Becoming Who You Want To Be

When we hear the word inflation we often feel it is a bad thing. The very hearing of the word can make us shudder. Inflation can mean that we pay more at the pump and more at the grocery store than we paid last month and scare the stock market beginners. The truth of the matter is, however, inflation may not always be bad. In fact, we depend on inflation for our properties to grow in value.

The following example shows how inflation can actually be helpful.

Rob and Mary bought a little house in 1991 for fifty eight thousand dollars. Their payments, including taxes and insurance were four hundred forty dollars each month.

In 2006, the home was appraised at two hundred ten thousand dollars. Due to increases in taxes and insurance the payment for the home had increased to five hundred ten dollars.

Bob and Marie have benefited greatly from inflation. There investment has grown by a five hundred percent factor. At the same time, they are paying the same amount of money for the home in 2006 that they were 17 years ago.

Recently, Rob and Mary had their home reappraised. Due to the economic conditions in the United State of late the home is now only worth one hundred fifteen thousand dollars. Their house payment remains exactly the same as it was in 2006, but the home has lost almost half of its value form 2006. The lack of inflation has caused Rob and Mary to lose net worth. Unless the economy turns around and we begin to have some inflation once again, their property will continue to lose value.

No one wants to see runaway inflation. That means that we will be paying more at the store for our food and other necessities of life. However, we all depend on some inflation in order for our lives to flow smoothly.

Balanced inflation allows property and investments to grow. Prices also will increase slowly but so do paychecks. This is sometimes referred to as balanced growth.

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