Money (It's a hit!)
Posted on 03/30/2022 6:26:01 AM PDT by shadowlands1960
Near-8 percent inflation sounds high, but look at the actual drain on your paycheck and spike in your expenses, and it feels a lot higher.
Our era is known for deluging consumers in more information than they can thoughtfully intake, and the Biden White House is counting on you to glance past the record-breaking bad inflation numbers that keep revealing the dangers of Congress’s high-dollar spending. You might give only a cursory look to a list of percentages from the Labor Department, but apply those numbers to your own paycheck, savings, and expenses, and the numbers start to sound a lot bigger and more painful.
The average annual wage earned by American workers was $53,383 for the year 2020, according to the Social Security Administration. Take 7.9 percent of that — the year-over-year inflation rate for February — and you have $4,217. So, for that average American salary to maintain the same value it had a year ago, it would have to increase by just over $4,200; if it hasn’t, inflation has cost you roughly $4,200 in depreciation of your salary’s value.
To compare, the average annual pay raise employees are expected to receive in 2022 is 3.4 percent — less than half of the past year’s inflation rate. Using the previous average wage, even if you got a 3.4 percent raise (adding $1,815 to your yearly income), you’d still be down more than $2,400. And that’s with an average raise that’s already higher than pay bumps in previous years; in 2021, the average employer gave out 2.8 percent raises.
(Excerpt) Read more at thefederalist.com ...
Don’t give me that Do-Gooder Good BS!....................
“How Much ‘Bidenflation’ Is Really Taking Out Of Your Bank Account”
Answer: Zero; I’m beating them to it. All Americans would do well to significantly reduce amounts on deposit in banks that give you absolutely nothing in return.
Agreed. We’ll be paying off a mortgage, investing the rest.
Inflation is the government’s way of making the retired folk poor, and the government rich.
People who worked hard when they were able and who have saved some money so they wouldn’t be a burden are the ones who pay for the government’s follies.
Both are great ideas — and investments ought to surpass the inflation rate. Otherwise, you are still being chiseled. But you knew that.
IMHO, paying off a mortgage at this time is a financial error.
I owe a substantial chunk of change at 2.5 - 3.25 %. With inflation running at 7-8 % the bank is paying me money to hold on to it.
And, the inflation is mostly in rent, gas and food!
It must hurt the needy the most!
I don’t know about elsewhere, but fuel, electricity, harbor slip rent and my weekly grocery bill are all up thirty to fifty percent over a year ago.
Take 7.9 percent of that — the year-over-year inflation rate for February and DOUBLE it to equal the real inflation rate Calculations we used in the 1970’s under Jimmy Carter
The formula for calculating inflation has undergone a great deal of change since the 70s. It would be nice to come up with a mathematical formula to enable us to make historical comparisons... It mostly has to do with what ‘goes in the basket’ and what doesn’t.
Agree.
I think if you have debt under ten percent you should ride it. With the current inflation rate you are still gaining. Otherwise, zero debt is the best position to be in with no new debt and no cash sitting around unused.
Except for a small emergency fund, Our savings are in gold, silver and land.
There's a website for that:
I surely don't pretend to understand it all, but it addresses the fact that the government has been cooking the books (primarily to aid Democrat presidents) for many years, and the data they have uncooks the books and allows for meaningful comparisons.
Blue chip dividend stocks are generally around 3%, so you’ve got to rely on stock growth. That’s just a maybe, so who knows. Some of the financial investment stocks claim dividends of 7 or 8%, but they’re newer companies, and if their stocks plummet, even if they pay the 8%, you’ve just lost half your money.
My sense is that the blue chips have to have their stock values keep up with inflation or they are themselves losing. Easier said than done, though.
Our thinking is a little different. We see us losing the 7% inflation by holding our money. And we see us losing the 3% interest we’re paying on the mortgage. So, paying the mortgage prevents a loss of 10%.
As long as you don't leave the money just sitting in a checking account losing value, you are way ahead of the game holding debt in an inflationary economy.
All good points; thanks. If I had any money, I think I’d put it into physical metals, even at these prices. Then I’d always know I had something of value, even should all else fail.
Totally agree with your comment. (fixed rates only)
And the irony of it all is that it’s by design.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.