Archive for December, 2011

Frog Boiling – you’re in the pot!

What is the local sale price on your favorite brand of pop/soda? Here it’s 3 two-liters for $4. Last month it was 4 for $5. So the price of pop/soda is up eight cents per bottle.

Many people don’t think about this 8 cents. The pricing changes on these ‘sales’ happen erratically, and might be lower next month before going higher again the following.

Last summer this same pop/soda was often for sale at one dollar a bottle. So the recent climb is 33% higher now.

Over time consumers don’t seem to recognize the slow progression of pricing. Often hindered by another game that gets played. The size variation. There is one sale on two-liters and a different sale on 1.5-liters. Then you can only find the 1.5 liters for a while. Then they disappear and the two-liters return. But with those size changes arrive little bumps in pricing. Eight cents here and eight cents there and it starts to add up.

We’re savers. Inflation is a hidden tax on your wealth – and it adds up. Looking at one of those ‘what went on the year you were born’ birthday card stands the other day showed that one card that was for a ’40 years old’ had almost exactly 1/10th of the value of anything of today. Average car today = $20k, ‘then’ it was $2k. Salary ‘then’=$7k is now $70k.

Imagine if you retired forty years ago. Your savings is now 1/10th effective than it was back then! But then maybe you don’t care because if you retired 40 years ago you’d be 105 now. A frog boiling for a very long time.

So you think you have enough savings?



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