Now is a great time to be alive, although it may not seem this way. America and most countries are experiencing high inflationary pressures from all sources.
However, you have all the tools at your disposal to combat inflation and continue to grow your net worth.
Welcome back to the Inflation Ate My Paycheck Series (101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111), where we stop inflation in its tracks.
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Inflation will be sticky. The US government (and other countries) printed lots of money during the 2020 pandemic.
On top of money printing, they lowered interest rates to zero, gave out stimulus checks, handed out cheap business loans, and halted student loan payments.
All of these things flooded the US economy with a ton of cash. When there is excess liquidity (money) in the system, it gravitates towards hard assets.
In our case, the extra money quickly went to the stock market, houses, and cryptocurrencies. In 2022, the Federal Reserve set out on a mission to slow inflation by raising interest rates.
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However, there is still a lot of money still floating around. We must realize that inflation at 4-5% a year will persist for 5 to 10 years—inflation will be sticky.
Don’t fight the scenario; fight inflation. So inflation will stick around for 5-10 years; what will you do about it?
Don’t sit around and whine about it; it’s time to take control of your financial destiny. America has always been expensive; now, it’s at a whole new level.
With this new intelligence on inflation, you’ll need to take a new approach to your daily activities. Knowing that inflation will persist for a decade should motivate you to change your mindset.
Let’s review how you can increase your income every single year to outpace inflation. You’ll need multiple income streams that can continue to compound on their own.
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Upskill your skills. Your brain is the most valuable thing you possess; however, you must continue to tune it to perfection.
You may not be able to give yourself a raise at your job, but you can create multiple income streams by learning new skills.
Let’s say you are a nurse. Millions of people start their journey to become nurses or doctors every year. Why not help these aspiring medical professionals by telling your story or creating a mentorship group?
When you become an entrepreneur, you’ll learn many new skills you can leverage throughout your lifetime. Some skills I have learned are writing, editing, designing, advertising, and content marketing.
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You can also go towards active income by joining Uber, Fiverr, or many other freelance-style gigs. Although in the long run, it’s best to start building your own business.
Join the sharing economy. If you share, you will never worry about inflation. The more people you serve, the richer you become.
There are many ways to join the sharing economy—find the one that best suits your needs. You can share your parking space, bedroom, extra dwelling, RV hookups, or storage space.
You can also share your car on sites like Turo. Many people view their things as siblings (part of the family). But, it is best to consider them assets that make you money.
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The sooner you release your attachment to these things, the faster you can start making money. If you are a single family living in a single-family house, you’ll have a tough time. It’s time to stack the odds in your favor.
Real estate vs. inflation. One of the best ways to beat inflation is through owning real estate. Remember, inflation favors hard assets.
I know what you think: “Josh, I can’t afford to get into real estate.” Sure, you can, but you must work with your brothers, sisters, and parents.
Or, perhaps you move your family to a small city while you earn a high wage in the big city. Extreme times call for extreme measures.
The Passive Income Grind 2: Relax
My wife and I are retiring this year at ages 39 and 42, respectively. Did we achieve this without sacrifice?
I have been away from my family for the last three years—two years in Japan and one in San Diego.
We used this time away to pay off debt, invest in dividends, refinance our three homes, start a business, and manage roommates and tenants.
It’s been a busy three years, and retirement will also be hectic. My first goal is to use my college benefits to help me pay down house #2 over four years.
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Thinking ahead always. I always live 5-10 years in the future. My writing business will take some time to generate good returns.
By paying off house #2, we will receive $2,200 to $2,500 per month of cold hard rental cash. This will be life-changing.
I could have decided to leverage more houses to earn this rental income, but sometimes the safer (slower) bet pays more dividends.
The power of passive income. The moral of the story is that you need passive income to beat inflation consistently.
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Your assets generate passive income—meaning you need assets. You can buy, build, or create assets.
If you have no money, you must create assets from your brain (like I am doing now). Invest in dividend-paying stocks once those assets (books, music, videos) produce cash.
While creating royalties and investing in dividends, get a roommate to generate rental income. Use your rental income to invest in a rental car, an ATM machine, or start a garden.
Your passive income comes from dividends, royalties, business, and real estate. You can work these into your life while you maintain your day job.
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Conclusion. Life is not supposed to be easier, but it gets more manageable when you have passive income.
Every day I wake up richer than the last. Each time someone buys one of my books, my net worth ticks up a little.
I already wrote the books; now their only job is to make money for me. They sit in the world with the sole purpose of making my life easier.
How many things do you own with the purpose of making your life easier? I have an army of books, dividend-paying stocks, and houses that help me beat inflation daily. How about you?
If you want to enjoy the finer things in life (vacations, cars, private school), you’ll need to do something different from everyone else.
Yes, this life is hardcore, and most people cannot fathom building a stable of assets that produce passive income. Are you like most people? Good Luck!
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