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Old 01-22-2015, 02:03 PM   #41
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Below are my annual expenses since 1999. It's difficult to compute a personal inflation rate since my financial situation and needs fluctuate each year. However, nothing too extreme in terms of expenses has happened during this time (except for the high veterinary bills that are separated out). My regular expenses have held steady at about $30K/yr (approximately $10K/yr mortgage, $5K/yr charity, and $15K/yr living expenses).

If inflation was 5%/yr, my $30K expenses in 1999 would be about $60K today. If inflation was 10%/yr, I would be spending $120K today. Clearly, this is not happening, at least in my situation.

I think there has been some personal inflation (e.g., utilities have noticeably gone up, as has some food), but I also think I've become more frugal with time. There certainly has been inflation in medical costs, but my employer pays most of my insurance so I don't see this (and I'm never sick). I know that there's been even more inflation in educational costs, but I have no children so this doesn't directly impact me.

1999 ($30,915)
2000 ($33,454)
2001 ($27,325)
2002 ($31,751)
2003 ($29,757)
2004 ($25,510) [plus $18K in veterinary bills]
2005 ($29,424) [plus $5K in veterinary bills]
2006 ($30,735)
2007 ($29,703)
2008 ($31,846)
2009 ($23,878)
2010 ($26,108) [plus $17K for a new car]
2011 ($28,845)
2012 ($27,539) [plus $15K in veterinary bills]
2013 ($26,860) [plus $20K in veterinary bills]
2014 ($29,854) [plus $14K in veterinary bills for friend's pets]
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Old 01-22-2015, 02:42 PM   #42
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We track expenses very closely. Our "basic" expenses have gone up about as fast slowly as the CPI in the 8 years that I've been retired.

"Basic" excludes gifts, very erratic major travel, and healthcare (my wife had a major disease and that impacted our trend). But, it includes food, energy, etc.
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Old 01-22-2015, 06:12 PM   #43
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Stability in spending is not necessarily evidence of no/low inflation. Choosing to substitute lower priced products/services in one's life does not mean inflation went away. If I was eating salmon and T-bone steaks on my food budget last year but spent the same this year by buying canned tuna and ground beef that does not mean that food inflation was zero.

BLS has claimed that such substitution is not included in their surveys, however to quote its own website FAQ-
"How is the CPI market basket determined? The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought. For the current CPI, this information was collected from the Consumer Expenditure Surveys for 2011 and 2012. In each of those years, about 7,000 families from around the country provided information each quarter on their spending habits in the interview survey. To collect information on frequently purchased items, such as food and personal care products, another 7,000 families in each of these years kept diaries listing everything they bought during a 2-week period"
Consumer Price Index Frequently Asked Questions


IOW- The actual "basket" of goods/services being measured does change over time. IMHO- Surveys collecting data on folks choosing to buy cheaper stuff in a time of relative wage deflation is NOT the same as measuring real inflation, or the price change of the same goods/services over time.

I am NOT saying current inflation is what many of us lived through in the 70's/80's, but I gotta throw the BS flag when I hear that inflation is under 1%.
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Old 01-22-2015, 06:19 PM   #44
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Have tracked expenses carefully for 6 years. Groceries have gone up 50% in that time. Insurance has risen from 30% to 100% depending on type. Cost of having repair person come out has gone from $95 to $145. Lawn tractor service (pick up drop off) costs twice what it cost in 2009.

Amethyst
Things you need go up much faster than the CPI. Someone remarked to my father how cheap TV were now. My father responded but how often do I buy a TV one every fifteen years. He said I buy food everyday.
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Old 01-22-2015, 06:24 PM   #45
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Stability in spending is not necessarily evidence of no/low inflation. Choosing to substitute lower priced products/services in one's life does not mean inflation went away. If I was eating salmon and T-bone steaks on my food budget last year but spent the same this year by buying canned tuna and ground beef that does not mean that food inflation was zero.

...
This. And I am guilty of not qualifying in my above post the reason my overall costs have remained the same for many years is because I have been doing exactly that: substituting. I've also noticed I've been eliminating some spending as well. OTOH, I did so on purpose as I used to have pretty inflated tastes in my younger years, and as I've grown older, much less of that appeals to me. Consequently tuna is just as satisfying than T-bone steaks (in my case more so as I don't eat meat) .
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Old 01-22-2015, 06:25 PM   #46
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I suspect that if we have an agenda item to "prove" that official CPI numbers are rigged, we will find the data in this wonderful internet world to prove so. And viceversa. All I can say is that my personal expenditures have been remarkably level since ER. It's not a scientific study but I've spent about 64K in living expenses since then and my standard of living is about the same, I eat about the same, go out as often do the same things etc. Scientific validity of this ZERO. But anybody who says that inflation is currently rampant and astronomically higher than CPI - I call BS when I see it.
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Old 01-22-2015, 06:30 PM   #47
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I haven't been tracking the cost of Hostess cupcakes but I do buy a few annually.
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Old 01-22-2015, 06:43 PM   #48
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I see your point MooreBonds - but I was looking at it from a personal POV - like Mulligan was with ACA changing his health insurance premium.

I tried to note what I considered factors in changes. (Changed providers, changed commute, changed energy rating of the house, etc.)

Rodi, you can tie me to a stake and administer a Singapore Canning, and I will still say it's inflation, or at least until I cannot stand the pain. And to ER Hoosier's later point on substitution, I got the worst of both worlds on it. A $200 plus increase and was substituted to a narrower network and $1500 higher deductible to boot. Now that is some rampant inflation!


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Old 01-22-2015, 07:09 PM   #49
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Here is the thing though-- have you ever sat down and tried to honestly calculate it?

Just about anyone who tries to pick a representative basket of goods and then actually tracks it, ends up somewhere in the ballpark of BLS.

MIT did it--

US Daily Index ┬╗ The Billion Prices Project @ MIT

Are they cooking the books too?

The problem is that almost everyone remembers the increases, but forgets about the decreases.



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I am NOT saying current inflation is what many of us lived through in the 70's/80's, but I gotta throw the BS flag when I hear that inflation is under 1%.
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Old 01-22-2015, 07:13 PM   #50
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I think substitution and changing market baskets is a good thing. Otherwise we'd have weird effects like the inflation rate of film (23% in the last CPI update) being too heavily weighted.

Alternatively I believe the Billion Prices Project (or pricestats) does not use any product substitution at all. Their inflation numbers are comparable to BLS CPI-numbers for the US.
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Old 01-22-2015, 07:24 PM   #51
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I think substitution and changing market baskets is a good thing. Otherwise we'd have weird effects like the inflation rate of film (23% in the last CPI update) being too heavily weighted.
Have you even bothered to price new vacuum tubes for the HiFi this year? Great Ghu! And then I have to re-tube the Univac for tax season...
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Old 01-22-2015, 07:32 PM   #52
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Have you even bothered to price new vacuum tubes for the HiFi this year? Great Ghu! And then I have to re-tube the Univac for tax season...
True. Tungsol KT150's at $100 each for my power amp and I need four of them! Of course, I could use KT 88's but what is the fun in that?
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Old 01-22-2015, 07:41 PM   #53
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Amen to that ER.... Inflation is running rampant in my personal situation. Counting food, cable, and mostly Obamacare my personal inflation rate is 10%. I could live on $3000 last year, now it's $3300!


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I tend to agree with this also as I have seen monthly budget items increase by fairly large percentages and I'm a fairly frugal person as are most here. I have been saying recently, "while the government thinks inflation is low we certainly have "household" inflation…in the areas you mentioned as well as others like my electric bill (unit cost), water, taxes, etc.
And those increases have led to my changing some things to keep cost down…so I agree with others that it doesn't mean there is not inflation. I would think you would have to keep goods, services, food, energy and healthcare the same over time to accurately calculate inflation.
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Old 01-22-2015, 07:49 PM   #54
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I tend to agree with this also as I have seen monthly budget items increase by fairly large percentages and I'm a fairly frugal person as are most here. I have been saying recently, "while the government thinks inflation is low we certainly have "household" inflationůin the areas you mentioned as well as others like my electric bill (unit cost), water, taxes, etc.

I installed a metal roof over a year ago and my total electricity usage dropped 15% while my neighbors I compared to were up 5-6%. Well now the electricity company just filed to get 10% back with a rate increase. Kind of torn on this one though as I own some of their preferred stock and want to make sure I get my 6.5% dividend.


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Old 01-22-2015, 10:05 PM   #55
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Rodi, you can tie me to a stake and administer a Singapore Canning, and I will still say it's inflation, or at least until I cannot stand the pain. And to ER Hoosier's later point on substitution, I got the worst of both worlds on it. A $200 plus increase and was substituted to a narrower network and $1500 higher deductible to boot. Now that is some rampant inflation!
In this particular, unique case - because legislation has enacted an "upgrade" to a much pricier item, and Mulligan is taking the lowest-cost item humanly possible, I would still consider it 'true inflation', since he has no legal option to go for anything cheaper (and his insurance policy before was pretty 'bare bones' low cost).

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I installed a metal roof over a year ago and my total electricity usage dropped 15% while my neighbors I compared to were up 5-6%. Well now the electricity company just filed to get 10% back with a rate increase. Kind of torn on this one though as I own some of their preferred stock and want to make sure I get my 6.5% dividend.
You don't need the rate increase to keep getting your divvy. It's secure. Now, the divvy on the common, on the other hand - THAT'S what is in dire need of the rate increase.
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Old 01-22-2015, 10:19 PM   #56
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In this particular, unique case - because legislation has enacted an "upgrade" to a much pricier item, and Mulligan is taking the lowest-cost item humanly possible, I would still consider it 'true inflation', since he has no legal option to go for anything cheaper (and his insurance policy before was pretty 'bare bones' low cost).



You don't need the rate increase to keep getting your divvy. It's secure. Now, the divvy on the common, on the other hand - THAT'S what is in dire need of the rate increase.

Ok, then it's settled...I hope the 10% rate increase doesn't get approved!


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Old 01-22-2015, 10:31 PM   #57
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I installed a metal roof over a year ago and my total electricity usage dropped 15%.
And the new roof was on the house!
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Old 01-23-2015, 08:13 AM   #58
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I think this thread shows how insidious inflation can be. [mod edit]
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Old 01-23-2015, 08:39 AM   #59
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The problem is that almost everyone remembers the increases, but forgets about the decreases.

I'll give you a real world deflation example.

I tried the Kirkland Vodka (in the super tall bottle) when it first came out. It was $24.99 for the jumbo bottle. So a few bucks more than the Sky vodka I used to buy. My LBYM self had to justify the increased price, but I liked it so I sprung for it.

Then it dropped to 23.99 and stayed there for a while. This past fall it was 21.99.

Last week it was $19.99 per bottle.

That's a few bucks saved each month. Woo hoo.
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Old 01-23-2015, 08:48 AM   #60
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That's a few bucks saved each month. Woo hoo.
And for a good cause, too!
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