Making Your Money Last

4 Ways to Beat Inflation Now

These four moves will put your finances in better shape, too.

Consumer prices are rising at the fastest pace in more than two years, largely as a result of the hike in fuel and food prices. While few believe double-digit inflation rates will return anytime soon, the overall inflation rate is expected to hit 3% this year, up from 1.5% in 2010. Here are four moves to help you prepare for rising prices.

Build a CD ladder. Inflation and higher interest rates usually go hand in hand. One good way to take advantage of higher rates on savings is to set up a certificate of deposit ladder, buying several CDs that mature at six-month intervals. The longer-term CDs will pay more today, while the shorter-term CDs will give you the ability to reinvest your money at higher rates of return when interest rates start to rise.

Refinance your mortgage. Sooner or later, mortgage rates are also going to climb. The best way to check inflation on this big piece of your budget is to lock in a 30-year fixed-rate loan. Such loans are still at historically low rates, running about 4.5%. At that rate, principal and interest payments will be about $510 for each $100,000 you borrow.

Be healthy. The cost of health insurance is projected to go up about 8% in the coming year. An unhealthy lifestyle can cost you in dozens of ways, including higher health premiums, co-payments and deductibles. Many companies provide financial incentives -- from gift cards to cut-rate insurance premiums -- if you’re willing to participate in weight-management, smoking-cessation or wellness programs they sponsor. (See also 30 Ways to Cut Health-Care Costs).

Tiptoe into telecommuting. Today’s biggest inflation driver is the price of gasoline, which rose by one-third over the past year. You can cut back on how much you use, particularly if your boss will let you work at home a few days a week. You’ll save about $4 for every 25 miles you don’t have to drive, and you’ll trim other work-related expenses, such as the cost of buying lunch. (See also 6 Things You Need to Know About Saving on Gas).

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