Coping With Inflation on Big Ticket Items

This is a guest post by Mr Credit Card from http://www.askmrcreditcard.com/, which is an online credit card review site. Today, Mr Credit Card is actually going to veer off from his usual credit card topic and write a post about coping with "inflationary expenses". If you are looking to get a credit card, please check out his best credit card deals and offers section on his site.

There are some things that just keep going down in prices. Computers, for example, keep getting cheaper every year. If they do not get cheaper, then at least they have more processing power. Same goes with most electronic gears. But most other items just seem to keep getting more expensive. Some of these items make up the bulk of our big purchases in our lives (or at least are on-going expenses). How do we cope with them or at least mitigate their rise in price every year?

But first, let's explore some of the things that simply keep rising (at least most of the time).


Things that just keep going up in prices

House Prices and Rent - This is one of the biggest concerns when you are younger. Can you afford to buy a home. This becomes a factor especially when you are planning to get married. According to statistics, house prices (over the very very long run) have appreciated about 2-3% a year. But prior to the crash housing prices were rising 5% to 10% a year in different markets.

If this was 2005 and you were a young couple, how do you cope with runaway prices? Not much you can do except to rent and save and wait for the right opportunity (which may be now).

Gasoline prices - We have seen the days when oil was $20 a barrel and gas prices was ridiculously low. But with a weak currency, we may be in a period where oil prices stay high.

Food - Ever noticed that the cereal makers increased the prices of cereals in 2008 (or they gave less amounts in the same box)? What was the reason they cited? High commodity prices. But ever since 2009 when commodity prices collapsed, the prices of cereals have not changed. Kelloggs was quick to raise prices but somehow when corn prices decline dramatically, you do not hear these same companies lowering prices! Hence, food prices will always be rising no matter what.

Cost of college education - The cost of college education continues to defy expectations. While the so-called official consumer price index is about 3% a year, the inflation of college education cost runs about 5% to 7% a year. And it shows no sign of stopping even in this recession. This presents a huge burden to couples with kids. The amount that you have to set aside just to fund your kids college education is simply unreal!

Travel - Ever noticed that taking a vacation is always more expensive? Airline prices keep increasing because of "oil prices"? Mergers between different carriers also mean that the airline industry here is becoming more like an oligopoly. Hence, prices are pretty sticky. Remember why the Motel Chain used to be called 6? Because, they charged (or at least used to) $6 a night. Those days are long gone!

Medical Cost - We all know that medical costs are increasing. But for seniors that are planning for retirement, medical cost isn't just the issue. The real issue is the increasing cost of long term care. The insurance industry has done studies to show that there is a good chance that a senior person will at least visit or need a long term care facility at least once in their life time. Yet, the cost are really staggering - ranging anywhere from $150 to $250 a day. The rate of inflation of long term care cost is about or higher than 5%!


How to combat inflation in these areas?

There are various things you can do to help with with these expenditures that I mentioned above. Let's start with housing prices. There is nothing much you can do if you are in a super housing bull market or a bear market. But you certainly be grounded and not buy something you cannot afford, not taking silly adjustable mortgages, making sure you put a substantial down payment (at least 20%). And if you cannot afford to buy a house, just keep renting. Or you could find a really cheap place to live and maybe even buy a premade log cabin!.

You can dramatically reduce the cost of food prices by making extensive use of coupons. Use both manufacturer's coupons and stacking with store coupons are a great way to save on grocery and food shopping. Most grocery coupons are available in your Sunday newspapers so make sure you get a copy. To top it up, you should consider getting a cash back rewards credit card to help you save more money. You could do what Mary does and have your own vegetables garden and get your own fresh eggs.

When it comes to gasoline prices, I think the most important thing is to actually buy a fuel efficient car and buy one that just fits your needs. Another thing is to make sure you fill her up with the right type of gasoline. Many cars require just regular gasoline but many folks insist on using "premium gasoline". Different cars also have different insurance cost. You can bet that a BMW is more expensive to insure than a Toyota Corolla. You can also consider using a gas rebate credit card to help you earn rebates at the pump.

If you have kids, there is really not much you can do in terms of college inflation. You could hope your kid gets a sports scholarship and you should definitely work on getting scholarships. But like retirement savings, you could start early by contributing regularly to a college 529 plan. When you reach your fifties, you could also consider purchasing a long term care insurance plan as well to hedge against the event that you have to end up in a nursing home in your old age.

Lastly, we all like to travel. But travel cost seems to go up every year. How do you hedge against this? To be honest, there's not a whole lot you can do. The folks in the time share business will tell you that buying a time share is the best thing because you lock in a low cost and you can "exchange vacation spots". But in all honesty, this is what I think you can do to save on your travel expenses.

Firstly, you can fly just a couple of airlines so you can earn air miles with just one or two frequent flier programs and get free flights once in while. Try to stay in the same chain of hotel as well since you can earn frequent guest points and get other discounts. Learn when is the best time to book flights and understand the seasonality of booking cheap tickets. Obviously, you can also get an airline credit card that lets you earn frequent flier miles. Or you can make hiking trips and travel by a trailer.

To sum up - Personal finance gurus like David Bach have started this whole concept of not buying starbucks coffee and what it can save you. But to be honest, a cup of coffee is really a small expense. The items that I just mentioned are much bigger (or more costly) items and focusing on handling their cost inflation would be much more productive for your own personal finance.

Beat Credit Card Debt - 10 Tips

This is a guest post by Mirsad Hasic who is the webmaster and editor of http://www.think-creditcards.com where you will get tips and advice on different types of credit cards, debt control, credit monitoring and more. He is also regularly contributing with guest posts on other blogs as well where he shares his knowledge within the finance area.

It all started out as such a beautiful romance. That credit card felt as if it had been created just for your hand and the two of you went everywhere together. You could depend on it to cover the cost of whatever happened to catch your eye. A new suit? A $500 pair of Jimmy Choo shoes? A vacation at the ski slopes? Why not? After all, the magical connection between you and your platinum-plated sweetheart is not to be denied. However, all good things do come to an end and it’s time to face the music and take stock of your financial situation. You are now looking at some serious credit card debt and it is time to create a plan that can get you out of the deep, murky waters before you drown.





Here are 10 tips you can use to free yourself from credit card debt that really work.





• You need to get out the scissors and start cutting those plastic passes to debtor's prison into tiny little shreds. You only need one credit card that you can use for identification and necessary purchases. If you continue getting calls and letters offering pre-approved credit cards don't fall into the trap again. Say "no" to the salesmen and shred the mail as soon as you get these "come hither" messages.





• Remember that just because you are destroying the credit cards you do not have to close all of the accounts. You might need a couple of open accounts to maintain your good credit rating. If you are already having problems with your credit rating you should close the accounts when you shred the cards. One open and active credit account is enough for you to handle and you still need to pay the other balances off as well.



• Leave your credit cards and checkbook at home when you go to the store. Take only enough money to cover the purchases that you absolutely have to make. Having access to additional funds only makes it more likely that you will make some impulse buys while you are out and about. If you see something that you absolutely must buy, take a deep breath and walk away. Allow yourself a 72 hour cooling off period and then go back and look at the item once more. Chances are it will not seem nearly as impressive the second time you see it.



• Remember that the ATM machine is not your personal cash cow. A cash advance courtesy of your ever available credit card will keep you in debt for a very long period of time. You may not have known it but the interest begins to mount on these cash advances the second those $20 bills start spurting from the ATM machine. If you think the APR on normal credit purchases is high, take a second look at the interest rate that is tacked on to credit card cash.• Instead of making minimum monthly payments you should at least pay double the amount that is shown on your statement. Paying even more money will help you cut your credit card debt even faster. Make bi-monthly payments if this makes it easier, but stay ahead of those minimum amounts at all costs.



• Do not use your credit cards for small purchases such as fast food meals, sodas, magazines and snacks. The interest you are going to be charged can result in the same financial hit to your bank account as if you had paid triple the going rate for these purchases. Is that Mickey D soy burger really worth $3.50 of your hard earned dollars?



• Curtail those shopping habits! Make a budget and keep track of all of your daily spending. This will help you discover the ways to stop unnecessary spending. The money you save can be used to chip away at your credit card balances.



• Get a copy of your credit history and look at of your outstanding debts. Then categorize them into groups. Separate the largest balances, the smallest balances and those debts with the highest interest rates. Begin with the highest interest rate balances and commit yourself to paying them off one at a time. When you finish with this group move on to the smaller balances and pay them off the same way and then you are free to concentrate on the bigger balances that you owe. Slow and steady payments will get you out of the credit card debt that has you trapped at the present time.



• Forget the grace periods and get your payments in on time so that your credit card providers will not add late fees and penalties to the balance each month. One late payment that is only 24-48 hours overdue can result in your being assessed an additional $35-$75 or more.



• Beware of the convenience of making credit card payments over the phone because that can mean an additional $10 that you are paying each month. Stick to online banking, pay the amount in person at your local bank or just use snail mail to deliver the money. If you choose regular mail for your payments allow plenty of time for the check to reach its destination and be processed before the payment due date arrives.

Carnival of Money Stories, Autumn Edition

Delicious autumn! My very soul is wedded to it, and if I were a bird I would fly about the earth seeking the successive autumns. ~George Eliot

While spring is frequently thought of as a time of growth and change, fall is the time for recharging our batteries. It's a time to hunker down, contemplate our place and plan for the future. Are you where you want to be financially? Perhaps the slower pace of fall will give you the time you need to decide on the changes that will get you where you would like to be. Hopefully reading this week's submissions will give you some ideas!

Budgeting

The Financial Blogger has some Tips on Budgeting for a Wedding. Hopefully you can enjoy your special day without having to spend the rest of your life paying for it!

"Vacations are Expensive, Should We Go or Stay?", is the question being asked at Gather Little by Little. Although I disagree with his premise that people in this country have a feeling of entitlement about vacations (Europeans take a lot more vacations than Americans do), I certainly agree that you'd better be able to afford that vacation before you pack your bags!

Money Management

Darwin's Finances gives us the benefit of the lessons he learned at his father's knee, so to speak, with Money Habits to Live By. Sometimes it's good to get a refresher of the basics!

I generally decline to do an Editor's Pick when I host a carnival but this week The Amateur Financier gets my nod for his well-written, entertaining story about, “What Christmas Ornaments Taught Me About Money”. Good job AF!

Falling a little close to home, The Smarter Wallet also gets an Editor's Pick with “How Baby Boomers Can Earn Extra Income”. More fall out from the economic crises.

Life Excursion learned what “living to your income” means and has decided that regardless of his income he needs to live as he did when he was in college. He now believes Living Off the College Mean is the way to go. I think that may be taking frugality a bit far but good for him if he can do it!

Everyone must take time to sit and watch the leaves turn. ~Elizabeth Lawrence


Shopping

Did you ever have a bad case of buyer's remorse? Budgets are Sexy does. In My Worst Buyer's Remorse Story, he reveals that he regrets buying a house. It's a good lesson. Regardless of what we constantly hear, home ownership is not the right choice for everyone!

Are you shopping for a good rental car deal? Christian PF was and got a heck of deal. He's sharing How to Get The Best Price on a Rental Car. If you're willing, putting in the time can really pay off.

The Digerati Life is giving us some options in, “Green Living: Ways to Recycle and Buy Used”. It's always good to look at all possibilities.

Housing

Having trouble getting a re-fi? The Dough Roller can relate and shares 7 Lessons Learned from a Failed Attempt to Refinance a Mortgage. Tough lessons!

Drawing a possibly controversial conclusion, Evolution of Wealth finishes the tale of Bob or Jim? What's your take?





I trust in Nature for the stable laws Of beauty and utility. Spring shall plant And Autumn garner to the end of time. - Robert Browning


Investing

Money Blue Book is taking a look at E*Trade, with whom he has been a long-time customer.

Business

On the Internet Business Blog we are urged to expand our universe and think outside the box in terms of our future career choices.

Credit

In what is unfortunately an all to common occurrence, Ask Mr. Credit Card relates a tale of poor customer service in “Sister Act”. What's happening out there?

Are you getting all those Change of Terms notices from your credit card companies? CashMoneyLife answers a reader's question about an escalating interest rate in “What Should I Do?”



Youth is like spring, an over- praised season more remarkable for biting winds than genial breezes. Autumn is the mellower season, and what we lose in flowers we more than gain in fruits. - Samuel Butler


Other

Quite Worrying About 80% of Your Life, says Frugal Green, who references the Pareto Principal in his article about focusing on what's really important in your life. You know the expression, “Don't sweat the small stuff”? That in a nutshell, is the point!

While drawing no conclusions, Free Money Finance tells the story of A Real-Life Financial Meltdown. It's a tale of poor choices made during the economic downturn. Hope it's not your story!

Baker over at Man vs. Debt has a vlog post on Dave Ramsey's evangelical approach to financial management. Baker is asking “Is Christianity the Only Path to True Financial Peace?” His video essay dealing with this topic is interesting and based on the high number of comments he received, thought- provoking to his readers.

“Is Capitalism Always the Answer?”, asks The Happy Rock, in an excellent and also thought-provoking article. He got some predictable, “you've lost me as a reader” comments but also some good intellectual responses, including one which argues that the ability to choose your path is a feature of a capitalistic society. I have to say I agree. I doubt his good readers will leave him.

That's it for this week folks. I hope you enjoy the articles mentioned here. If your article was included, don't forget to link to the carnival from your site and promote it on whatever social networking avenues you frequent.

Did your perfectly reasonable, well written article not make it? It probably was not written in any sort of narrative voice and therefore was not a story. Try again next week by submitting your best story on a money related topic here!

It's Time for Trees!

This article was written for me by the manager of Stadler Nurseries in Maryland and Virginia. She will be writing monthly article here on SimplyForties and I couldn't be happier!




The state of Maryland, where I live, has embarked on an ambitious 2-year program to plant one million trees by 2011. In conjunction with this, a program was instituted earlier this year to encourage state residents to plant more trees by offering a $25 rebate for each tree planted from an extensive list of native trees. The goal is to get private citizens to plant 50,000 trees by 2010. The name of this program is Marylanders Plant Trees, not a very catchy name I know, but the idea is a good one.

As noted on the program website, http://www.trees.maryland.gov/, “forests are our most strategically important natural resource. Trees protect water quality, clean our air and provide wildlife habitat. One large tree can eliminate 5,000 gallons of stormwater runoff each year, and well placed trees can help reduce energy costs by 15 to 35 percent. Trees also enhance our quality of life, beautifying neighborhoods and highways, providing sound barriers and shade, and helping increase property values.”

In these days when so many people are concerned about climate change and looking for ways to offset their carbon footprint, increasing this country’s tree canopy can play a major role in this goal.

We all contribute to global warming when we do things like heat and cool our homes, drive our cars, and fly on airplanes. The good news is that there are many things each of us as individuals, can do to reduce our carbon emissions. The choices we make in our homes, our travel, the food we eat, and what we buy and throw away all influence our carbon footprint and can help ensure a stable climate for future generations.

Trees are "carbon sinks." They absorb carbon dioxide from the air and use it as their energy source, producing oxygen for us to breathe. Reforestation is the most cost-effective means of offsetting carbon emissions. A tree can remove and store up to 7,000 pounds of carbon over its lifetime. A tree that shades a house can reduce the energy required to run the air conditioner and save an additional 200 to 2,000 pounds of carbon over its lifetime.

According to the USDA Forest Service, "Trees properly placed around buildings can reduce air conditioning needs by 30% and can save 20-50% in energy used for heating."

Did you know:

• You'll save money if your air conditioner draws air from a cool, shaded area? One large shade tree can reduce the surrounding air temperature by as much as 9° F. Plant a tree to shade the area around and over your air conditioner, but be sure to keep the air intake area clear of branches.


• More home energy is lost from windows than walls? Locate your trees to specifically shade windows. Plant a tree east or southeast of east-facing windows; south, southeast or southwest of south-facing windows; or west or southwest of west-facing windows.


• Trees can also save energy in cold weather? Planting a windbreak will lower the wind chill near your home, which can greatly lower heating costs. A windbreak is a single row or multiple rows of dense evergreen trees planted on the north and northwest side of your house (or the side with prevailing winter winds). The windbreak should be longer than the area to be protected. Extend the windbreak to the east side of the house, if space permits.

"A well-designed landscape not only adds beauty to your home, it reduces your heating and cooling costs. On average, landscaping for energy efficiency provides enough energy savings to return an initial investment in less than 8 years." - US Dept Energy

Do you have space in your yard to plant a tree or two or three? Encourage your state legislation to institute a program like the one we have here in Maryland. The positive results from planting trees will benefit our neighborhoods, our states, our country and our world. This is the perfect time of year so get out there and get planting!

Cheryl lives with her husband and their three cats in a 100-year-old house in the beautiful state of Maryland. She has a degree in horticulture from the University of Maryland and has been the manager of Stadler Nurseries in Maryland and Virginia for over 20 years. Become a fan of Stadler Nurseries on Facebook to find out what's going on in the garden world!