Just as this cartoon portrays, I was able to save money during the pandemic. My husband was fortunate to keep his job (although they lowered his pay for a short period), and we didn’t do anything for almost 12 months. No travel, no eating out, no clothes shopping, no ‘extra’ shopping in general. Instead, we were able to pay down a significant portion of our mortgage.
In 2021, we spent money. Our bills remained the same (i.e. insurance, utilities, etc.), but we did some home improvements, traveled, and went out to eat. We took advantage of exceptionally low interest rates and refinanced our mortgage one last time (2.25%). It lowered our mortgage payment by $1,000 a month. We were in a great situation.
Fast forward to 2022. All of our regular bills (except the mortgage) have increased by between 20 and 50%. The economic pundits have you believing it’s only 7%. That is simply not true. Every company has jumped on the ‘inflation’ bandwagon and raised prices an astronomical amount. 7% would almost have been okay. But it is just not so. We have personally been experiencing numbers much higher than 7%.
Here are a few examples: Subscription services were raised by $1 a month. On $7.99, that is a 12.52% increase. A recent gas utility bill went from $192 (2021) – to $272 (2022) which is 41.67%. (I highly doubt this past January was that much colder than last January.) I just received a notice that our property tax is going up to more than $9,000, which is a 20% increase. Our sewer line insurance and water line insurance increased by 56.18%. I have yet to get our new car and homeowner’s insurance policies, but based on this article, I should expect a significant increase.
My husband’s pay raise for 2021 was 0%. Houston, we have a problem.
Even with these increases, we are fortunate. We make enough income to cover our increasing bills, but we have less disposable income. If we were in retirement, on a fixed income, this would be frightening. A 40-50% increase on the essentials such as utilities and insurance is insane and non-sustainable. What can we do?
We can only control our own situation, and we are taking action to do so.
We are going to continue with our plan to retire in 1 year, however, we are tweaking our plan slightly. (The bullets in bold are new!)
- Saving as much cash as we can (the no/low buy year!).
- Selling our home and buying a smaller home. (Lower taxes, insurance, utilities)
- Selling one of our cars. (Lower insurance/maintenance/gas).
- Moving to a state with no income tax and more sun!
- Utilize retirement savings to purchase real estate for rental income.
- Establishing part time work for another source of income and mental stimulation.
I have yet to discuss the last two bullet points with my husband, but I’m sure he’ll be receptive to it. 😉
I believe diversification is going to be key in retirement and getting income from different sources may be the ideal solution to this crazy economic climate we are in.
How are you handling this wild inflation? What are you doing to take control?
8 thoughts on “Think inflation is 7%? Think again.”
You may think this wired BUT I have come to the conclusion that no human can help me or the world for that matter. I have since , upon this revelation to now turn all my concerns over to the Lord. He is my provider.
The Lord will now provide.
I have to go back to Florida in April to attend my brothers memorial. It will take $1000 to do so. I don’t have the money. If the Lord wants me there, he’ll send me the money.
Don’t give up yet, Cindi. Remember that cookbook I want you to do….
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I haven’t given up. I’m just getting started! Jesus is my business partner. 🙂
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I’m on a fixed retirement income. A good pension, ok SS but very little savings (which I regret!!) but the inflation is terrible. I built a summer cabin last year, was so overwhelmingly scary. You know how bad building costs became and now have a loan on that. (We had a cabin that was uninhabitable and torn down). But I am very much considering VRBO the cabin for several weeks a year to offset some expenses! We’ll see how that goes!
We were contemplating a pool in our back yard but the cost of building was so overpriced and prohibitive. So, I completely understand! Hopefully you can enjoy the cabin. I think a VRBO is a great idea!
Yes I think we will when everything settles down. We had a old cabin for about 18 years and loved being at the lake, the area etc. and it’s only 20 miles from my home but was slowly rotting to the point we hadn’t slept there for two years! (Couple campers pulled in) so with 12 grandkids (growing old so fast!) and kids it was have to do something.! As a widow so overwhelmed! The actual mortgage while bad is doable. Utilities, taxes cable and water softener (a have to) has prices increased more than projected plus the the higher prices on everything else! But this is in NW Mn fairly prime vacation land so I’m really thinking this.
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Hi Sharon, Like you I am trying to control my expenses. I am delaying some projects and doing more DIY. I had hired help for my spring cleanup , fertilizing, and landscaping, but this year I will do it myself. I am using two gift cards From replacing my flooring and purchasing three energy efficient appliances To get my groceries for free and this savings is being used for the increased natural gas and gasoline cost. One month with the new appliances and kitchen led light , I cut my use by 42.9% and electricity increased 44%, so I paid $2.00 more then 2021! The only take out comes from my pre made meals from my freezer. So far, these changes keep my budget in balance, but who knows what increases will come next month. Sincerely, Lara
What great ideas! My husband and I are chomping at the bit to downsize our house, but he needs to retire before we do that because we want to move away from this area. Once in our new home, we plan on doing all we can to lower utility power – these increases are ridiculous, and they can be solved so easily. BUT, the only thing I have the power to do at this point is to control my usage.
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