These days, the worst way to save money is to find a great deal.

2 minute read

Explaining the economy is both big and boring. The United States’ gross domestic product exceeds $22 trillion. That number is so massive it doesn’t matter.

Sometimes, small numbers speak loudly. Over the past year, the price of a hearty breakfast has soared. Egg prices are up 12 percent. Bacon prices are up 20 percent.

When it comes to food, gasoline, and other staples, you need to act decisively and swiftly to save money…

You can learn more about the three ways to keep inflation from deflating your budget, but what about big-ticket items like cars, appliances, and electronics?

This is where inflation becomes partly your fault.

Stop shopping for deals

You’ve heard about FOMO. It stands for Fear of Missing Out. It’s such a pervasive feeling that psychologists are studying it. As Psychology Today has reported, researchers are only now devising “some intervention techniques that could equip a person with certain regulatory resources to combat FOMO.”

Until they do that, you have to cure yourself – and fast. FOMO is especially deadly during inflationary periods. In fact, there’s a term for it: “inflationary psychology.”

Investopedia’s definition is the most succinct…

Inflationary psychology is a state of mind that leads consumers to spend more quickly than they otherwise would in the belief that prices are rising. Most consumers will spend their money on a product immediately if they think its price is going to increase shortly.

This is how inflation becomes your fault. While you didn’t start it, your own FOMO is dragging it out.

Here’s how it often looks in practice: You notice prices are rising, so you start buying more. You figure, “Prices are going up now, so they’ll probably keep going up. I’m not losing money by paying $200 more for this TV set, I’m saving $200 because it’ll probably go up $400 tomorrow!”

It’s just that kind of FOMO deal-shopping that will break your budget.

Shortages of everything but debt

A friend of mine is a car dealer. Last week, I was asking him about some new GM models. On average, a large dealership will stock upwards of 200 vehicles on its lots. That accounts for various makes, models, colors, and features.

My friend had 30 vehicles on the lot. All of them were already sold. He had raised the prices, and raised them again. Yet every new vehicle he could get his hands on sold immediately.

Now, some people need a new car for practical and legitimate reasons. If your car has broken down and isn’t worth repairing, you still need to get to work, take the kids to school, and shop for groceries.

However, my friend is selling premium SUVs and sportscars for outrageous sums. His buyers might indeed need a new car, but they want more car than they might otherwise buy – just because they think the prices will keep going up.

The bottom line is your bottom line

The best advice I can give you is to ignore what you think you’ll save. During stressful and chaotic inflationary times, the only thing that matters is the money you spend and save. Don’t get distracted by what your friends are buying, or by what economists are saying. The simple truth of every economy is this: What goes up must come down, and what hits rock bottom always rises again.

Your financial freedom depends on your independence from the pack mentality.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC