The government money printers impact inflation, but what impact does it have on your debt? You likely have a mortgage, car loans, and other types of debt.
As inflation increases or currency collapses, you lose purchasing power. You'll face an increase in the cost of living. And may have trouble paying off debt.
Here's what financial expert Joe Brown has to say about the impact of inflation on your debt. You may not be ready for what is coming for many.
Heresy Financial. What Happens to Your Debt When The Dollars Dies (YouTube, 21:52)
Feeling overwhelmed or uncertain about the impact of inflation on your financial future is expected. Don't despair. To hedge against inflation, you must first understand the following:
- Debt is a legal contract denominated in a specific number of dollars. Debt may go through a revaluation or conversion when the dollar is no longer used.
- Inflationary debt jubilee may occur, which means if you take on debt, you might not have to pay it back. Yet, this is not likely to happen.
- If the debt gets repriced in the new currency, you might get screwed out of purchasing power. This is a bonus benefit to lenders who are often lobbyists too.
- Not all debts are equal, and not all debts will die the same death. There are three common types of debt: mortgage, car loan, and credit card debt.
- Hyperinflation and currency changes have happened hundreds of times worldwide. Modeling is available for how this plays out. Those who prepare tend to profit.
You cannot rely on politicians for the Federal Reserve to save you. Zimbabwe (2008) faced hyperinflation. Venezuela's (2016-2021) debt became worthless. Lebanon (2019-2021) had inflation compounded by COVID-19.
As what has happened in other countries with inflation will happen here. There is no magic erasure of debt, you must manage it today. You must prepare, educate yourself, and take action today.
The good news is that inflation is a turning point that will determine your wealth. With the right investments, you can overcome inflation. Write with your questions.
Joe Brown is with Heresy Financial. He teaches clients about how money works so they can control their own financial security. You can reach Joe at https://heresy.financial/
A business analyst and publisher. Had $250,000 in his retirement by age 25 while losing it all in the dot.com bubble. Invested more than $575,000 in the expense of experience that showed him what works for increasing net worth. Discovered value of actually listening to mentors.