:::: MENU ::::

Browsing posts in: :)

Low Interest Rates, Higher Inflation?

by

Thank you for all the feedback on how to handle teacher gifts this year. I believe the consensus is clear, gift cards it is.

The election and unknowns and misinformation has our country at odds all the way across the board. No matter your politics, it is a sad state of affairs. No matter who won or wins, it is a sad and perhaps dangerous state we are in. And no, this is not going to be a political post.

But I heard that while the election has us all distracted, the chairman of something or other announced that while they plan to keep interest rates low, this governing body may elect it’s right to adjust for inflation. Or something like that.

Sorry, as you all know, the financial world is not my first love so I’m not well versed in most of it. But I am paying more attention. Not to mention, both of the girls are taking economics this year so we’ve had lots of discussions around it and their studies.

Sign up for Digit today and save automatically!

How to Manage Your Money

Back to my point or rather question…so if interest rates stay low, but inflation goes up, how should we manage our money to survive it best? Especially those without large nest eggs or steady income.

My understanding is that low interest rates will make purchasing homes more manageable for more people. Yeah.

But higher inflation will push the cost of every days goods up…food, gas, etc. Which is bad in my mind. It will force everyone to spend more on every day items. Leaving us little choice but to up our budgets while incomes will most likely not rise.

Am I misinterpreting this?

Plan to Survive and Thrive

So BAD Community, my question is twofold, is what I am hearing and how I am presenting this correct? Is this what is coming?

And two, if it is true, what advice do you have for the average, debt fighting person to survive and even thrive in this type of economy?

Links to resources to learn more, read more would be greatly appreciated.

Spending More on High Quality vs. Saving on Cheaper

by

When my future husband and I were dating, we started playing tennis together. I was a rookie, but he loves to play and patiently showed me the ropes. We were playing so much that I got tired of borrowing a racket, so I decided to buy my own. Little did I know this purchase would raise an issue we’ve faced our entire marriage: spending more on high quality vs. saving on cheaper products.

An Unpopular Opinion

We went to the sporting goods store together. There was a cheaper Wilson tennis racket that was fine, and then there was a fancy racket that was apparently super good and on an awesome sale, but still cost a lot more. I don’t remember the exact prices, but it was a no-brainer for me—I was going to get the cheaper one. We got into a brief philosophical discussion standing there in the aisle: when do you justify spending more on high quality and when do choose to save on something of lesser quality?

I bought the Wilson. Later that day our discussion came up with my husband’s sister-in-law. She didn’t get it. “Why wouldn’t you get the better racket?” She told me she always buys better quality because it holds up better over time. She pointed to an expensive bike she had just bought, even though she and her husband were poor college students. (I didn’t get THAT.)

But I reasoned that I might never get really into tennis, and I hated to invest in something that could potentially gather dust. I’d rather wear out the Wilson first and prove to myself that I’d make a high-quality racket worth it. We just didn’t understand each other.

You should know that 15 years later I still have that Wilson racket. I play about once a year and it needs restringing now and then, but it’s still kicking. BOOM.

Spending More on High Quality vs. Saving on Cheaper
My husband’s tennis racket and my beginner’s racket… because I’m still a beginner

Less Expensive Isn’t Always the Right Call

I’m inclined to be a bit of a cheapskate, but I know my husband (and our sister-in-law) are often right. You have to take into account something’s value over time and your ability to resell, as well as the thought of filling up our world with cheap, one-use-only junk.

There are times I’ve learned to pay more. For example, clothes. Even though I was raised wearing clothes from K-mart and Ross, I’ve come to learn that you get what you pay for. A cheap blouse will pop a seam or stretch out quickly, and it probably wasn’t made well or in a humane, eco-friendly way. (I read “Fashionopolis” by Dana Thomas last year and it haunts me every time I shop for clothes.) We’re on a budget, so I’m not shopping on Fifth Avenue. But I do try to get basics that will hold up for as long as possible and hopefully save me money per wear.

But there are other times when I still refuse to pay more. One of those times is food staples. Cheaper food can mean it’s less nutritious or not as flavorful. But just because it’s generic doesn’t mean it doesn’t work just as well. My husband has convinced me that generic peanut butter ain’t the same, but you better believe I buy generic basics like flour, sugar, pasta, and frozen vegetables. I thought this article that discussed just how often chefs buy generic was fascinating.

But what about you? When are you okay spending more on high quality items? When do you think it’s fine to pick the cheaper option?