is high for a savings account. However, the yields have not kept up to a similar situation in 2018 where the Fed Funds rate was the same as 2022 but the banks offered a higher yield on their savings accounts.
So even if the Fed raises interest rates, the banks are not going to raise in-tandem with how they have raised rates. Inflation sucks because it’s becoming even worse for the consumer. Although the risk free returns do help ease concerns, they don’t completely mitigate the concerns.
There is more cash in my savings account than ever before. Although it’s losing value every month and although there were higher yields historically, I’m gladly parking my cash there. I’m more interested in preparing for the worst and having the best happen than the other way around.
9) The Whole World is in Shambles
The United States is not the only country who is going through this inflationary crisis situation. Germany’s PPI came in at 5.3% in July 2022 versus 0.6% expected. Their electricity even reached 1,000+ Euros per mWh at one point in 2022. The first time ever.
Inflation sucks because it’s not isolated and contained in just one single country. It affects the entire world. There’s no way to stay somewhere else to ride out the wave because it’s happening across the globe. Inflation affects even the one who is most prepared.
The whole world is falling down. No country is safe and no country has effectively combated the effects of inflation. Globalization made it infinitely harder for one country to do well while another country is in shambles. There’s a reason why Goldman Sachs sees the UK reaching a recession in the fourth quarter.
High inflationary environment affects everyone. Even the ones with sophisticated models and governments to predict inflation.
Inflation Sucks but You Can do Something About It
You are not sitting ducks. Yes, inflation sucks. However, there are things that you can still do to combat it. There are definitely ways for you to cut back on buying more stuff. Now is not the time to practice excessive consumerism. Now is the time to practice frugality.
These days, I am certainly not spending money on frivolous things. My credit card bill for August was somewhere close to $500. I have no need to buy a lot of things in order to keep me happy. If I can just have enough things to keep me alive, that will be good for me.
One way to build wealth is to increase income. Another way to build wealth is to want less things. Although inflation is not the best situation to be in, you’re in that situation. Whether we want it or not. The central bank made the situation infinitely worse.
Now is the time to pursue side hustles to combat the effects of inflation and so you can afford to put food on the table. Even an extra $100/month helps to buy groceries and gas for the month. Every dollar counts these days. More so than ever before.
We just never know how much longer this high inflationary environment will last. We don’t even know just how much worse this environment will get, either. Anything is possible. The low unemployment rate of 3.5% is low until it isn’t. Employment in the United States is “at-will”.
It’s great to have a job until we no longer have that job. Things change quickly.
Ways Inflation Sucks Shortlist:
- Inflation sucks: rent and mortgage costs are increasing
- Restaurant costs are increasing
- Inflation sucks: fuel
- Wage increases haven’t kept up
- More people are starting side hustles and getting second jobs
- Grocery bills
- Asset prices are down
- Savings account yields haven’t kept up
- The whole world is in shambles
