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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

#311

Post by WalterBright »

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?

> How do you keep that from negatively impacting your credit rating?

It has, my credit score isn't the greatest. But I don't care. I don't take out loans to buy things because of the high interest rates. Instead, I pay for things with investments.

Borrowing money to buy things is a trap. Borrowing money to buy a new car is financially inept. Buy a beater for cash, invest what you would have spent towards a new car, and eventually the growth in that investment will provide enough to buy that new car. You'll be much better off.

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

#312

Post by WalterBright »

prepend wrote: post #303
latchkey wrote: post #287

Earlier quoted context omitted.

> 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 ca…

Even if the amounts aren't that large, it's good practice.

I once read an article on how Amazon made money selling items at wholesale prices. The answer is astute money management. When you bought an item, Amazon charges your credit card immediately, and they get the funds right away. Amazon does not pay the vendor, however, until 90 days have elapsed.

This means they have the use of the money for 90 days, and (of course) they invest the money. Multiply this over millions of purchases, and you're making a boatload of moolah.

I do the same thing, it's just on a very small scale. It's called working the float.

Banks do it, too. Ever notice that when you get a cashier's check, your account is debited immediately? But if you deposit a cashier's check, you have to wait a day or two for the credit. The bank is doing the same thing.

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

#313

Post by jliptzin »

kepler1 wrote: post #286
jliptzin wrote: post #158

Earlier quoted context omitted.

It’s a pretty easy problem to solve, just have wages increase automatically on an annual basis in line with changes to the CPI. That would be in addition to any raises due to good job performance or a promotion. Or even on a monthly basis during periods of high inflation. Obviously, companies avoid this simple solution because they make money on the delay between raising the price of the product they sell and when th…

I'm glad you just solved all of our country's problems by declaring that raising workers' wages is the solution to everything. I'm sure that's got no downsides to it, huh? Why didn't we think of that before?

The problem, as stated by the comment I was responding to, was workers' wages constantly falling behind the rising cost of living and that was the solution I proposed. The commenter I was responding to proposed an alternate solution where someone is constantly switching jobs. In theory, that would work too, but obviously not feasible in practice. Where do I say I am solving "all of our country's problems"?

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

#314

Post by xyzzyz »

TuringNYC wrote: post #203
sarchertech wrote: post #193

Earlier quoted context omitted.

What was the size of your grandfather's home? If you built a comparable home today , the same distance from the center of a city of comparable size to the nearest city center when he bought the home, and you were allowed using comparable building codes, how much would that house cost? It's nearly impossible to actually compare these things. Comfort, and safety, are inherently difficult to value. Things like energy ef…

It is hard to make a comparison for my grandfather, but my father's home is right in my hometown and still exists. You raise all great points. My father's home was in Brighton Beach in Brooklyn NYC. It cost under $50,000 in 1980. The same house has a Zestimate today for $1,049,800. I wish we still owned it. For comparison sake, yes, there are 4 decades of upgrades and also 4 decades of deprecation, floods, hurricane…

Brooklyn in 1980s was a decrepit criminal hellscape, no wonder prices were so low. I’m quite sure you can afford to buy a place in Detroit or Indianapolis, maybe in 40 years one of these will turn around like NYC did.

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

#315

Post by prepend »

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…

Is there a way to find median gdp per capita? My question with typical per capita is that won’t reflect if all of that gain went to top 1% or the middle class.

I don’t know if there’s a good median equivalent of gdp per person as it’s not really household income.

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

#316

Post by latchkey »

WalterBright wrote: post #312
prepend wrote: post #303

Earlier quoted context omitted.

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 ca…

Even if the amounts aren't that large, it's good practice. I once read an article on how Amazon made money selling items at wholesale prices. The answer is astute money management. When you bought an item, Amazon charges your credit card immediately, and they get the funds right away. Amazon does not pay the vendor, however, until 90 days have elapsed. This means they have the use of the money for 90 days, and (of co…

Of course, banks make a lot of money on pennies because of scale. None of this is new.

I do agree that being your own bank is really smart, that's why I like DeFi so much... it makes it super easy, without any impact on your credit score.

That said, doing it at a small scale doesn't really seem like it is worth the hassle. $200 isn't worth the time or dings on your credit score. When I've done it before, other cards notice and also start to cancel you or lower your available credit as well.

I have "excellent" credit (780+), a fairly large credit line across several cards (~$100k+) and I never get those year long offers for 0% (or anything less than current interest rates) any more. Those dried up years ago. I don't see how anyone is making this work.

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

#317

Post by jjav »

throw__away7391 wrote: post #275
slowmovintarget wrote: post #266

Earlier quoted context omitted.

No, it's going to housing. Auto expenses are trivial, but housing, especially where the jobs are, is astronomically expensive. In the expensive housing markets, contracting prices (new roof, electrical, remodels, landscaping...) are all priced far higher than other places in the country.

Housing is very much what I mean. The car-centric approach to life that the US takes dictates a very particular type of city construction and infrastructure to facilitate it. Single family homes require more land, low density housing costs quite a bit more to supply with power/water/sewage/roads. Even apartments in the US frequently feature parking and the streets for you to take your car and commute to work and back…

> Manhattan is essentially the only walkable place in the country

This is nowhere near true. Tons of suburbs are perfectly walkable to all kinds of stores and service you could want. I've lived in 6 places in the US and only one of them was not within convenient walking distance of plenty of stores, entertainment and services (and that one was because I chose a fairly rural area at the time).

Yes you can find unwalkable places in the US but you can also find plenty of walkable places if you look for that.

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

#318

Post by scarface_74 »

ModernMech wrote: post #308
scarface_74 wrote: post #179

Earlier quoted context omitted.

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 wen…

Buying a home should be near the top of anyone’s list who is concerned about their financial well being. I realize that is easier said than done. But with remote work, you’re a lot less likely to be forced to sell because of a relocation when prices aren’t good.

I don’t consider my primary residence an “investment” as much as an inflation hedge. Sure property taxes will go up as well as insurance. But usually that’s not as bad as rent.

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

#319

Post by jjav »

WalterBright wrote: post #195
judge2020 wrote: post #83

Earlier quoted context omitted.

Credit card debt in the U.S. alone hit 1 Trillion https://www.cnet.com/personal-finance/credit-cards/credit-ca...

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.

> 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.

Indeed, this is annoying nonsensical. They should not count credit card balance as debt until it has rolled over at least one payment cycle.

Every summer my credit score drops ~40-50 points when I put the upcoming school year payment on the credit card (they give a nice-enough discount for prepaying) and then a month later bounces right back up after I pay it.

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

#320

Post by throw__away7391 »

jjav wrote: post #317
throw__away7391 wrote: post #275

Earlier quoted context omitted.

Housing is very much what I mean. The car-centric approach to life that the US takes dictates a very particular type of city construction and infrastructure to facilitate it. Single family homes require more land, low density housing costs quite a bit more to supply with power/water/sewage/roads. Even apartments in the US frequently feature parking and the streets for you to take your car and commute to work and back…

> Manhattan is essentially the only walkable place in the country This is nowhere near true. Tons of suburbs are perfectly walkable to all kinds of stores and service you could want. I've lived in 6 places in the US and only one of them was not within convenient walking distance of plenty of stores, entertainment and services (and that one was because I chose a fairly rural area at the time). Yes you can find unwalka…

How long have you lived outside the US/Canada/Australia? I’d suggest that your definition of “walkable” is skewed by global standards. I don’t mean sometimes you can leave your car at home, I mean that you have no need for a car and even most people who can afford to choose not to own one and prefer to walk, bike, or take public transportation instead.

The New York subway system is the only mass transit system in the US which could stand up to international comparison with a straight face, and NYC is still quite car focused. Sure there are some bike lanes, a few temporary street closures and 14th is closed to private cars now during the day, but still there is no large dedicated pedestrian area in New York of the kind you find in nearly all European cities.

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