If you’re like me, you might think that you’re doing OK with your current standard of living costs. I thought I had it all locked up by keeping my annual budget set at $34,000 a year. After all, I don’t have a mortgage. I don’t have car payments. I’m not in any debt nor do I have student loans. I’m happily retired, right?
Enter stage left, inflation. Personally I don’t think this episode of hyperinflation is going to be temporary. I don’t think prices of many things are going to come down. That includes car prices, property taxes, insurance and the cost of durable goods. Maybe gas and food prices may fluctuate but I think we are going to be dealing with super high inflationary costs for a very long time.
In the ‘before’ time when inflation was (falsely) reported to us by government standards, we were led to believe the annual inflation rate was no higher than 2%. Today, that rate is (again falsely) set at 5%. I will admit that I used to think I could handle inflation by cutting back on non-essential items and thus get my annual budget under control and in the same spending category. With car prices edging at a 30% increase and housing costs nearing a 40% increase, I have now come to realize what is going on today is a whole new ballgame. I will also admit that I’ve been warned about the pitfalls of high inflation as my retirement years progressed but up until now, I hadn’t truly understood what all of this meant.
What changed my mind? This test (click here): “How Does Inflation Affect My Standard Of Living“. Based on just a simple inflation increase of 3%, my $34,000 annual expenses will surge to a whopping $62,000 in twenty years! (almost double) How the heck am I supposed to afford that? I’d have to become a hermit and live in a shell in order to come up with money like that. In other words, I might not be able to live like I am now in twenty years. Social Security isn’t going to be that benevolent. My investment and cash holdings aren’t going to be that productive. Adjust the rate of inflation to adequately reflect the true inflation (like 5% to 15%) and I’d have to be elected Queen of Something in order to afford myself.
I few years ago I was living on $2400 a month. Today, I’m living on $2880 a month. I’m still able to afford paying my bills because I keep cutting back on my expenses. I’ve eliminated cable & satellite and strictly watch TV via an antenna. I’ve shortened vacations. I’ve eliminated eating out in restaurants. We cook all our meals from scratch. Hubby and I cut our own hair. I do my own manicures and pedicures. I’ve eliminated trips to the spa. No more annual massages! We DIY (Do It Yourself) almost everything now and that includes car maintenance and repairs. We drive less. We coordinate our errands more. I never shop retail. Most everything we need such as clothes are purchased at either Goodwill or The Salvation Army. WE make a list of what we need and carouse yard sales. We swapped out all our light bulbs and inserted LEDs instead. We heat our house less and less in the winter and air condition our home less and less each summer. We shop loss leader sales for our groceries. We barter. We swap. Or we just simply go without. I have no idea how we would ever come up with $5203 a month twenty years from now.
I just don’t see it.
Unless we sell our home and coordinate the proceeds from the sale accordingly. This, however, would be our last resort. Maybe I should lament the woes of so many other retirees and their unforeseen future and bemoan “Geeze, I wish I had saved more for retirement” but that’s neither here nor there. We have a way out. Many others do not.
So, what do we do till then?
All is not lost. There are still plenty of good bargains out there and more than enough ways for us to keep continuing to cut back and cut back and cut back. The first is thankfully, you can still get some great deals at Aldi (and other bargain discount grocery chains). We can still get eggs at Aldi for $1.25 a dozen, a gallon of milk for $2.76, a loaf of good quality bread for .89 cents and frozen chicken parts (legs, thighs) for .99 cents a pound. Our local gourmet shop is still selling local, whole cut-up chicken priced at the same, constant $1.99 a pound.
Last week Aldi had frankfurter and hamburger rolls on sale for only .49 cents a package. We were able to buy and stock up on these summertime bargains and store them in our new but discounted basement freezer along with other good food deals we’ve come across on our journey. I used to fret that when it came time to update our twenty year old kitchen appliances, I settled on the standard white models and never upgraded to the stainless steel models. I saved hundred and hundreds of dollars but was always concerned my kitchen would look outdated. Not any more! Apparently, white appliances are back as I see more and more of them in home designer magazines:
Second, we’ve cut back on a lot of other things, most importantly meat. We’ve switched to more meatless meals. This phenomenon isn’t just limited to our awareness. Our top grocer’s recent weekly advertisement looked like this: (Yup, there was a vast array of plant-based choices which weren’t there as long ago as last week!)
We’re enjoying RV camping at state and national parks vs privately owned RV parks ($24 a night vs $85 a night). We’ve cut back on the length of our vacation travels. One week instead of two weeks. Two weeks instead of a month. Two months instead of three months. Our RV has an on-purpose, full kitchen so we can cook more meals ourselves while on the road. If we do want to splurge now and then, at home or on vacation, I’ve started accumulating reward gift cards to some of our favorite jaunts such as Starbucks, Dunkin’, iHop, Panera or Applebee’s to name a few. This way, we can save our cash while on vacation.
We have other things that we can put into place to save money and will probably be doing them on a need-to-do basis. For example, we will probably eliminate our second car and become a one-car couple. That will save us a lot of money on insurance, upkeep and registration/inspection fees! We’re working on installing either a pellet or wood burning stove in our living room as a viable heating alternative to alleviate future expensive energy costs. We already have an automatic generator set up for when the power goes out (often) and our freezer and refrigerator stay on so as not to spoil any of our hard bought food supply.
Another thing hubby and I have discussed was turning our barn in to a rental residence. It was built with that end game in mind. We would either rent it out or move in it ourselves and rent out the main living quarters. Thankfully, we DID think ahead when it came to earning extra money via a rental. We just didn’t think it would ever come to fruition. Hyperinflation changed all that. Real estate does extremely well during inflationary times. We’re blessed to own our own home and the several options we could utilize in order to remain living in our home during our retirement years.
As for investments, when inflation is high, banks typically pay higher interest rates. It may just be a matter of time before The Feds realize they will have to raise interest rates in order to tame hyperinflation. If and when they do, having some extra cash around and taking advantage of the higher interest earning accounts may be beneficial to our bottom line. We don’t invest in Wall Street. Only FDIC or TIPS bonds is what we would do if and when the need arises. I’m not a financial advisor. I am only telling you what is right for us. You would have to come to your own decisions or speak to a certified financial advisor to figure out your own path through these hyper-inflationary years.
All our meals are cooked from scratch. Most every food item I buy has been on sale or discounted. When we leave the house we pack our own water, drinks, coffee, sandwiches and snacks so that we are never tempted to roll through a drive-thru. We don’t buy anything at full price. Nothing. We wait and we watch for the sales. Or we go without. Before I spend a penny, I either discuss it with my husband or I contemplate it for a long, long time. In other words, I’m not a casual consumer. I hate clutter. I only buy what we need. There is no extra here. I hope and pray hubby and I make it successfully through these upcoming, financially challenging times.
Here’s what I cooked up last week. We cooked up a bunch of breaded (left over, stale bread, stored in the freezer) chicken tenderloins (much cheaper than boneless chicken breasts) with original applesauce. You’ll notice a lot more bean dishes. The conventional rice and cannellini beans were first on the list (topped with grated Parmesan cheese). I cooked up a batch of air fryer chick peas. Delish! Made a great, healthy snack. You can get the recipe by clicking here. I also steamed broccoli topped with olive oil, lemon juice, minced garlic and sesame seeds.
One splurge: Aldi had rain hats on sale for doggies in their pet section. My husband got up early on the sale day morning to buy our puppy this $3.99 rain hat. (we missed the rain coat sale!) It brought a lot of joy and laughs to our household. Sometimes you just have to let go.
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