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Leveraging Financing to Beat Inflation
 

Introduction: In today's economic climate, the concept of financing as a means to beat inflation holds significant relevance. As highlighted by financial guru Robert Kiyosaki, debt can be perceived as an asset when utilized strategically.
 

Inflation Trends: According to Investopedia, the average inflation rate in 2023 stood at 4.1%, while 2022 witnessed a higher rate of 8.0%. Notably, the Consumer Price Index (CPI) indicated a significant dip from its peak in June 2022, showcasing a trend towards stabilization.

Forecasted Inflation: Looking ahead, J.P. Morgan Research forecasts global core inflation to remain relatively stable, hovering around 3% in 2024.
 

Benefits of Leveraging Financing: Leveraging financing presents a savvy strategy to outpace inflation. Take, for instance, tangible assets like real estate. The cost of essentials such as roof replacements could potentially double in the next five years.
 

Cost of Financing vs. Cash Payment: At Roof It Right, we offer varying discounts for cash payments versus financing options. For instance, a cash payment for a complete roofing system could entail a 20% discount with a 50% down payment. However, if financing is the only viable option, we provide tailored solutions to ensure cost-effectiveness.

For example, one of our popular Wells Fargo plans, the 12-month 0% APR plan (#1019), comes with a dealer fee of 5.94%. Despite this fee, we still provide a discount, which may be 14.06% off the total sale price.
 

Inflation Impact on Loan Repayment: Considering inflation's impact on loan repayment, let's examine a scenario. Borrowing $12,891 for a roof replacement in January 2022, inflation gradually decreases the real value of the repayment amount. By the end of 2024, the borrower effectively pays back less than the borrowed amount, thanks to inflation.
 

• In 2022, with inflation at 9.1%, the equivalent value of $12,891 at the end of the year would be $14,064.

• In 2023, with inflation at 4.1%, the equivalent value of $12,891 at the end of the year would be $13,419.

• In 2024, with forecasted inflation at 3%, the equivalent value of $12,891 at the end of the year would be $13,277.
   

Another example:  Wells Fargo 60-month 0% APR plan (#4115). Despite a dealer fee of 18.69%, you may still receive a 1.31% discount on the total sale price.
 

Math for Plan 4115: Let's delve into the numbers for plan 4115. Assuming a roof replacement cost of $15,000, with a dealer fee of 18.69%, the discounted total comes to $14,803.50. Over 60 months, the borrower would repay this amount. However, considering an annual 3% increase in the cost of roof replacement, the equivalent cost of the roof in five years would be $17,161.31. Despite this inflation, the borrower would only repay $14,803.50 to Wells Fargo. This discrepancy underscores the advantage of financing over time, especially in the context of inflation.
 

Long-Term Benefits of Financing: Moreover, financing presents long-term benefits, particularly in the realm of real estate investments. Over the past five years, home values have surged, with Kentucky witnessing an 85.5% increase. Such trends highlight the potential for substantial returns on investment.

Conclusion: In conclusion, leveraging financing intelligently can serve as a potent tool to beat inflation and maximize returns on investments. By understanding inflationary trends and strategically utilizing financing options, individuals and businesses can navigate economic uncertainties with confidence and secure their financial futures.