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The Best Strategy I’ve Found for Dealing with Record High Inflation

by | Jul 25, 2022 | Money, Personal Finance

Inflation is ripping our faces off.

It’s 9.1% in America. But if you do your own calculation, you’ll likely arrive at a number of around 18%.

Some will blame supply chain shortages. Some will say corporations got too greedy and raised their prices too much.

The truth many in power hide from is that inflation is the direct result of creating more than 40% of all US dollars in existence out of nowhere since March 2020. Nothing else. Not Putin. Not ya momma. Free money.

When inflation spiked in 2020 I tried these things.

I tried to save money

If inflation goes higher people tend to save more money to cover increasing expenses. I tried that. The problem is you wake up every day knowing that your money is melting faster than an ice cube.

Psychologically, saving money just doesn’t sit right in the mind. Saving makes the hidden tax of inflation greater, not less.

I tried to reduce expenses

“Tighten the purse strings,” they say.

The problem I found is when I stopped investing in myself the skills I had weakened and that made my overall value in the market less. I went through my list of subscriptions. I looked for ones to cull.

But I can’t. Most of my software subscriptions save me time and run my tiny online business. If I cut them off because of inflation then I have to work harder. And try reducing expenses when you’ve got a baby on the way.

If anything, when my daughter is born soon, my expenses will go through the roof. I’m not going to have her walking around in smelly nappies just to save a few bucks because of inflation. It’s not an option. I’ll die before I do that.

We only get one life. Why should we have to make sacrifices on basic things? Screw that. That’s not living.

I tried to invest better

Investing your money can be a nice little hedge against inflation.

You can buy stocks, bonds, real estate, or crypto to try and recover some of the effects of inflation. The problem is most investment portfolios have no way to generate a 9.1% return after taxes (typically gotta make much higher returns to net 9.1%).

When you attempt to chase these ludicrous, out-sized returns you end up taking on more risk to get it. You end up betting the farm on a crypto dog coin with a smiling puppy face that dies three months later.

7% investment returns were doable with a Vanguard index fund. But 9.1% isn’t. The sooner you realize that the better.

We’re not going to invest our way out of inflation.

I tried to save on tax

Taxes are a huge expense for all of us.

I pay 50% of every dollar I earn to the government. I tried to lower my taxes (legally) by changing the structure of my online business. It bought the tax down a little but it still didn’t fix the problem of inflation.

The best strategy to destroy record high inflation forever

I like to invert problems.

Famous investor Charlie Munger taught me to do this with his “anti-goals” concept. Instead of asking “what do I want?” invert the problem and ask “what don’t I want?”

Through this process I came up with a better question. “How would I make 9.1% inflation seem tiny?”

That led me to the simple answer: make more money.

If inflation is 9.1% but my income goes up 25% then I don’t care so much. And if my income continues to skyrocket then inflation suddenly becomes a moot point.

The question is, how?

Online income streams. Make money online.

The powerful diversification strategy

Adding online income streams isn’t just about making more money.

It’s about diversification. Solopreneur Daniel Vassallo made me think with this tweet.

Nobody can predict where the next war will be. Or whether deflation might become the next evil force. Or whether a post-bat-virus market crash could wipe out trillions of dollars of wealth. Or whether another Donald Duck will get into power and completely mess things up and start a Jan 6 riot.

Or whether mass layoffs will occur in your industry or at your company. Or whether another bat (or monkey) virus will circle the world and kill millions of people. Or whether climate change will wreak havoc.

World events that can create risk for your income are out of your control.

A diversified portfolio of online income streams is in your control. No matter your IQ you can 100% make money online.

Daniel says diversification helps you stay agile. He’s right. One income stream is what will ruin your life and cause inflation to beat you over the head until you’re punch drunk and can barely stand.

The goal isn’t millionaire status

The problem with this topic is …. Lambos.

People hear online income streams or making money online and dream of riches. That makes it too far out of reach, and it misses the freaking point.

The majority of people would have base level happiness at $70–100k a year in income. Between a job and online income streams this is entirely doable. With a job alone it’s much harder.

So what’s left then is to talk about what online income streams you can add. Here are a few ideas:

  • Resell your 9–5 skills to another business
  • Consulting
  • Freelancing (use freelance marketplaces)
  • Writing online (Newsbreak, Quora, MirrorXYZ)
  • Coaching people two steps behind you in a skill
  • Teaching others skills you already have via online courses
  • Publishing eBooks on Gumroad and Amazon KDP
  • Ghostwriting social media content for anyone who needs it
  • A virtual assistant gig (bonus: you learn about more income streams from the person you’re assisting)
  • A podcast or Youtube channel with paid sponsors
  • Promoting affiliate products to a small email list

That’s a few of the common ones people just like you are currently doing. How do I know? I run several online communities where people share how they make money online. The answers aren’t so glamorous, but they clearly work.

Closing Thought

Stop complaining and blaming inflation issues on everybody else.

World leaders don’t care. They created inflation out of nowhere by creating trillions of dollars out of thin air. This is how we pay for the bat virus of March 2020. There’s no way around it.

All you can do is increase your income enough that 9.1% inflation feels small in comparison. Everything else is a dog and pony show. (Timmy real talk).

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

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