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US inflation means families are spending $709 more per month than two years ago

cnn.com

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Re: US inflation means families are spending $709 more per month than two years ago

#301

Post by prepend »

throwaway5959 wrote: post #256
koprulusector wrote: post #163

Earlier quoted context omitted.

There are now officially 10 year car loans, 40 year mortgages.

In many cases, people getting 40 year mortgages would be better off just continuing to rent. We just bought our first home with 10% down and a 30 year note and we’re now basically paying rent to the bank.

It’s pretty nice to be able to lock in a price for 40 years. Whereas rent will typically increase a few percent each year. So after 40 years, if you’re still there, rent will be 3-5x the original amount.

Whereas mortgage payments with a fixed interest rate don’t increase so really only expenses like taxes and insurance increase over time. So after 40 years your monthly spend may be 1.5-2x.

I’m expecting that eventually there will be an interest only perpetual mortgage where the principal never decreases so banks are basically just buying secured annuities based on the real estate collateral.

Some countries have 99 leases that sort of operate like this and I thought it was strange that people would be willing to pay to purchase these leases where they never owned the property. But I guess some stability is better then none.

Re: US inflation means families are spending $709 more per month than two years ago

#302

Post by prepend »

djbusby wrote: post #242
WalterBright wrote: post #195

Earlier quoted context omitted.

This can be a misleading statistic. A lot of people use credit cards as a substitute for cash, and pay off the balance every month. This is accounted as "debt" but in a practical sense it is not. Me, I use the credit card as a 6 week interest-free loan, plus getting the cash back discount.

I thought the Fed only counted the carried balance. So folks who pay in full every month are not counted. I did a quick search but couldn't find anything definitive.

I would expect that they are only able to see the current balance.

For me, I charge and pay every month so never pay interest. But my credit report always shows a 2-5k balance (or whatever I charged).

Theoretically, if I paid off the balance BEFORE my statement period ends it would show $0, but I never do this because I have 25 days of 0% interest to pay, so I do.

I don’t think credit reports track interest paid but that would be one way to track if it’s “real” credit card debt or people just cycling.

But also you could look at average. I average $3k over the past 10-30 years or whatever. If this increased to some new stable level it would mean an increase in income. But if it increased at some rate or increased sporadically then it means I’m taking on more debt.

So I expect if credit card debt increases in total it probably means more debt and not more people paying their balance in full each month.

Re: US inflation means families are spending $709 more per month than two years ago

#303

Post by prepend »

latchkey wrote: post #287
WalterBright wrote: post #285

Earlier quoted context omitted.

I invest it. Occasionally the CC company will send me an offer of a loan for very low interest for a year. I run the numbers, and if it looks good, I'll take the loan and invest the money, and pay it back at the end of the term. The CC company, of course, is hoping I'll miss payments so they can charge me 30% interest. I disappoint them. Being aware of the time value of money is essential for managing your finances i…

> Occasionally the CC company will send me an offer of a loan for very low interest for a year. I run the numbers, and if it looks good, I'll take the loan and invest the money, and pay it back at the end of the term. How do you keep that from negatively impacting your credit rating?

I’m not OP, but it I do this. Sometimes it negatively impacts a little but it’s worth it (800 vs 795 doesn’t matter too much) but usually it’s a wash because it’s $5 down in one account and $5k more in another.

But when you have $100k of available balance and $10k of debt, the credit bureaus don’t change much when you have $100k of available balance and $20k of debt for 15 months (or whatever the term is).

Now you can easily get 5% returns in money market accounts so if you take a 0% loan with a 3 percent transfer fee on $10k you can basically get $200 for “free” for the juggling. You have to determine if it’s worth it, but if you have larger amounts maybe it’s $500-2k for effectively setting some reminders and not screwing up.

Re: US inflation means families are spending $709 more per month than two years ago

#304

Post by HDThoreaun »

lotsofpulp wrote: post #259
mentalpiracy wrote: post #255

Earlier quoted context omitted.

Ford doesn’t even sell sedans anymore!

Wow, I stand corrected. Cheapest Ford is $30k+. I thought they would still have the Focus/Taurus still available.

Ford's business is selling as many F150's as possible. Due to the way fuel efficiency regulations work in this country it makes sense for them to axe sedans from their lineup and replace them with large cars that can be classified as trucks because their more fuel efficient "trucks" can counteract the fine they would get from selling fuel inefficient F150s.

Re: US inflation means families are spending $709 more per month than two years ago

#305

Post by HDThoreaun »

supernova87a wrote: post #28

I think a big problem, especially with companies, is that as soon as any cost of some input touches a new price level, that price now starts to get baked into the planning. Even if it was only for a very short blip, and even if the actual average costs later go down. It gets very sticky, but only in the up direction. Have you talked to any kind of building work contractor, insurance company, etc. lately? They've all…

> I don't think we've in recent memory seen prices actually decrease after an inflationary cycle.

This absolutely happens with individual goods. Egg prices are back to normal. Car prices are going down.

Re: US inflation means families are spending $709 more per month than two years ago

#306

Post by danaris »

adventured wrote: post #139
qbasic_forever wrote: post #16

Earlier quoted context omitted.

There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic. IMHO vehicles are huge drivers of debt. There are almost no cars under $30k now, and the average sale price of new cars is pushing up near $50k. This is for bog standard stuff like Hondas and Fords, not luxury cars. Used cars are incredibly expensive too. People are financing cars…

> There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic Consumer debt service payments as a percent of disposable personal income - is at 5.6%. In 2016 it was around 5.5%-5.6% - despite far lower interest rates. The same figure was 5.6-6% in the 1995-2000 years. Household debt service payments as a percent of disposable personal incom…

> The US has gotten dramatically wealthier in the past seven years.

If you believe this is true in a practical sense for the bottom half of income earners, then I've got a bridge to sell you....

Re: US inflation means families are spending $709 more per month than two years ago

#307

Post by HDThoreaun »

WalterBright wrote: post #215
kec wrote: post #45

Earlier quoted context omitted.

Deflation means a dollar tomorrow is always worth more than a dollar today meaning a rational person should strive to spend as little money today as possible. This eventually locks the entire economy up into a death spiral.

> This eventually locks the entire economy up into a death spiral. The US economy had zero net inflation from 1800 to 1914. No death spiral. The whole "2% is good for the economy" is propaganda to hide the fact that deficit spending causes inflation and is a tax on the economy.

The US economy was absolutely fucked for a large portion of that time period largely because of the lack of monetary policy. The economy has done much, much better since we introduced fiat.

Re: US inflation means families are spending $709 more per month than two years ago

#308

Post by ModernMech »

scarface_74 wrote: post #179
ModernMech wrote: post #14

Every year for the past 5 years I’ve gotten a “merit raise” which hasn’t met inflation, so I’m effectively making less than I was when I started at my job despite having 5 years more experience. My organization puts a negative value on experience, and the only way I can get an actual raise is to jump ship. The story of my generation. Meanwhile they complain about a hiring and retention problem. Gee, I wonder why?

Any reason you haven’t changed jobs? A company has at most one full review cycle to not keep up with market before I start looking.

For me it was first because of covid. I started in Jan 2019, and by the end of my first year when I was scheduled for a raise, I didn’t get it because everyone was tightening things due to the pandemic. So I took a team player attitude and did what needed to be done to get through that period.

Covid receded, and I got an okay raise but it was still below inflation. Then inflation got crazy(er) and my rent finally went up 30%, so that’s when I started making noise about it. They gave me another raise which was higher than they gave anyone else, but still below inflation again.

So now I’m telling them I want at least 10% over what I was making in 2019 or I’m out. Already have something lined up if they try to lowball me, I’m sick of this.

Re: US inflation means families are spending $709 more per month than two years ago

#309

Post by WalterBright »

HDThoreaun wrote: post #307
WalterBright wrote: post #215

Earlier quoted context omitted.

> This eventually locks the entire economy up into a death spiral. The US economy had zero net inflation from 1800 to 1914. No death spiral. The whole "2% is good for the economy" is propaganda to hide the fact that deficit spending causes inflation and is a tax on the economy.

The US economy was absolutely fucked for a large portion of that time period largely because of the lack of monetary policy. The economy has done much, much better since we introduced fiat.

Milton Friedman in "Monetary History of the United States" shows that fluctuations in the money supply were significantly more pronounced after fiat money began. The fed's enlightened hand on the tiller simply isn't as good as the blind actions of the free market.

Re: US inflation means families are spending $709 more per month than two years ago

#310

Post by WalterBright »

prepend wrote: post #302
djbusby wrote: post #242

Earlier quoted context omitted.

I thought the Fed only counted the carried balance. So folks who pay in full every month are not counted. I did a quick search but couldn't find anything definitive.

I would expect that they are only able to see the current balance. For me, I charge and pay every month so never pay interest. But my credit report always shows a 2-5k balance (or whatever I charged). Theoretically, if I paid off the balance BEFORE my statement period ends it would show $0, but I never do this because I have 25 days of 0% interest to pay, so I do. I don’t think credit reports track interest paid but…

Or it means inflation.

I've also had credit report hiccups because of the "debt" on my credit card.

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