Author Topic: What is your trick for beating inflation?  (Read 2563 times)

meteor

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What is your trick for beating inflation?
« on: January 25, 2014, 05:08:26 PM »
Financial experts say we are inevitably subject to annual inflation, but I disagree.  For example, computers have gotten much cheaper over time.

When milk got expensive, I started drinking water (no love lost).  When gas and vehicle repair prices went up, I gave up my vehicle and rode a bike. I'm sure a lot of MMM's have creative ideas on how to counteract inflation.  What's yours?
« Last Edit: January 25, 2014, 05:18:47 PM by meteor »

MrsPete

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Re: What is your trick for beating inflation?
« Reply #1 on: January 25, 2014, 05:55:05 PM »
Some things are cheaper, others are more expensive.  For example, I pay less for phone service (no smart phone) than I did when we had a house phone and made long distance calls.  We also use email for communication with out of town family, a benefit we didn't have years ago.  On the other hand, cars and gas are more expensive than they were in the past.  Sure, you can "downsize" your use of expensive items, or you can buy used, but at some point you have to spend -- you can't do without everything.  This isn't something you can "win" 100% of the time.

How to avoid inflation? 

- Shop smart.  Pay attention to sales and buy only for bottom dollar.  For example, canned foods are always super-cheap in the fall, so buy by the case.  Fill your pantry, put cans in your coat closet and under your bed.  You're sure to need canned goods, so don't wait 'til the price is higher again.  Begin a price notebook so you'll recognize a real sale vs. a fake sale. 
 
- For things like clothing, buy used.

- Make things last longer (electronics, for example -- you don't need the latest and greatest gadget). 

- Learn old-fashioned skills like making your own cheese and wine, mending your own clothes.  These skills aren't hard, but they're dying off. 




HayMaker

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Re: What is your trick for beating inflation?
« Reply #2 on: January 25, 2014, 06:35:54 PM »
Financial experts say we are inevitably subject to annual inflation, but I disagree.  For example, computers have gotten much cheaper over time.

When milk got expensive, I started drinking water (no love lost).  When gas and vehicle repair prices went up, I gave up my vehicle and rode a bike. I'm sure a lot of MMM's have creative ideas on how to counteract inflation.  What's yours?

You are not countering inflation.  What you are describing is called the substitution effect in macroeconomics.  If the price of beef goes up lots of people start eating chicken instead.  You're adapting your life style in response to inflationary pressure.  Nothing wrong with it, but it's not beating inflation.

I would describe beating inflation as being able to maintain your life style despite price increases.  This can be accomplished in a number of ways, the most obvious being to invest in such a way that your returns exceed the rate of inflation.  That brings up another area of debate as the US govt has been modifying how that is calculated for years, some would say in a cynical effort to limit cost of living increases in safety hey programs, etc.

Other ways to beat inflation would include things like buying in bulk, locking in prices, ( think hedging as in oil or cattle futures) extreme couponing, etc.

limeandpepper

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Re: What is your trick for beating inflation?
« Reply #3 on: January 25, 2014, 07:10:15 PM »
The following has really helped me over the past couple of years.

- Housemate asked if partner could move in and was happy to pay a bigger portion of the rent and bills. Thanks to this, even with rent increases, I'm still paying less than I was a few years ago.

- Discovered consistently fantastic end-of-the-day deals for fruit and veg at a conveniently located market. My food grocery bill has gotten cheaper as a result. I pay 50 cents for something that would cost me $1.50 at the supermarket, and the quality is just as good, if not better, in many cases. And over the years, those deals have remained at the same price points!

Nords

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Re: What is your trick for beating inflation?
« Reply #4 on: January 25, 2014, 08:05:54 PM »
Financial experts say we are inevitably subject to annual inflation, but I disagree.  For example, computers have gotten much cheaper over time.
When milk got expensive, I started drinking water (no love lost).  When gas and vehicle repair prices went up, I gave up my vehicle and rode a bike. I'm sure a lot of MMM's have creative ideas on how to counteract inflation.  What's yours?
I thought this was going to be a discussion about asset allocation, rental properties, equities, and inflation-adjusted annuities.

But if we're talking about hedonic substitution and reducing our expenses then I'd have to vote for (1) refinancing our mortgages and (2) sending our daughter off to college.