It's time to start digging up those Squirrelled Nuts!!!! - Page 425 (2024)

michaels Posts: 28,168 Forumite

1 July at 11:18AM

Apologies SS for more on this. I always think it is easiest to always work in 'todays prices' as we know what things cost today so rather than adjusting the current pot to compare with the 5 years ago pot, I would adjust the 5 years ago pot to see what it could purchase at todays prices.

For example a pot that was £500k in June 2019 actually had spending power of £667k at todays prices so if the current pot is say £600k then effectively the pot has fallen by 67k - but has obviously supported 5 years of spend so not surprising.

It means that despite the seemingly stellar performance of the last 5 years, once adjusted for inflation they are probably pretty average.

1 July at 4:49PM

cfw1994 said:

Ahhh…that tricky one, inflation.

Other than roughly modelling some inflation-based wizardry on a spreadsheet to take us to 100, or whenever we expire (whichever comes first😳), I try not to dwell on what-might-have-beens…

I see inflation as a very personal thing.
Some things you can’t impact. Council tax, for example (short of moving!). Pensions might rise at a particular rate.

Many things you can.
Despite this year causing much more legwork than usual, judicious use of topcashback and a willingness to ‘do the insurance dance’ has meant that our car insurance (& we have three in the house 😜) has remained *broadly* flat for several years. Good, considering one renewal this year had jumped over 70% (H***ings D***ct can go fish for other suckers this year 🤣). Ended up with a 20% hike elsewhere, but got one of the others down a little 🤷‍♂️
We cook more of our own food from fresh, and are happy to shop around (Aldi/Lidl/Costco/greengrocer) to keep those prices down.

I prefer to take the Sea_shell approach and check our ‘net worth’ figure from time to time.

If a year passes and we are broadly the same, life is good….even if that number should be ‘even more’ if we applied inflation 💪

We do squander far too much on festivals, events and indeed our luxury item, a month in the snow…but there are always ways to do these things to maximise fun and minimise outgoings!

Inflation is not really a "personal thing". People consume differently and so may be affected slightly differently in the short term but in the long run most people are affected pretty much the same. There is a lot ridiculous hyperbole from the media and some politicians about the so-called "cost of living crisis", but even so most people seem to have a head in the sand attitude towards it.

I think it will be tempting for the next govt, whoever it is, to use inflation to help balance the books. It seems to be an easy way to raise taxes and reduce govt debt, through fiscal drag and devaluing debt, without people complaining too much because they aren't seeing losses in £.

1 July at 5:09PM

zagfles said:

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Inflation is not really a "personal thing".

The ONS might disagree with you 😉
https://www.ons.gov.uk/visualisations/dvc1833/calculator/index.html

Plenty of others too: one example here, but you are of course welcome to disagree with me/them 👍

Pat38493 Posts: 2,745 Forumite

1 July at 5:18PM

zagfles said:

cfw1994 said:

Ahhh…that tricky one, inflation.

Other than roughly modelling some inflation-based wizardry on a spreadsheet to take us to 100, or whenever we expire (whichever comes first😳), I try not to dwell on what-might-have-beens…

I see inflation as a very personal thing.
Some things you can’t impact. Council tax, for example (short of moving!). Pensions might rise at a particular rate.

Many things you can.
Despite this year causing much more legwork than usual, judicious use of topcashback and a willingness to ‘do the insurance dance’ has meant that our car insurance (& we have three in the house 😜) has remained *broadly* flat for several years. Good, considering one renewal this year had jumped over 70% (H***ings D***ct can go fish for other suckers this year 🤣). Ended up with a 20% hike elsewhere, but got one of the others down a little 🤷‍♂️
We cook more of our own food from fresh, and are happy to shop around (Aldi/Lidl/Costco/greengrocer) to keep those prices down.

I prefer to take the Sea_shell approach and check our ‘net worth’ figure from time to time.

If a year passes and we are broadly the same, life is good….even if that number should be ‘even more’ if we applied inflation 💪

We do squander far too much on festivals, events and indeed our luxury item, a month in the snow…but there are always ways to do these things to maximise fun and minimise outgoings!

Inflation is not really a "personal thing". People consume differently and so may be affected slightly differently in the short term but in the long run most people are affected pretty much the same. There is a lot ridiculous hyperbole from the media and some politicians about the so-called "cost of living crisis", but even so most people seem to have a head in the sand attitude towards it.

I think it will be tempting for the next govt, whoever it is, to use inflation to help balance the books. It seems to be an easy way to raise taxes and reduce govt debt, through fiscal drag and devaluing debt, without people complaining too much because they aren't seeing losses in £.

Didn't I read somewhere that the UK government has been issuing a lot of inflation linked bonds in recent times, so their scope for using inflation to erode debt is more limited than before?

1 July at 6:15PM

There are a lot of people on this thread who have retired or fire'd that appear to gain satisfaction and happiness from saving money and managing on a relatively small income, good for them.
There are also a lot of people who gain satisfaction and happiness from spending money and living on a high income. They are generally not on these forums. It's not always the case that spending more doesn't make you happy.

I guess if you are preoccupied with justifying your own low income/spend versus others who have/spend more, and regular tell yourself you are happy with that then maybe there's an element of kidding yourself, a bit like the people who spend loads and say it makes them happy but they aren't.

1 July at 6:22PM

cfw1994 said:

zagfles said:

Inflation is not really a "personal thing".

The ONS might disagree with you 😉
https://www.ons.gov.uk/visualisations/dvc1833/calculator/index.html

Plenty of others too: one example here, but you are of course welcome to disagree with me/them 👍

That's a calculator, and a vague waffle from what looks like a sales site. How do they disagree that "People consume differently and so may be affected slightly differently in the short term but in the long run most people are affected pretty much the same."?

Stuff like petrol and other volatile things will make a big short term difference depending how much you drive, but long term very little as sometime years you'll gain others you'll lose. It's no different from stockmarket returns etc.

But anyway, saying stuff like "inflation is personal" etc just seems to me to be an excuse to ignore inflation, just because the headline rate might not exactly match your personal rate you can't rely on the figures so may as well bury your head in the sand. If you can calculate your long term rate and reckon it's significantly different to the headline figures, go for it.

1 July at 6:27PM edited 1 July at 6:29PM

Pat38493 said:

zagfles said:

cfw1994 said:

Ahhh…that tricky one, inflation.

Other than roughly modelling some inflation-based wizardry on a spreadsheet to take us to 100, or whenever we expire (whichever comes first😳), I try not to dwell on what-might-have-beens…

I see inflation as a very personal thing.
Some things you can’t impact. Council tax, for example (short of moving!). Pensions might rise at a particular rate.

Many things you can.
Despite this year causing much more legwork than usual, judicious use of topcashback and a willingness to ‘do the insurance dance’ has meant that our car insurance (& we have three in the house 😜) has remained *broadly* flat for several years. Good, considering one renewal this year had jumped over 70% (H***ings D***ct can go fish for other suckers this year 🤣). Ended up with a 20% hike elsewhere, but got one of the others down a little 🤷‍♂️
We cook more of our own food from fresh, and are happy to shop around (Aldi/Lidl/Costco/greengrocer) to keep those prices down.

I prefer to take the Sea_shell approach and check our ‘net worth’ figure from time to time.

If a year passes and we are broadly the same, life is good….even if that number should be ‘even more’ if we applied inflation 💪

We do squander far too much on festivals, events and indeed our luxury item, a month in the snow…but there are always ways to do these things to maximise fun and minimise outgoings!

Inflation is not really a "personal thing". People consume differently and so may be affected slightly differently in the short term but in the long run most people are affected pretty much the same. There is a lot ridiculous hyperbole from the media and some politicians about the so-called "cost of living crisis", but even so most people seem to have a head in the sand attitude towards it.

I think it will be tempting for the next govt, whoever it is, to use inflation to help balance the books. It seems to be an easy way to raise taxes and reduce govt debt, through fiscal drag and devaluing debt, without people complaining too much because they aren't seeing losses in £.

Didn't I read somewhere that the UK government has been issuing a lot of inflation linked bonds in recent times, so their scope for using inflation to erode debt is more limited than before?

About 75% is not inflation linked. FT had an article saying we issue more inflation linked than anyone else but it's still only about 25%The UK issues more inflation-linked debt than anyone else. Has it worked? (ft.com)(paywalled)

So inflation will reduce the real value of three quarters of govt debt. May be tempting for a chancellor to try to balance the books by inflating away govt debt while increasing taxes steathily through fiscal drag. How about a BoE inflation target of 3 or 4%?

Nebulous2 Posts: 5,216 Forumite

1 July at 7:15PM

Cus said:

There are a lot of people on this thread who have retired or fire'd that appear to gain satisfaction and happiness from saving money and managing on a relatively small income, good for them.
There are also a lot of people who gain satisfaction and happiness from spending money and living on a high income. They are generally not on these forums. It's not always the case that spending more doesn't make you happy.

I guess if you are preoccupied with justifying your own low income/spend versus others who have/spend more, and regular tell yourself you are happy with that then maybe there's an element of kidding yourself, a bit like the people who spend loads and say it makes them happy but they aren't.

This is a personal thread for someone who is an impressive model for retiring very early and getting a lot of satisfaction from leading a fairly frugal lifestyle. It's not surprising that you'll find others here poring over that, either to emulate it, or to wonder at how it can be done.

I'm struggling to understand what you mean about high earners / spenders not being on this forum. It depends how you define them. There are a lot of people I would regard as being in that capacity on this forum - its common for people to say that they expect to be higher rate taxpayers in retirement, and a big topic of conversation in the past was people breaching the life time allowance. If you're speaking about people with several orders of magnitude more than that, then there are a few, but they aren't very representative of the population at large, any more than they are representative here.

If you're talking about people who earn a lot, spend everything they have, are carrying a lot of debt to sustain their lifestyle, and are happy to let retirement look after itself, then I'd agree we don't have many of them here......

michaels Posts: 28,168 Forumite

1 July at 9:34PM

Cus said:

There are a lot of people on this thread who have retired or fire'd that appear to gain satisfaction and happiness from saving money and managing on a relatively small income, good for them.
There are also a lot of people who gain satisfaction and happiness from spending money and living on a high income. They are generally not on these forums. It's not always the case that spending more doesn't make you happy.

I guess if you are preoccupied with justifying your own low income/spend versus others who have/spend more, and regular tell yourself you are happy with that then maybe there's an element of kidding yourself, a bit like the people who spend loads and say it makes them happy but they aren't.

Some on this thread have the income to spend twice what they do but choose not to because every bit of consumption currently damages the environment and living at a level that seems perfectly acceptable leaves funds available to support good causes.

Others may take a different view of what life is about.

1 July at 9:55PM

michaels said:

Cus said:

There are a lot of people on this thread who have retired or fire'd that appear to gain satisfaction and happiness from saving money and managing on a relatively small income, good for them.
There are also a lot of people who gain satisfaction and happiness from spending money and living on a high income. They are generally not on these forums. It's not always the case that spending more doesn't make you happy.

I guess if you are preoccupied with justifying your own low income/spend versus others who have/spend more, and regular tell yourself you are happy with that then maybe there's an element of kidding yourself, a bit like the people who spend loads and say it makes them happy but they aren't.

Some on this thread have the income to spend twice what they do but choose not to because every bit of consumption currently damages the environment and living at a level that seems perfectly acceptable leaves funds available to support good causes.

Others may take a different view of what life is about.

Good on them, but you'd expect some people act like that. Probably comes under my first group though