Interesting! - My personal rate of inflation has dropped!

[mathjak107]

not to get off subject but in a way yes bite me can and does happen..you see it has been deemed many times that the police are an investigative unit as a first function..so lets say your being mugged and someone calls the cops...if the sector cars are busy or have an officer needs assistance call out or are on a gun run you are low man in the priorty list...eventually they will come to you but the bad guy maybe be long gone.....they will take the info and investiagate..........most cases here in nyc were about people suing because they were injured and since its near impossible to get a gun permit to carry here law suits crop up all the time suing the police for non protection.....

[mathjak107]

and soooo getting back to what i said ,its just like the cpi index ha ha ha.........it applys to each and everyone of us according to the government but because all our individual expenses and purchases are different ,it affects no one......

Originally Posted by mathjak107

then theres cost of living which is quantity of items at that price you use and the last part of the personal index is standard of living...if you enjoy the best of breed and keep current with technology its still just as expensive....

Sorry, that's not inflation!

[mathjak107]

inflation by itself is measured in price increases.....those items may or may not affect you...there are 2 other components needed in order to come up with a figure for yourself.... if i walk to work and you drive 100 miles a day my index is alot different than yours with out figuring price x quantity and living standard....

[mathjak107]

WEBSTERS Inflation:
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

In this definition, inflation would appear to be the consequence or result (rising prices) rather than the cause.

Originally Posted by mathjak107

WEBSTERS Inflation:
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

In this definition, inflation would appear to be the consequence or result (rising prices) rather than the cause.

No one is arguing this. But inflation is not Indexing your standard of living to technological progress!

[mathjak107]

inflation i believe is a personal thing unique to all of us...i enjoy best of breed in my hobbies and interests..i enjoy living in the area i live in....sure i can move to a cheaper area but im not....my cost of living has to take in living standard...
my buddy at work eats these nausiating 99 cent frozen dinners every day for lunch....it cost me 6-7 bucks a day bringing lunch from home when im done with all my goodies and snacks and fruit.... the goods he uses may not rise in price,,if mine do and im not willing to downgrade,substitute a cheaper product or do without thats all living standard...its a key part of what inflation means to me

[mathjak107]

again the 750.00 sony xbr in 1987 was 750..todays sony xbr is 2200.00....if i want that level of best of breed thats living standard,,,coupled with inflation

Originally Posted by mathjak107

again the 750.00 sony xbr in 1987 was 750..todays sony xbr is 2200.00....if i want that level of best of breed thats living standard,,,coupled with inflation

Have your own inflation system if you must, but that's not is what is measured or discussed by experts in economics.

[mathjak107]

i think thats how the subject kind of got started...it started out by everyone discussing how the cpi index was almost meaningless unto itself and then everyone chimed in as to how some were actually living cheaper and some were getting creamed by increases and the reasons for the wide disparity

[rogersteciak]

Originally Posted by Cut-Throat

Have your own inflation system if you must, but that's not is what is measured or discussed by experts in economics.

Although I use an inflation rate of 3% in my spreadsheet, I should change it to 5% for my personal rate of inflation.* That number is calculated as follows:* In 1990, my basic living expenses (i.e., minus the mortgage) were $1000 a month.* In 2005, these same expenses are now $2000 a month.* That translates into a 5% rate of inflation for myself (i.e., basic living expenses doubled in 15 years).* I'm still living at the same location and have basically the same lifestyle as I did then, so my personal inflation number of 5% is the right one for me to use.

[mathjak107]

yep thats the point...the cpi ,the number that the economists and government uses is a fictious person who really dosnt exist....
that fictious person always is willing to substitute or do without or uses products and services that the fictious person buys way below real pricing...look at rent ,look at health care, look at education ,look at the cost of actually buying a home,which by the way isnt even figured in the index.we all rent our selves our homes at way below market rate increase in the cpi.......there is far more to our "own" cpi than that silly govt number

[deserat]

Joe Dominguez actually discusses personal rates of inflation in his book "Your Money or Your Life" and says that they can go down or stay steady if you aren't the 'first adopter' of new technology. So, buying a plasma TV early in its market cycle will definitely increase your personal rate of inflation.

Frankly, I believe that minimizing your personal rate of inflation is the key to FI and RE - of course basic needs must be met, but beyond that, its all about choice.....CPI is meaningless to me. I look at how much I spend in different categories of my life and determine if what I received from that activity/material good is worth what I spent on it - if I still enjoy/need that but consider it too expensive, I then look for cheaper alternatives or adjust spending in other areas which aren't of as much value to me - very much along the lines of the process in "Your Money or Your Life."

I'm not surprised when one's personal rate of inflation decreases, espceially if there are patterns of frugality ingrained in their thought and behavior processes.

Deserat

Deserat

[mathjak107]

I'm not surprised when one's personal rate of inflation decreases, espceially if there are patterns of frugality ingrained in their thought and behavior processes.

Deserat



i love how you say CHEAP!

[justin]

Mathjak,

I found an old post of mine regarding inflation that may shine some light on why you're personal inflation rate is so much higher than the CPI.

http://early-retirement.org/forums/i...58123#msg58123

In a nutshell, the inflation rate for items consumed by your average millionaire went up 6.4% in 2004 versus 3% for the average Joe (CPI). For those really rich folks (net worth greater than $30 million), the inflation rate was 11.3%.

So if a large proportion of your expenses are luxury goods, you may be seeing personal inflation rates much higher than the CPI.

[mathjak107]

yep exactly why lifestyle is a very important component of the "real cpi"

[justin]

Mathjak, you're spending money like a rich guy. Use the 6.4% rich guy inflation figure and be done with it. In the meantime, us frugal folks on the board and the other 90% of the country who don't have much to spend will do just fine with the CPI.

[mathjak107]

well im not retired yet...still working and enjoying our toys.....but wait until we pull the plug in 3 years or so....then its different priorities........

[mathjak107]

thinking about it i took a look at our recent purchases....actually the road bikes my wife and i bought 2 years ago for 2500.00 each are still the same price,,,,the linn home theater we bought 2 years ago at 7500.00 is still the same...the dlp tv we bought last year is 600.00 less this year and the lease on the bmw truck we want this year is 100.00 bucks cheaper than last.....
sooooooooooooo know what all that means?........they were charging to much to begin with ha ha ha

[justin]

Originally Posted by mathjak107

...the dlp tv we bought last year is 600.00 less this year...

dlp is so last millenium. Now it's all about super hi-def 100" plasmas. Wall-mount, of course.