Accumulators, what's your response to inflation?

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SavinMaven
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Accumulators, what's your response to inflation?

Post by SavinMaven »

We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
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Re: Accumulators, what's your response to inflation?

Post by muffins14 »

SavinMaven wrote: Mon Feb 05, 2024 12:01 pm We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
I am doing nothing financially different, but am:
1) Trying to improve at my job
2) Hoping to make a case for a raise later in the year
3) Being prepared to interview to see what the market would pay me if I left for a new role
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Lee_WSP
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Re: Accumulators, what's your response to inflation?

Post by Lee_WSP »

Inflation is pretty bad. It eroded real earnings, so unless your income keeps up with it, you experience a real loss in earnings and ability to save.
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Re: Accumulators, what's your response to inflation?

Post by sailaway »

We are kind of in stasis since downshifting last year, but our strategy has consistently been to hold steady and see where the markets (including inflation) take us. You just keep reevaluating based on real world expenses. Thinking your number as today's dollars: who knows what that number will actually be by the time you reach it.

There are certain things we have given up due to inflation. We used to eat quite a bit of lamb, but it was one of the first prices to skyrocket during COVID, so we stopped. Never really checked on prices again after New Zealand reopened.

On the other hand, DH has chronic pain issues, so we are much less stoic about heartng and cooling than we used to be.

The key is to be flexible and don't give up just because the world is changing.
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CyclingDuo
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Re: Accumulators, what's your response to inflation?

Post by CyclingDuo »

SavinMaven wrote: Mon Feb 05, 2024 12:01 pmWe are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.
If your savings is automatic out of your paychecks based on a percentage of income + the employer's percentage match, how is your rate of savings going down? Your recent raises should be reflected in the paycheck withdrawals going into your workplace retirement plans to remain at the same percentage. In other words, whatever percentage you were sending to savings should remain the same.
SavinMaven wrote: Mon Feb 05, 2024 12:01 pmI'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
Are you saying you had to cut what was being taken out of your paycheck that is going into your workplace retirement plans? Or are you talking about after tax savings into taxable and Roth IRAs that is now lower as a result of household expenses?

CyclingDuo
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Tamalak
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Re: Accumulators, what's your response to inflation?

Post by Tamalak »

Half of my net compensation goes into investments. It's my first "expense". The other expenses have to fit in the other half.
stoptothink
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Re: Accumulators, what's your response to inflation?

Post by stoptothink »

We've never had a reason to budget and we are very minimalist compared to most when it comes to spending; savings (which has been >50% of gross throughout our marriage) is just what is left over. Raises have been frozen at both our employers, along with inflation, so we've just accepted that we're saving less right now and there's nothing we can do about it. We're still in a great position.
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Re: Accumulators, what's your response to inflation?

Post by exodusing »

Lee_WSP wrote: Mon Feb 05, 2024 12:11 pm Inflation is pretty bad. It eroded real earnings, so unless your income keeps up with it, you experience a real loss in earnings and ability to save.
Fortunately, median real wages have been increasing for a while. There was a spike during the pandemic, as low wage workers were laid off, leaving higher wage workers to increase the median, but that's past us.

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Re: Accumulators, what's your response to inflation?

Post by one_speed »

SavinMaven wrote: Mon Feb 05, 2024 12:01 pm We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
Have always increased savings accordingly when gotten raise. Sometimes, allotted entire raise to savings. Other times, just increased savings amount by same % as increase in income (+5% income --> +5% savings for example).

Edit: what I've not done is taken the amount of the raise, and gone out to finance a new car (etc) with that amount.
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windaar
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Re: Accumulators, what's your response to inflation?

Post by windaar »

Even with inflation allegedly "down," the prices that affect our family remain very high. We canceled our gym membership and cut loose a housekeeper. Canceled Hello Fresh. Cutting underused subscriptions. Only getting gas at Costco. For spring vacation we are driving instead of flying.
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Re: Accumulators, what's your response to inflation?

Post by Johm221122 »

SavinMaven wrote: Mon Feb 05, 2024 12:01 pm We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
Inflation hasn't really increased my expenses compared to my pay

Rent has been the same for about 5 year
Electric/utilities increased very little
Insurance has barely moved (I think my health insurance went up a dollar a pay period this year)
I ride a bike to work so my transportation costs are extremely low


Inflation is based on your choices. Not everyone feels the effects the same way. The one area I have felt the most with inflation is my weekly Walmart shopping. Probably 20% high than 2 years ago. But this isn't a big percentage of my spending.
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Re: Accumulators, what's your response to inflation?

Post by Chuckles960 »

windaar wrote: Mon Feb 05, 2024 1:02 pm Even with inflation allegedly "down," the prices that affect our family remain very high.
Inflation is the rate of increase, not the increase itself. Obviously prices will remain high due to past inflation, even if current inflation were to go down to zero.

Newspaper articles on how inflation is being brought under control don't seem to register the fact that prices---especially at the grocery store---are high.

Of course, getting inflation down is a good thing to do, and in fact it is all that can reasonably be done. For prices to go back down, inflation would have to be negative (deflation), which sounds good but can have nasty consequences.
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Re: Accumulators, what's your response to inflation?

Post by exodusing »

Chuckles960 wrote: Mon Feb 05, 2024 1:13 pm
windaar wrote: Mon Feb 05, 2024 1:02 pm Even with inflation allegedly "down," the prices that affect our family remain very high.
Inflation is the rate of increase, not the increase itself. Obviously prices will remain high due to past inflation, even if current inflation were to go down to zero.

Newspaper articles on how inflation is being brought under control don't seem to register the fact that prices---especially at the grocery store---are high.

Of course, getting inflation down is a good thing to do, and in fact it is all that can reasonably be done. For prices to go back down, inflation would have to be negative (deflation), which sounds good but can have nasty consequences.
Prices don't have to go down - if wages rise more than prices you're better off despite higher prices. Fortunately, they have for most as shown in the chart I posted above. Unfortunately, not everyone has been able to keep up.
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SavinMaven
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Re: Accumulators, what's your response to inflation?

Post by SavinMaven »

CyclingDuo wrote: Mon Feb 05, 2024 12:35 pm If your savings is automatic out of your paychecks based on a percentage of income + the employer's percentage match, how is your rate of savings going down?
The bulk of our savings is self-directed - an automatic transfer to Vanguard out of our checking account. The dollar amount I transfer hasn't risen in a couple years, even as we've gotten raises. The rising cost of living is 'eating' the raise instead, and I'm curious how others are adjusting their budgets, or savings, or expectations to account for the inflationary environment.
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Re: Accumulators, what's your response to inflation?

Post by Stoic9 »

For us we were well diversified. For example inflation went up some in 21-22 (not as bad as the 70-80's) and back down fast. Most of that was gas and housing. We were down to one car by 2021 and were enjoying the technology of delivery plus we jumped on oil stocks in spring-summer of 20. We invested early in rental property (diverse). Our property got inundated with demand in 20-23 because of remote work demand. Rents jumped 20-30% easily covering inflation. I worked in a highly professional job so raises and promotions were regular. Now with inflation dropping like bricks we are flush.
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climber2020
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Re: Accumulators, what's your response to inflation?

Post by climber2020 »

Overall timeline hasn't changed because the 10 years prior to 2021 had such spectacular stock returns that more than made up for the inflation period that followed. Buying a house when they were still relatively cheap with a low interest mortgage also helped avoid some inflation costs.

If I were an accumulator starting now or in the last 2 years, the answer would be to work a few years longer.
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CyclingDuo
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Re: Accumulators, what's your response to inflation?

Post by CyclingDuo »

SavinMaven wrote: Mon Feb 05, 2024 1:57 pm
CyclingDuo wrote: Mon Feb 05, 2024 12:35 pm If your savings is automatic out of your paychecks based on a percentage of income + the employer's percentage match, how is your rate of savings going down?
The bulk of our savings is self-directed - an automatic transfer to Vanguard out of our checking account. The dollar amount I transfer hasn't risen in a couple years, even as we've gotten raises. The rising cost of living is 'eating' the raise instead, and I'm curious how others are adjusting their budgets, or savings, or expectations to account for the inflationary environment.
Ah, got it.

Regarding reduction in expenses to counter any inflation that we have seen while allowing accumulation to still keep on track...

Some of our recent cost reduction is not due to fighting inflation entirely, but more as a result of our transition from being a dual income household to a single income household (wife retired last year and is now receiving her pension).

However, beginning in 2020 and as a result of Covid, we do eat out far less than we used to since we are big foodies and love to cook (as well as raise our own vegetables and herbs). We had decided last year to cut back to just once a week for going out to eat, but since my wife retired last June, we find ourselves having to actually force ourselves to go out and eat. It's been more like once every two weeks, or even three weeks these days. We just enjoy cooking so much that it's rarely worth it to go out to eat since we can do it better ourselves. Not to mention, our town lacks anything really exciting to go out and eat. We have to drive about 20-30 minutes for that, so it is just easier to eat at home. Our usual night out would probably average $75-$150 for the two of us depending on the restaurant, choice of entree, and adult beverage. However, as mentioned, it has been a reduction compared to prior years.

I also save at least $12-$15 per day by packing my own lunch to take to work which is something I rarely, if ever, did before Covid. It used to cost much less, but whether I get a salad, or a sandwich - the going rate seems to have climbed up to the $14-$15 or even $18 range over the past two years near where I work. That means I am averaging at least $75 a week savings by taking leftovers or my own sandwich to work.

We also cut back on wine as part of our daily cost savings. I hate to admit it, but we can easily polish off a bottle of wine every evening without even blinking. So for us, what began as dry January last year, has continued off and on to the point we're giving this year a full run at it. I think my wife has only had one glass of wine this year which was at a meal with a friend last week. I haven't had anything in 2024. I did notice the price of many of our favorites rise over the past few years a dollar, then two, then three+ per bottle compared to what they were before Covid. Not drinking a bottle every night between the two of us at dinner has led to at least a $15-$18 per day savings, and even more for the nicer stuff. I'm sure I'll have a glass or two socially every now and then, or when we go out to eat, but the daily bottle at dinner habit has been kicked. It wasn't really a cost decision, but more of a health decision as we seemed to have fallen into a routine during Covid. We both felt it was time to dial it back and started doing so last year. The cost savings is a bonus and can easily divert that money into savings or to help cover inflation seen in other products/services we need.

We've always kept the thermostat on 68-70 for heat in the day for Winter, and 66 at night, so no changes there.

Our two week vacation last Fall was at a time when overseas flights were rather inexpensive, we were housed by friends for half of the duration we were there, and the US dollar was high compared to the Euro. What could have been a rather expensive vacation was surprisingly cost-effective this time around as a result.

We do use the beacons on our cars for our automotive insurance, which supposedly saves us a certain percentage on our insurance rates. The reduced rate combined with driving the speed limit which helps keep mpg higher - and of course, no traffic tickets - at least chips away at keeping transportation costs lower. No debt on our vehicles. We keep them well maintained, tire pressure topped off, and drive our cars for at least 10-12 years before replacing in an attempt to keep overall transportation costs reduced.

I hate shrinkflation, so items at the grocery store that have utilized that tactic do not get put in our cart - or at least we try to avoid as many of those products and companies that utilize it as much as possible. As an example, we used to indulge in a bag of Skinny Pop popcorn quite often even though we know it is cheaper to make our own popcorn (which we do). The Skinny Pop bag had gotten smaller and smaller, there was much less popcorn in the bag, and the price had remained high. So it was sayonara to Skinny Pop. Their loss (The Hershey Company), our gain. Same thing happened at Panera bread where the bag of chips they give with a sandwich suddenly got a lot smaller with maybe a total of about 9-12 chips in a bag, yet the price of a sandwich kept going up and up which is one thing that helped lead me to bagging my own lunch to bring to work. We've always known what aisles to avoid in the grocery store, and we still avoid them. We source most of our eggs, beef, and poultry from a local farm 10 minutes from where we live. Costs are much lower than in our local grocery stores.

The big three expenses for a household remain for most all of us: housing, transportation, food. Get them all right, and things will be much easier when it comes to LBYM and making it on a no-budget, budget - or any of the other forms of a budget (50/30/20, zero-sum based, envelope system, pay yourself first, etc.). Get one of the big three items wrong, and good luck. Get them all wrong, and forget about it.

We've been able to keep our accumulation on track.

CyclingDuo
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Re: Accumulators, what's your response to inflation?

Post by lazynovice »

I just retired but generally, we gave ourselves a “raise” on spending each year based on what was going on in our lives at the time. It was almost always less than inflation reported in the news and with raises and promotions, less than our wages were rising. We saved the rest. Our savings and our savings rate increased over time. Sometimes it meant cutting back on things, eating out less etc.
Last edited by lazynovice on Mon Feb 05, 2024 9:54 pm, edited 1 time in total.
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Re: Accumulators, what's your response to inflation?

Post by RubyTuesday »

For most workers, real wages are up during the recent periods of high inflation (see St Louis Fed and Bureau of Labor Statistics for details).

You’ve gotten raises, have they not kept up with your personal rate of inflation? i.e. Can you not maintain your savings rate and pay your increased expenses?
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Re: Accumulators, what's your response to inflation?

Post by stoptothink »

RubyTuesday wrote: Mon Feb 05, 2024 4:26 pm For most workers, real wages are up during the recent periods of high inflation (see St Louis Fed and Bureau of Labor Statistics for details).

You’ve gotten raises, have they not kept up with your personal rate of inflation? i.e. Can you not maintain your savings rate and pay your increased expenses?
I believe the increases in real wages are primarily in low-skill/low-pay jobs. Anecdotally, my and wife's employers have frozen raises for the last 3 years.
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Re: Accumulators, what's your response to inflation?

Post by exodusing »

RubyTuesday wrote: Mon Feb 05, 2024 4:26 pm For most workers, real wages are up during the recent periods of high inflation (see St Louis Fed and Bureau of Labor Statistics for details).

You’ve gotten raises, have they not kept up with your personal rate of inflation? i.e. Can you not maintain your savings rate and pay your increased expenses?
I posted a chart with St Louis Fed data above.
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Re: Accumulators, what's your response to inflation?

Post by peterw »

SavinMaven wrote: Mon Feb 05, 2024 12:01 pm We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
The key to not letting inflation erode savings is to live in such a way that high inflation makes only a minimal difference to your expense footprint.

What causes inflation? A lot of people chasing too few goods. If we as a society want to reduce inflation, we must as a society consume less during those times when goods are scarce. I understand it is impossible to cut food, but cuting a recent example, can we make do without eggs when egg prices are skyrocketing due to an outbreak of bird flu? If airline tickets become pricey, do you have to take an overseas vacation? If Apple release a new iPhone or a new gaming device that costs 1k more than your old onw, do you have to buy it?

Blaming outside influences is easy. Making personal changes to adapt to such situations is hard.
Last edited by peterw on Mon Feb 05, 2024 4:49 pm, edited 2 times in total.
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Re: Accumulators, what's your response to inflation?

Post by arcticpineapplecorp. »

windaar wrote: Mon Feb 05, 2024 1:02 pm Only getting gas at Costco.
saw this recent meme and laughed out loud about Costco:

https://www.reddit.com/r/Costco/comment ... _spent_in/
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
peterw
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Re: Accumulators, what's your response to inflation?

Post by peterw »

CyclingDuo wrote: Mon Feb 05, 2024 3:56 pm
Some of our recent cost reduction is not due to fighting inflation entirely, but more as a result of our transition from being a dual income household to a single income household (wife retired last year and is now receiving her pension). ...

We've been able to keep our accumulation on track.

CyclingDuo
Love this response. So many good ideas here for the younger folks.
Nottingham
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Re: Accumulators, what's your response to inflation?

Post by Nottingham »

I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
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Re: Accumulators, what's your response to inflation?

Post by Nottingham »

peterw wrote: Mon Feb 05, 2024 4:43 pm
SavinMaven wrote: Mon Feb 05, 2024 12:01 pm We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
The key to not letting inflation erode savings is to live in such a way that high inflation makes only a minimal difference to your expense footprint.

What causes inflation? A lot of people chasing too few goods. If we as a society want to reduce inflation, we must as a society consume less during those times when goods are scarce. I understand it is impossible to cut food, but cuting a recent example, can we make do without eggs when egg prices are skyrocketing due to an outbreak of bird flu? If airline tickets become pricey, do you have to take an overseas vacation? If Apple release a new iPhone or a new gaming device that costs 1k more than your old onw, do you have to buy it?

Blaming outside influences is easy. Making personal changes to adapt to such situations is hard.
Lol. Of course it's bogleheads who max our their 401k, roth and 529 are causing the inflation. :mrgreen:
OrangeKiwi
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Re: Accumulators, what's your response to inflation?

Post by OrangeKiwi »

Keep investing in businesses that are most able to collect higher and higher prices, including yourself.
Last edited by OrangeKiwi on Mon Feb 05, 2024 5:05 pm, edited 1 time in total.
Nottingham
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Re: Accumulators, what's your response to inflation?

Post by Nottingham »

RubyTuesday wrote: Mon Feb 05, 2024 4:26 pm For most workers, real wages are up during the recent periods of high inflation (see St Louis Fed and Bureau of Labor Statistics for details).

You’ve gotten raises, have they not kept up with your personal rate of inflation? i.e. Can you not maintain your savings rate and pay your increased expenses?
Mortgage payment on median house in 2019 was $1000. It's $2300 now. 230% more. Are you saying that for most workers real wages grew 2.3 times? :oops: I can't believe I read this on bogleheads. I get reading this on reddit from fresh graduates, but here? C'mon.
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Re: Accumulators, what's your response to inflation?

Post by AnnetteLouisan »

I was incentivized to go for promotions and mention raises. I was also incentivized to turn down offers without good size raises. I was also incentivized to invest more to earn more. Earning more incentivized me to keep working longer.

Tax inflation also spurred me to get more cap gains income v income taxed at ordinary income rates. It also spurred me to invest more in treasuries since they are state tax free.

Tip inflation and the tip machine led me to cut back on dining out, their food and taxis.
Last edited by AnnetteLouisan on Mon Feb 05, 2024 6:01 pm, edited 1 time in total.
Chuckles960
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Re: Accumulators, what's your response to inflation?

Post by Chuckles960 »

Nottingham wrote: Mon Feb 05, 2024 5:04 pm Mortgage payment on median house in 2019 was $1000. It's $2300 now. 230% more. Are you saying that for most workers real wages grew 2.3 times? :oops: I can't believe I read this on bogleheads. I get reading this on reddit from fresh graduates, but here? C'mon.
I too can't believe I read this on bogleheads----$1000 to $2300 would be 130% more, not 230%. And the median mortgage payment for new home sales was $1000 in about 2012; In 2019 it was about $1250. The current number is correct.

https://www.bankrate.com/mortgages/aver ... ome-prices

Still, it is true that payments on new mortgages are high, because of high interest rates combined with increased prices. Most things one buys are not so strongly affected by interest rates. Plus people with existing fixed-rate mortgages are not affected. So this is a special case, not representative of inflation as a whole. Of course it is unfortunate for those affected, but it does not require everyone's wages to be increased 130%.
Gus Chiggins
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Re: Accumulators, what's your response to inflation?

Post by Gus Chiggins »

Nottingham wrote: Mon Feb 05, 2024 5:04 pm
RubyTuesday wrote: Mon Feb 05, 2024 4:26 pm For most workers, real wages are up during the recent periods of high inflation (see St Louis Fed and Bureau of Labor Statistics for details).

You’ve gotten raises, have they not kept up with your personal rate of inflation? i.e. Can you not maintain your savings rate and pay your increased expenses?
Mortgage payment on median house in 2019 was $1000. It's $2300 now. 230% more. Are you saying that for most workers real wages grew 2.3 times? :oops: I can't believe I read this on bogleheads. I get reading this on reddit from fresh graduates, but here? C'mon.
And many many people are not buying new homes, and those people are greatly benefiting from one of the best inflation hedges available, the 30 year fixed rate mortgage taken out at historically low rates over the preceding decade. For many, their housing cost (which is probably their largest cost) has remained fixed despite all the recent inflation.
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Re: Accumulators, what's your response to inflation?

Post by TheDDC »

Tamalak wrote: Mon Feb 05, 2024 12:36 pm Half of my net compensation goes into investments. It's my first "expense". The other expenses have to fit in the other half.
BINGO.

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Re: Accumulators, what's your response to inflation?

Post by TheDDC »

Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
Give me a break! Can't get by on $250,000??? Cant believe have the crap I read on here anymore. What on earth are you buying? Most get by with much less... $60,000 or less.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks.
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Re: Accumulators, what's your response to inflation?

Post by AnnetteLouisan »

TheDDC wrote: Mon Feb 05, 2024 5:33 pm
Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
Give me a break! Can't get by on $250,000??? Cant believe have the crap I read on here anymore. What on earth are you buying? Most get by with much less... $60,000 or less.

-TheDDC
We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
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Re: Accumulators, what's your response to inflation?

Post by FeralCat »

AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm
TheDDC wrote: Mon Feb 05, 2024 5:33 pm
Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
Give me a break! Can't get by on $250,000??? Cant believe have the crap I read on here anymore. What on earth are you buying? Most get by with much less... $60,000 or less.

-TheDDC
We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
The one I really love is something to the extent of: I save 50-percent of my take home pay, and then spend the rest. My rent in an HCOL is 50-percent of my take-home pay, so if I invest the rest, what am I supposed to eat? I will add that my rent just went up 10-percent this past year too. Despite this, I am still way over in total savings as compared to the Fidelity recommendations for savings by age. In other words, I am doing just fine.
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Re: Accumulators, what's your response to inflation?

Post by the_wiki »

What else can I do but keep saving and hoping market returns best inflation?
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Re: Accumulators, what's your response to inflation?

Post by sailaway »

AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm
TheDDC wrote: Mon Feb 05, 2024 5:33 pm
Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
Give me a break! Can't get by on $250,000??? Cant believe have the crap I read on here anymore. What on earth are you buying? Most get by with much less... $60,000 or less.

-TheDDC
We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
Many of us expressing shock that you can barely scrape by on $250k do live in VHCOL areas ourselves.
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Re: Accumulators, what's your response to inflation?

Post by HomerJ »

Lee_WSP wrote: Mon Feb 05, 2024 12:11 pm Inflation is pretty bad. It eroded real earnings, so unless your income keeps up with it, you experience a real loss in earnings and ability to save.
Real wages, on average, have actually kept up with inflation. Still not great, 0% real income growth since inflation took off a couple of years ago isn't good, but it's not bad either.

Now, a particular person's income/wages may not have kept up... I'm just talking averages across the board.

May have to change jobs to get a good raise, but that's ALWAYS been true.
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Re: Accumulators, what's your response to inflation?

Post by watchnerd »

Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
We downshifted from $400-$450k when wife retired early (age 52) in 2022, so now we're getting by on $250-300k.

No mortgage or debt, 50% savings, but due to inflation we've had to make some lifestyle cuts.

We're going out to eat a lot less, cut back on overseas travel, canceled symphony subscription, fewer steaks, and, like you, have shifted the alcohol consumption down two price levels, both for wine and liquor.

Oh, yeah, and CostCo gas.
Last edited by watchnerd on Mon Feb 05, 2024 7:07 pm, edited 2 times in total.
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Re: Accumulators, what's your response to inflation?

Post by simas »

SavinMaven wrote: Mon Feb 05, 2024 12:01 pm We are in the accumulation phase. As grocery, insurance and other prices rise, our annual dollar amount of savings has held steady (it's automated), but we've gotten recent raises, so our savings rate is going down.

Of course we're in a priviliged position to be employed, getting raises, and accumulating, and do appreciate that.

I'm curious to learn what others are doing. Are you cutting the "wants" budget so that your savings rate remains the same as the cost of "needs" increases? Pursuing a side gig? Planning to work longer before FIRE?
we spend less which is what is expected with high inflation (robbing of purchasing power). in restaurants we use(d) it was most visible, felt like 80-100% over last few years. what use to be a $11 entry on a menu of local Korean restaurant became 20. the cafeteria at work which was cheap/low quality either raised price or decoupled, instead of item costing 7-8 dollars it is now 9.5 however fries are not included and are optional choice (previously included) so it is 13+ with tax where it was <8. small things however very visible. Subscriptions are being looked at more carefully, etc. Costco for gas whenever possible :)
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Re: Accumulators, what's your response to inflation?

Post by billaster »

AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
I'd be more inclined to take the US Census Bureau's word for it.

Some median household incomes:

Los Angeles $76K
Santa Monica $107K
San Francisco $137K
New York City $77K
Manhattan $96K
Staten Island $93K
Brooklyn $74K
Nassau County $138K

https://www.census.gov/quickfacts/fact/ ... /BZA010221
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Re: Accumulators, what's your response to inflation?

Post by AnnetteLouisan »

sailaway wrote: Mon Feb 05, 2024 6:55 pm
AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm
TheDDC wrote: Mon Feb 05, 2024 5:33 pm
Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
Give me a break! Can't get by on $250,000??? Cant believe have the crap I read on here anymore. What on earth are you buying? Most get by with much less... $60,000 or less.

-TheDDC
We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
Many of us expressing shock that you can barely scrape by on $250k do live in VHCOL areas ourselves.
In homes we’ve owned for a while maybe, and in our park earning or retirement years. Lot of young folks face high rents, high student debt and higher home buying prices.
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Re: Accumulators, what's your response to inflation?

Post by AnnetteLouisan »

billaster wrote: Mon Feb 05, 2024 7:06 pm
AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
I'd be more inclined to take the US Census Bureau's word for it.

Some median household incomes:

Los Angeles $76K
Santa Monica $107K
San Francisco $137K
New York City $77K
Manhattan $96K
Staten Island $93K
Brooklyn $74K
Nassau County $138K

https://www.census.gov/quickfacts/fact/ ... /BZA010221
I thought we were talking about Bogleheads. Of course the median skews much lower income. They also have lower taxes and many have lower school debt obligations. If one is retired and bought one’s home in the 80s, one isn’t paying much income tax, isn’t paying a mortgage, isn’t raising children, isn’t traveling to midtown by car or Uber, etc.
Last edited by AnnetteLouisan on Mon Feb 05, 2024 7:13 pm, edited 2 times in total.
JoeNJ28
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Re: Accumulators, what's your response to inflation?

Post by JoeNJ28 »

Not making any changes due to inflation. We save about 15% soon to cut down to 10% and spend the rest. Mid 30s for my partner and I with one kid.
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Re: Accumulators, what's your response to inflation?

Post by watchnerd »

billaster wrote: Mon Feb 05, 2024 7:06 pm
AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
I'd be more inclined to take the US Census Bureau's word for it.

Some median household incomes:

Los Angeles $76K
Santa Monica $107K
San Francisco $137K
New York City $77K
Manhattan $96K
Staten Island $93K
Brooklyn $74K
Nassau County $138K

https://www.census.gov/quickfacts/fact/ ... /BZA010221
Median income higher than NYC/Manhattan/Los Angeles where I live:

Gig Harbor, WA $103,688
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Re: Accumulators, what's your response to inflation?

Post by FeralCat »

billaster wrote: Mon Feb 05, 2024 7:06 pm
AnnetteLouisan wrote: Mon Feb 05, 2024 6:03 pm We should have separate threads for VHCOLA v mcola and lcola living. Respectfully it seems there’s a big disconnect in understanding the realities of different places. Maybe a VHCOLA boglehead could give some examples of average costs. Or the others could simply take our word for it.
I'd be more inclined to take the US Census Bureau's word for it.

Some median household incomes:

Los Angeles $76K
Santa Monica $107K
San Francisco $137K
New York City $77K
Manhattan $96K
Staten Island $93K
Brooklyn $74K
Nassau County $138K

https://www.census.gov/quickfacts/fact/ ... /BZA010221
Most people don't consider themselves to be financially successful unless they can afford to own their own home. According to your statistics the median value of an owner-occupied housing unit (which includes apartments) in Los Angeles is $732K. That is 10x the median household income. Those households at or below median income are obviously not homeowners. I really didn't want to get into another fight about high housing costs. But it is true - something has to change.
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Re: Accumulators, what's your response to inflation?

Post by Nottingham »

TheDDC wrote: Mon Feb 05, 2024 5:33 pm
Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid. No more weekends in Miami where I could fly for $50 and stay there right at south beach for $100 a few years ago. Now weekend in Miami is $3000 vs $500 before. No more vacations in the US as I can hardly stomach paying $600 a day for 20sq. ft. Marriott at Cape Cod or LIS.

Whatever my home needs I DIY. Basically I work two jobs: IS manager and carpenter. I just can't afford to pay someone $10k to remove/slap drywall or $50k to reno bathroom.

My first salary in the US was $100 000 when I came here 10 years ago and my current $250 000 feel exactly the same now. I put more to 401k now but $250 000 3 years ago was a lot of money and now you can barely get buy on that.
Give me a break! Can't get by on $250,000??? Cant believe have the crap I read on here anymore. What on earth are you buying? Most get by with much less... $60,000 or less.

-TheDDC
Let me know how people making $60 000 keep up with house maintenance or having a weekend out at Cape Cod. Comparing to 3-5 years ago that's exactly that - barely getting by. I remember where I could get a deal at cape cod for a hotel for $50 and then get a $15 lobster roll. Now that same exact hotel is $500 and lobster roll is $60.
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Re: Accumulators, what's your response to inflation?

Post by Nottingham »

Gus Chiggins wrote: Mon Feb 05, 2024 5:28 pm
Nottingham wrote: Mon Feb 05, 2024 5:04 pm
RubyTuesday wrote: Mon Feb 05, 2024 4:26 pm For most workers, real wages are up during the recent periods of high inflation (see St Louis Fed and Bureau of Labor Statistics for details).

You’ve gotten raises, have they not kept up with your personal rate of inflation? i.e. Can you not maintain your savings rate and pay your increased expenses?
Mortgage payment on median house in 2019 was $1000. It's $2300 now. 230% more. Are you saying that for most workers real wages grew 2.3 times? :oops: I can't believe I read this on bogleheads. I get reading this on reddit from fresh graduates, but here? C'mon.
And many many people are not buying new homes, and those people are greatly benefiting from one of the best inflation hedges available, the 30 year fixed rate mortgage taken out at historically low rates over the preceding decade. For many, their housing cost (which is probably their largest cost) has remained fixed despite all the recent inflation.
Fixed housing cost is fixed until they get 43%+ tax assessment and need a new Heat Pump which is not $8000 anymore but $30 000. All these bs about benefits of inflated housing cost is just hilarious.

I get it maybe your plan was to sell your inflated house in Orange County and get a cheap house in Cascais. But guess what? Housing in Cascais appreciated too. :mrgreen: So housing is a wash but the rest of expenses are now 50%+ than before.
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Re: Accumulators, what's your response to inflation?

Post by Nottingham »

Chuckles960 wrote: Mon Feb 05, 2024 5:24 pm
Nottingham wrote: Mon Feb 05, 2024 5:04 pm Mortgage payment on median house in 2019 was $1000. It's $2300 now. 230% more. Are you saying that for most workers real wages grew 2.3 times? :oops: I can't believe I read this on bogleheads. I get reading this on reddit from fresh graduates, but here? C'mon.
I too can't believe I read this on bogleheads----$1000 to $2300 would be 130% more, not 230%. And the median mortgage payment for new home sales was $1000 in about 2012; In 2019 it was about $1250. The current number is correct.

https://www.bankrate.com/mortgages/aver ... ome-prices

Still, it is true that payments on new mortgages are high, because of high interest rates combined with increased prices. Most things one buys are not so strongly affected by interest rates. Plus people with existing fixed-rate mortgages are not affected. So this is a special case, not representative of inflation as a whole. Of course it is unfortunate for those affected, but it does not require everyone's wages to be increased 130%.
It's not only mortgages but labor and maintenance costs. 2.5% mortgage is nice, but maintenance prices are in 2023 dollars. And what about $150 aldi receipts? I could get a full cart at aldi for $80. Not exactly the same cart is $150.
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Re: Accumulators, what's your response to inflation?

Post by Lee_WSP »

HomerJ wrote: Mon Feb 05, 2024 6:59 pm
Lee_WSP wrote: Mon Feb 05, 2024 12:11 pm Inflation is pretty bad. It eroded real earnings, so unless your income keeps up with it, you experience a real loss in earnings and ability to save.
Real wages, on average, have actually kept up with inflation. Still not great, 0% real income growth since inflation took off a couple of years ago isn't good, but it's not bad either.

Now, a particular person's income/wages may not have kept up... I'm just talking averages across the board.

May have to change jobs to get a good raise, but that's ALWAYS been true.
On average means that the average kept up, but some percentage did not. And given what I recall of the stats, the increases originally went to very high earners meaning average isn’t good. I don’t know if median also kept up, but that would also mean half did not keep up.
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