If I have a lot of debt is inflation a good thing?

Question

Assuming the debt has a fixed interest rate that cannot change.

Answer 1

Yes. Inflation basically boils down to that money today is worth more than it is tomorrow. As inflation goes up, the value of the debt decreases. So you are paying off the same amount of debt, but it is worth less. That's why when inflation goes up, interest rates go up - to compensate the creditor for the lost value.

Generally, wages go up with the rate of inflation...but the amount of your debt does not. So while the buying power of a single dollar is less, your total buying power (hopefully) stays the same.

Of course, no one wants hyper inflation. But it is a great way to get out of debt.

Answer 2

Inflation and interest rates tend to move in the same direction. If this is your concern, I would look for options to fix the interest rate. Debt consolidation being one.

If you look at the trends of economic inflation over time, you will see this is true. One variable that does not always come into play is an increase in your earnings. Employers are trying to work with the same tools you are, so increasing wages is not always possible. You might even see lay-offs. Higher rates, higher prices, income saying the same...see the picture.

Again, if you are becoming concerned look for a fixed rate loan. If rates drop in the future, you have the option to refinance.

Answer 3

Inflation is not a good thing, even if you have debt that you intend to pay and do not have means to pay it off with your current earnings.

With inflation you may end up borrowing more to afford many necessities of life.

It may have a positive impact on your income if you own a business category that benefits from it. For e.g. when gas prices are going up, we lose but oil companies still make big profits on their current margin.

A last word is inflation or no inflation, a lot of debt is not a good thing.

Answer 4

Some people may disagree but inflation is NEVER a good thing. All it does is create a domino effect on everything else in the economy, but it's dominos moving up not down. So in debt a person in a high inflation environment would find themself struggling harder to GET OUT of debt. With prices DOWN one in debt has a better and faster chance of getting out because prices are lower and they can keep up the pace.

Answer 5

if u have a lot of debt owing to a friend without interest inflation is a bad bad thing for ur friend and good one for u but on the other hand dude if u have it on interest then witha rise in inflation there is a shortage of money in the money market then to raise the money the govt will introduce expantioanry monetory policy meaning that the interest rate will increase and then u can thinkof what is going to happen......... u hav to pay more than earlier

Answer 6

only if your paycheck keeps up with it-if it doesnt what is left after paying bills buys less if it does smile-old hippie here

Answer 7

Nope.

Answer 8

Is your middle initial "W" by any chance?

Answer 9

you still owe---so what difference does that make