Sep 06 2012

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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Sep 01 2012

Using budget billing, and paying with credit cards to streamline bill paying


I’m doing a few things to simplify my bill paying.

I just enrolled in the budget billing option for our gas bill.

We have a gas furnace, fireplace and water heater.

In the summer, our bill has been around $15-17/month since we’re only using the service for hot water. The bulk of the bill is “connection charges” and taxes — only $2-3 is actual gas usage! Pfft. Our highest bill last winter was $150, but it was a mild winter and I know it could swing the other way this year.

So, with our budget bill, we’re doing a flat $86/month. It’ll build a credit in these summer months, and accrue a deficit in the winter. In theory, it’ll all balance out in a year’s time but I can also make extra payments if it’s getting way out of hand.

I tried, in theory, to do budget billing myself. If you wanted to do that, you could assume the monthly charge would be $86 (in my case), see a summer bill of $17 and take the $69 difference and stick it in a savings account for later.

For me, the problem was it was too hands-on. I’d have to figure out the difference and manually move the money. It didn’t end up happening and so I knew I needed to find a way to automate it, hence the company’s budget billing program.

I also enrolled in our electric company’s budget bill for $112/month.

This next point is semi-controversial in the personal finance blogger realm, but it’s an option we’re taking.

For any monthly bill we can pay using our credit card, we are doing that. This includes: electric, internet, cell phone, Netflix and our dental discount plan.

Two reasons: We earn 1% cash back, and this consolidates a few bills into one bill and one due date instead of several.

This can get dangerous:

  • If you can’t pay the credit card in full each month. We have a relatively low credit limit and our liquid savings greatly exceeds our credit limit. We don’t carry a balance.
  • If you don’t review your bills monthly. Even though my cell phone bill is now being paid on my credit card, I still need to look at the phone bill to make sure there aren’t any weird charges.

Not all of my billers allow for a free payment via credit card. My gas bill charges a $4/month convenience fee, so I pay that bill using my bank’s online bill pay for free.

Some people argue that if the bill is paid via a credit card, it’s not “real” enough and you’re more likely to overspend. That’s a fair point. But my electric bill is going to be that budget $112/month unless the amount adjusts. My Netflix is going to be a constant. And so on. Over the year, the cash back will be around $36.

I’m not finished yet — I’m still looking for other ways I can further automate our spending and saving.

How do you streamline your bill payments?

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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