Preparedness for when

maryb

GreyQueen wrote: »

Morning all.

Brief visit before w*rk but wanted to share this, a result of this morning's interwebulating: http://www.drlwilson.com/Articles/INFLATON.htm

Which explains succinctly, albeit in US dollars, why even 'low' figures of inflation will pauperise most of us. Be afraid. Be very, very afraid.

Rule of thumb - with 7.2% inflation prices double in 10 years, with 10% they double in 7.2 years. You can interpolate numbers as appropriate. 7.2% is higher than you would see reported but half that is close to the official figure (let alone the real figure) and it would mean prices doubling in 20 years

Frugalsod

GreyQueen wrote: »

Morning all.

Brief visit before w*rk but wanted to share this, a result of this morning's interwebulating: http://www.drlwilson.com/Articles/INFLATON.htm

Which explains succinctly, albeit in US dollars, why even 'low' figures of inflation will pauperise most of us. Be afraid. Be very, very afraid.

It is much more relevant in the US were real wages have been stagnant for decades. The same principle applies to houses. If a home rises in value faster than wages it becomes a tax on everyone, even if you rent, because the price keeps increases even if wages are stagnant. In the UK wages are still falling even so the house price is massive tax on everyone. If you have to take out a huge mortgage to buy a £1 million pound home are you really a millionaire?

GreyQueen

maryb wrote: »

Rule of thumb - with 7.2% inflation prices double in 10 years, with 10% they double in 7.2 years. You can interpolate numbers as appropriate. 7.2% is higher than you would see reported but half that is close to the official figure (let alone the real figure) and it would mean prices doubling in 20 years

That's a good one to store in mind.

I do know that in the past 7 years, my council rent has gone up over 50% and many staple grocery items have gone up 100% since 2008. As a person of low income, the price of luxuries doesn't impact on my lifestyle, but the price of essentials is a daily burden.

In 1981, my parents' house could have been purchased (under Right to Buy) for £1.5k. By the time they bought theirs 4 years later, the price was £7k. Next door bought less than 5 years after for £13k.

Now in private ownership, by 2004, these neighbouring houses were £50k. Four years later, one house had doubled in price from £50k to £100k. Prices have fallen back slightly to the £88-90k mark but they are still the same very modest 1960s ex-LA terraced houses on an estate. They're never going to be more than modest homes for modest people, but they're typically being bought as investments and rented out for an arm and a leg to five working adults a time (two couples and a singleton).

Yes, it now takes 5 full time workers to run a house which was built to be affordable by one worker supporting a family.

Real incomes aren't keeping up with housing costs. I know plenty of people with decent full-time jobs who are sharing 2-3 to a single family home with non-family, just in order to be able to live.

I manage because I'm very good at managing and have lots of skills to help the money go a long way, but in the end, one is merely slowing the slide into poverty, not managing to arrest it.

mardatha

Maybe GQ we will end up house sharing with family and that will help us survive? Younger fitter ones as well as older experienced knowledgeable ones all working together for the family..

GreyQueen

mardatha wrote: »

Maybe GQ we will end up house sharing with family and that will help us survive? Younger fitter ones as well as older experienced knowledgeable ones all working together for the family..

I've long thought that the multi-generational family home will be making a comeback.

Know one family of three generations of women; early twenty-something unmarried woman, her divorced mother and her own very elderly mother. Know of single parents raising their children in their own parents' home after marital breakdown. Fair amount of it going on already.

Got to make sense as a way of giving and receiving family support, as well as keeping costs down. The single family home is a historical anomaly in most parts of the world, after all.

What we need is to be rich enough to have our own dower houses (and our own staff). I'd lend you Nursie, but I kinda like you and that would just consititute random cruelty. :rotfl:

jk0

Karl Denninger on the theme of inflation today:

http://market-ticker.org/akcs-www?post=229028

This from the ECB made me laugh:

A negative deposit rate would help the European Central Bank in its fight against low inflation (ECCPEMUY), according to former Executive Board member Jose Manuel Gonzalez-Paramo.
“I don’t know why it should have negative effects,” Gonzalez-Paramo, 55, said in an interview in London yesterday.

Umm, who would leave any appreciable amount of money in an account with a negative interest rate? Wouldn't the banks have a job keeping the cashpoints fed?

GreyQueen

jk0 wrote: »

Umm, who would leave any appreciable amount of money in an account with a negative interest rate? Wouldn't the banks have a job keeping the cashpoints fed?

Quite a lot of unworldly people, who believe that the old rules of engagement still apply; be thrifty and save for your rainy day fund/ old age. Virtue is rewarded and all that jazz.

Nasty little cynics like me have their money out of the banks and, wherever possible, stored in tangible goods which will serve ongoing needs and which are sure to cost more in the long run.

My very good quality mattress can be expected to last 20 years, which will give it an annual running cost of £47.15 or 90p a week. Or, at a conservative estimate of 15 years life, that would equate to £62.87 p.a. or £1.20 per week of lovely sleeps.

I could have bought several carpy mattresses for £943 and changed them every few years, but I'm now 24 months into its life and very happy to be sleeping on my money (not literally, no banknotes are stuffed inside ). And less waste in the environment, too. Shop little and seldom and buy quality gear (ideally secondhand if at all possible).

I shall continue to add to the canned food stash. With many items going up 50-60% in under 2 years, a larder beats a bank account hands down.

Of course, deposits will drop, and banks will have to start offering more interest to get them back, which will be good for savers, if not for the bankers. No point in bankers trying to be capitalists without understanding the basics of supply and demand; you want it supplied, then people can demand higher interest or vote with their feet.

jk0

Your post made me wonder if anyone sells mattresses with space for cash, and sure enough:

http://www.theguardian.com/business/shortcuts/2013/mar/29/mattress-safe-bank-with-confidence

GreyQueen

:rotfl:
Whatever happens when you turn the mattress? Do you have to learn to key in your numbers upside down?!:rotfl:

[Deleted User]

Frugalsod wrote: »

Yes but I would not necessarily light it!

How would you get heat and/or light, from unlit candles :huh: