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  • Inflation Perspective

    Amusing:

    We had a new front door and front screen door and one small window in the garage replaced yesterday. The guys did a nice job with quality (but not extravagant) materials, and we considered the price to be fair.

    We reflected on the amount for a moment and then realized: The cost of those modest improvements was more than 4% of what we paid for the entire house and half-acre+ lot when we bought it in 1980! BP

    We've got to quit saying, "How stupid can you be?" Too many people are taking it as a challenge.

    Ayn Rand:
    "You can avoid reality, but you cannot avoid the consequences of avoiding reality."

    G. K. Chesterton: This triangle of truisms, of father, mother, and child, cannot be destroyed; it can only destroy those civilizations which disregard it.

  • #2
    Originally posted by BobPalma View Post
    Amusing:

    We had a new front door and front screen door and one small window in the garage replaced yesterday. The guys did a nice job with quality (but not extravagant) materials, and we considered the price to be fair.

    We reflected on the amount for a moment and then realized: The cost of those modest improvements was more than 4% of what we paid for the entire house and half-acre+ lot when we bought it in 1980! BP
    Bob,

    I remember 1980 as well, prime as at 13% and buying a home you may remember what your mortgage was before a refinance. Gas was on the upward swing and a full sized loaded Caprice was around $9,000. Chevettes were $4,200 and Citations started at $6,000 at the beginning of the year.

    I have no interest in buying a new car. My current home is priced around $370,000, but if I wanted to buy it now, I couldn't I sound like my father when he said he didn't know how the young kids could make it Yet, I keep getting offers to sell my home. My three adult children are doing better than I was at their age. I am glad for that.

    It is all perspective or if you will, frame of reference.

    Bob Miles

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    • #3
      I just did a calculation. My new driveway cost 17% of what my house (4 BR, 2.5 B, 2/3 Acre) cost in 1990.
      Gary L.
      Wappinger, NY

      SDC member since 1968
      Studebaker enthusiast much longer

      Comment


      • #4
        I've been going through great masses of papers left by my late parents.

        I found the sales contract for the 1968 Ford Ranch Wagon (replacing a 1954 Chevy Bel-Air) that my parents bought in the fall of 1968. They made a down payment of about $500 dollars with the remaining $3500 dollars on a 36 month note. We got a good eight years out of that wagon and we went all over the country with that Ford.

        The $4000 dollar price in 1968 equals $30261 in 2021 dollars

        \"I\'m getting nowhere as fast as I can\"
        The Replacements.

        Comment


        • #5
          Originally posted by 6hk71400 View Post

          Bob,

          I remember 1980 as well, prime as at 13% and buying a home you may remember what your mortgage was before a refinance. Gas was on the upward swing and a full sized loaded Caprice was around $9,000. Chevettes were $4,200 and Citations started at $6,000 at the beginning of the year. Bob Miles
          You're right about financing a home in 1980, Bob; it was brutal.

          Thankfully, we had enough money to assume the "assumable" mortgage on this property. The local Savings & Loan (no longer extant) holding that mortgage did everything possible to try to prevent our assuming it but could not...at least legally, per the terms of that mortgage.

          Before we had to do anything unpleasant, they backed off and let us assume it. It was something like 6%, 30-year fixed at a time when a new 30-year fixed was, for all practical purposes, impossible to find. BP

          We've got to quit saying, "How stupid can you be?" Too many people are taking it as a challenge.

          Ayn Rand:
          "You can avoid reality, but you cannot avoid the consequences of avoiding reality."

          G. K. Chesterton: This triangle of truisms, of father, mother, and child, cannot be destroyed; it can only destroy those civilizations which disregard it.

          Comment


          • #6
            We bought our first house in Alhambra Ca. in 1981, opened escrow at 18.75% our 30 day escrow took about 90 days, but we closed at 15.5% and thought we'd hit the lotto! When we closed here in SC, last year, we're south of 3% It's all relevant!

            Jim
            "We can't all be Heroes, Some us just need to stand on the curb and clap as they go by" Will Rogers

            We will provide the curb for you to stand on and clap!


            Indy Honor Flight www.IndyHonorFlight.org

            As of Veterans Day 2017, IHF has flown 2,450 WWII, Korean, and Vietnam Veterans to Washington DC at NO charge! to see
            their Memorials!

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            • #7
              Bob Palma, we built our 1st new home in 1981 out in Smith County, Tennessee with a full basement, 3 bedrooms, two baths, a dining room and nice sized kitchen. It was brick and had 30 year (optional) shingles. It was 16. something % interest, and the price for the build was $34,500.00, and the builder threw in a new Murray riding mower. We had a driveway made to the 2nd house we lived in here in Hawaii 3 years ago, concrete, and about 75 feet long. There was some prep to the site, but ..... that driveway was a bit over $36,000.00 by the time it was finished !!!!!! Paradise tax I guess.... A decent house here that would be 75 to 100 grand in TN or AL go for 500 k to over a million bucks. A bit of sticker shock to us simple Southerners, ha ! BUT, no AC, heaters, winter clothes, pretty cheap taxes, 25 bucks a month electric bill thanks to the solar panels on this house, and best of all.... NO tire chains or frozen pipes, ha ha ! A lot of homes here are single wall construction, (studs visible) and some areas don't even bury their water lines... still astonishing after nearly 11 years.

              Comment


              • #8
                There is another side to stories about high interest rates: When my father retired from Rohm & Haas in the 80's he had a pension. You could receive monthly payments or cash out. Because interest rates were very high, you could cash out, invest the money, and get a higher monthly payout than just taking payments from the pension. Most of my father's contemporaries did this. Dad decided not to -- and they told him he was stupid. As the interest rates dropped dramatically throughout the early 90's, Dad's monthly payment remained constant while those who cashed out were suddenly getting significantly less than he was. To this day I don't know if he was smart or lucky.

                Comment


                • #9
                  Originally posted by BobWaitz View Post
                  There is another side to stories about high interest rates: When my father retired from Rohm & Haas in the 80's he had a pension. You could receive monthly payments or cash out. Because interest rates were very high, you could cash out, invest the money, and get a higher monthly payout than just taking payments from the pension. Most of my father's contemporaries did this. Dad decided not to -- and they told him he was stupid. As the interest rates dropped dramatically throughout the early 90's, Dad's monthly payment remained constant while those who cashed out were suddenly getting significantly less than he was. To this day I don't know if he was smart or lucky.
                  I think about this all the time. One thing I have learned is that it’s common for people’s eyes to glaze over when this subject comes up. You’d think more people would be engaged, at least enough to educate themselves; but it seems that the most common approach is to blindly follow what they hear somebody else is doing and leave it at that. It’s amazing.

                  Another thing I’ve learned: if you’re looking for guidance, seek those who are where you want to be, not just the guy you eat lunch with who doesn’t have squat.

                  Since the topic mentions inflation, a lot of successful people I know are predicting severe inflation in the short term. “Punishing” is a word I’ve heard. Time to think about increasing investment in hard assets. I think anybody that knows me can guess what ‘hard assets’ I recommend.

                  Proud NON-CASO

                  I do not prize the word "cheap." It is not a badge of honor...it is a symbol of despair. ~ William McKinley

                  If it is decreed that I should go down, then let me go down linked with the truth - let me die in the advocacy of what is just and right.- Lincoln

                  GOD BLESS AMERICA

                  Ephesians 6:10-17
                  Romans 15:13
                  Deuteronomy 31:6
                  Proverbs 28:1

                  Illegitimi non carborundum

                  Comment


                  • #10
                    Living within your means and placing money in other things is the only way to do things in my opinion. I learned about the eggs in one basket after I stated getting serious about inflation, depression, stagflation, the markets and other things. When I joined the USPS, it was just after Civil Service Retirement was replaced by Federal Employment Retirement System (FERS). As soon as I could, I joined the Thrift Savings Plan. I started with the index tied to the S&P 500. Great for a few years but then when I started seeing the index lose $4,000 in a month, then up then down 5,000 I placed all my money in the "safe" 6 percent Government bond index. Everyone I worked around said I was crazy; later on in the year they came up and bowed down with the I'm not worthy gesture. That was in 2000 and noting all things I could, that is when I made my move. I did diversify time and again. Lucky? Maybe but if I was tried to be wise about it.

                    There are some people that feel as long as the money is coming in that they don't need to invest My late mother in law was that way. When she passed, there were closets full of clothing with the tags still on, never worn. My estranged wife is the same way although not with clothes but other things like going overboard for the grandkids.

                    I am risk adverse. I do my reading and follow certain things. I try to avoid all the talking heads on TV. I also know that who I eat lunch is smart or full of beans. At the present time, I do not have to be concerned with daily, monthly, yearly expenses. I am not going to take a trip around the world, never appealed to me.

                    Trust to live well, take your reward when it is time, and if you enjoy your job, you probably have never worked a day in your life. Living through the 70's to the current time, at least for me, all I can say is I made it and hope to continue. If I have money when I shuffle off this mortal coil, I have already set up accounts for my grandkids to get a start in life.

                    Bob Miles

                    Comment


                    • #11
                      Same here. When I started at the USPS in 1988 that was the first time I had ever been shown anything about compounding interest. Nobody taught a word of it in school. It was pretty painless to participate in the TSP.

                      Now that I am retired I have to take a more active interest in understanding all of this. I learned many years ago about diversification, but mostly diversifying within the market. I also learned about staying put for the long term through the market ups and downs. At this stage I need to be more proactive. I don’t have time to wait out a correction for several years; I have to prepare the best I can. And since I know how to buy and care for them properly, I am enjoying having collector cars in my portfolio... and helping others interested in doing the same.
                      Proud NON-CASO

                      I do not prize the word "cheap." It is not a badge of honor...it is a symbol of despair. ~ William McKinley

                      If it is decreed that I should go down, then let me go down linked with the truth - let me die in the advocacy of what is just and right.- Lincoln

                      GOD BLESS AMERICA

                      Ephesians 6:10-17
                      Romans 15:13
                      Deuteronomy 31:6
                      Proverbs 28:1

                      Illegitimi non carborundum

                      Comment


                      • #12
                        My inflation perspective?
                        35 psi front/33 psi rear.
                        Andy
                        62 GT

                        Comment


                        • #13
                          Perspective on your personal response to inflation depends on how old you are and how much you have which is intended to last until you die. At a certain time in your life it becomes a question of how fast you are drawing down on your reserves. Dreaming of lucrative investments in tangible assets becomes a joke as we find ourselves needing to liquidate. There is no stopping the clock, most of you reading this will come to this realization quicker then you think.

                          Comment


                          • #14
                            Originally posted by Andy R. View Post
                            My inflation perspective?
                            35 psi front/33 psi rear.
                            Good one, Andy. BP
                            We've got to quit saying, "How stupid can you be?" Too many people are taking it as a challenge.

                            Ayn Rand:
                            "You can avoid reality, but you cannot avoid the consequences of avoiding reality."

                            G. K. Chesterton: This triangle of truisms, of father, mother, and child, cannot be destroyed; it can only destroy those civilizations which disregard it.

                            Comment


                            • #15
                              Or, 36" belt size, versus 32".
                              -Dwight

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