Sep 06 2012

Looking at 1988 prices and considering our personal economies

Comments Off on Looking at 1988 prices and considering our personal economies

I love looking at old newspapers. I enjoy seeing the news of the day as well as the advertisements.

I was searching for something the other day, and a newspaper from New Hampshire popped up. It was from December 1988. I saw a car ad for a Chevy Celebrity, listed at $10,150. That sounds outrageously expensive to me.

My parents had a Celebrity and it was nothing flashy.

I used an inflation calculator and saw that $1 in 1988 roughly equals $1.96 today. $19,894 in today’s dollars for that car? Pfft.

Even more amusing, I turned a few more pages and came across a Radio Shack ad.

  • 19″ color TV with remote, on sale for $299 ($586 today)
  • A personal computer with…I don’t even know what those features are, for $1,199 ($2,350 today)

You can’t pay someone to take an old 19″ TV off your hands today. And you can get a brand new computer for a few hundred dollars.

Inflation is inevitable on so many things. I’ve said this before — with electronics, I maintain that I’m glad the technology improves AND the price decreases over time!

What’s more, 1988 had high interest rates. If you were taking on a 30-year fixed mortgage in December 1988, you’d pay 10.72%. WHAAAT.

On a 5-year Treasury Note bought in Dec. 1988, you could earn 8.12% on your money.

Today, 24 years later, our economic picture is a bit different. I’m not an economist. I don’t  understand the 1980s.

But I do have a decent grasp on personal economics.

We can only do so much for the national economy through our vote and our lobbying, but we can do a lot more with our own situation.

When I look at monster mortgage interest rates in the 1980s and I see today’s historic lows, I know I will refinance and lock in on that low rate. If rates stay low, ok. And if they jump, I’ll have that as a hedge of protection.

If savings bonds and other typically safe investments draw a large interest rate, it would be to my advantage to have cash available to invest, rather than being tied up in debt payments.

We don’t know what’s ahead with the economy. We can’t know what’s ahead for our own lives, but we can and should do what we can to improve our individual picture.

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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