Escaping inflation?

 

What Costs More

Inflation has been pretty benign over the last 20 years, right?  The U.S. Consumer Price Index has ranged from negative 0.4% in 2009 to a high of 3.8% in the awful 2008 economic year.  In 13 of those 20 years, the CPI was below 2.5%, which is hardly comparable to the double-digit inflation rates that people experienced in the 1970s and 1980s.

 

But not all expenses moved in lockstep, as you can see from the accompanying chart.  Since 1997, college tuition fees, on average, have risen almost 170%, while the cost of a television set has fallen by more than 80%.  Software and childrens’ toys have become dramatically less expensive, new cars and clothing have largely escaped inflationary price rises, while nearly everything else has become dramatically more expensive.  Childcare and medical care have risen by approximately 100% in cost over the last 20 years, and energy, housing costs, food & beverages and public transportation all cost 50% more than they did 20 years ago.

CA - 2017-9-20 - What Costs More (5)

 

The lesson here is that your own inflation rate depends on what you’re buying.  If you’re sending kids to college (or paying for college on your own), and/or if you require a lot of medical care, then chances are your personal expenses are rising much faster than the inflation rate.  If you’re mostly spending your money on toys and TV sets, then you’re largely escaping the bite of inflation.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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