Financial stuff

A post about inflation over at Little House in the Valley compared the cost of several goods in 1971 to 2011 and determined that inflation had increased at a rate much higher than the average salary increased. I do not doubt that this is true but I don’t think that inflation is as bad as it seems.

The most expensive item on the list of goods was a house. House prices have increased dramatically but a 1971 house isn’t the same as a 2011 house. According to the National Association of Home Builders, the average home size in the United States was 2,700 square feet in 2009, up from 1,400 square feet in 1970. Houses have almost doubled in size which accounts for much of the increase in price. Modern homes also have a lot more amenities than 1971 era houses. For example,it wasn’t uncommon for a house to not have central air in 1971 but it is rare for a house to be built without central air now. There wasn’t nearly as many granite countertops back then either. A new house today is a lot more house than a new house was in 1971.

The next big ticket item is a car. I actually owned a circa 1971 car once and I can easily say cars are much better today. My 1971 car had an AM radio – not an AM/FM radio – just an AM radio. It got about eight miles per gallon and certainly didn’t have an airbag. The average 2011 car is safer, more fuel efficient, and much more reliable than the average 1971 car. Once again the 1971 product and 2011 product aren’t that comparable because the modern product is far superior.

Movies costs more but we now have the option of easily watching movies on DVD or Blu-ray in the comfort of our own home. You can get them for as little as a dollar at Redbox or with promotions you can get them free. You can also get free movies from your local library or at sites such as Hulu online.

Stamps have gone from eight cents to forty-four cents but that is still a bargain. There isn’t much need for stamps today since letters have largely been replaced by email and billpay. In 2011 the average person doesn’t need to spend much money at all on postage.

I won’t go into details on every item but here in the U.S. gas is cheap and food is cheap too. For tuition it looks like inflation really is as bad as it seems but maybe someone can explain how the tuition inflation is justified.

There is no doubt we have experienced a lot of inflation from 1971 to 2011 and salaries haven’t kept pace. Inflation isn’t as bad as it seems though because the 1971 items aren’t really comparable to the 2011 versions.

Having an energy efficient home is the trend today. This will help families save on their electricity bills and contribute to the preservation of mother Earth without having to seek help from an online cash advance site. With energy costs going up almost every year, it really pays to do your share in utilizing electricity in the most efficient way possible.

In the home, there are many ways we can do to use power wisely. If you know the rate at which home appliances consume energy, you will learn to use them properly and how to save electricity moving forward.

Heating and air conditioning units are appliances that consume the most energy in any home. The others are water heating, washing machines, tumble dryers, dishwashers, electric irons, lighting and the refrigerator. To let you save on your power bills, you need to focus on using these appliances wisely every time.

When you’re not using the television, video player, playstation, computer and other entertainment devices, it’s best to turn them off and unplug them from the socket. If you leave your TV on standby mode, it still uses up power by as much as 90 percent.

Get rid of your incandescent bulbs and replace them with the CFL ones. If you have halogen spotlights, it would be best to use LED spotlights instead.

If you don’t have a ceiling fan, it would help to install one. This appliance will save you on your heating bills moving forward particularly during the cold winter months. You can also turn down the thermostat of your heating system to lower your bill by up to five percent.

As for the fridge, make sure to vacuum the condenser coils at the back part to get rid of dust. This will make your refrigerator more efficient by up to 25 percent. It would also help to keep your fridge full but just enough to allow air to circulate inside. And when you need to, allow hot food to cool down first before putting inside the fridge.

Another thing is to avoid putting uncovered liquids inside the fridge. You will only promote evaporation inside which will make the refrigerator work harder.

In a consumer-based economy, it’s difficult for people to approach the idea of spending and why we do it when asked. If you stop someone and ask them why they are buying something, they’re likely to tell you that they need it. They probably don’t know why they need it, but they just know that they do. Every day, we spend, we rationalize the purchases we make, and our entire system is built around fostering and encouraging this lack of self-analysis. It’s only through looking inward that we can begin to understand why we spend the way we spend before we can even begin to get our spending habits under control.

The Coupon Mentality:

This is a common misjudgment that we convince ourselves of every day. Though if used properly, coupons can be an excellent money saving device, but it too often equates to being a penny wise and a pound-foolish. Saying to yourself, it’s ok that I spend twenty dollars at lunch because I’m not planning on going out for dinner. It can also mean buying something that you don’t really need only because you have an great coupon for it. Spending six to save one is not a good strategy. You are not striking a counterbalance. All you’re doing is rationalizing spending instead of using a little introspection to know why you’re spending.

I’ve Earned This:

This is a very common spending habit that we’re all guilty of, no matter how frugal we are. It doesn’t matter if it’s a new pair of jeans or a nice meal at a good restaurant, we convince ourselves that we have somehow earned the right to do this. This is systemic of a larger issue of entitlement that, as a consumer culture, we feel that we reward ourselves by spending on things that we don’t really need. We feel like we’re rewarding ourselves for working so hard. This seems totally understandable until it gets to the point where we’re not really asking if we “deserve” something and just buying it. This is an impulse that doesn’t use much thought. If we were to stop and ask ourselves why we feel we deserve something, we’d probably be a lot less likely to buy it. It’s not about spending and more about instant gratification. If we really thought we deserved it, then we’d be getting free insurance quotes in order to save money on costly healthcare. We deserve saving money, but it’s not as immediate or attractive.

I’ll Make Up For It Later:

Saying that you’ll make up for it later on another purchase is one of the most costly lies that we tell ourselves. We’ll go out and spend a hundred dollars on clothes one week and say that we’ll make up for it next week by not going out to eat. This would work if we followed through with it but, unfortunately, we have very short memories and attention spans. As soon as the purchase is made, the thought is gone. Instead, spend your money once you’ve earned it.

Work towards self-analysis when it comes to your spending. Living on credit purchases is an unnatural way to live. Saying that you’ll make up for it later or that you’ve somehow earned it is a gut-reaction that is based nowhere in logic. The power of rationalization is strong, but the will to stop yourself and hold back can be even stronger. It just takes a little effort and the results will prove substantial for your savings.

Whenever I post my income reports including my mystery shopping income I get questions from people wondering what is mystery shopping.  Mystery shopping is when a company hires someone to pose as a customer in order to evaluate the customer service and other aspects of their business.  A mystery shop can give an establishment a truer sense of how the business is run and what quality of customer service is provided since the employees and management of the establishment do not know when they are being mystery shopped.  Many different businesses use mystery shoppers.  The types of business I usually mystery shop are restaurants, banks, movie theaters, and gas stations.  Many mystery shopping companies also hire shoppers for jobs other than mystery shopping.  I’ll cover that in a later post.

If you would like to get started mystery shopping I suggest you visit Volition.com.  They have a lot of posts and material on mystery shopping and you should be able to sort through everything and find the information you need to get started.  You do not have to pay a company to get started mystery shopping.  Check back at the end of this month because I plan on releasing a mystery shopping guide that will give you all the information you need to get started in one place.

I received a free copy of this book for review quite a while back. I’ve been meaning to post my review for over a month but kept procrastinating. Perhaps the habit I should change is procrastination.

The premise behind Change Anything: The New Science of Personal Success, is that by using science you can make it easier to change personal habits. The authors have studied what influences bad habits and give you strategies for helping to overcome them. In this review I will share some of their strategies and how I intend to apply them to help me lose weight.

The authors tell you to identify your crucial moments. These are the moments when you are most tempted to indulge in your bad behavior. For me I generally don’t have any problem eating right in the morning or the evening. When I eat bad it is usually in the afternoon. I need to be more active in the afternoon so I’m less tempted to eat junk food.

The next strategy is to create vital behaviors. These are rules that you create in advance so that you resist temptation during crucial moments. For example you could create a rule that if you were tempted to eat a pastry you would first eat a piece of fruit instead. A couple of the rules I have created are that I need to eat at least one fruit and vegetable a day and drink no more than two cans of Dr Pepper a day. Those are pretty modest goals but they are better than I do now.

The last strategy is to engage all six sources of influence. Their six sources of influence are: love what you hate, do what you can’t, turn accomplices into friends, invert the economy, and control your space.

For love what you hate I plan to eat more of the healthy foods that I do like. I have identified those healthy foods I like and will make sure that they are available to me. I also need to find a way to exercise in a way that I enjoy. I like running and hiking but that is not too enjoyable now because it is so hot. I need to find a way to make these enjoyable despite the heat.

Turning accomplices into friends should not be much of a problem. My wife supports my goal of losing weight and will help me reach the goal by preparing healthy meals and limiting the amount of junk food we buy.

Inverting the economy is something I tried before with my $500 weight loss challenge. The idea of inverting the economy is that it should cost you more to eat unhealthy than to eat healthy. The economy can be inverted both from incentives and loss aversion. I tried the loss aversion technique with my weight loss challenge but it didn’t work for me. I think the reason it didn’t work was because the goal wasn’t short term enough. I kept telling myself I had plenty of time to meet the goal until it was finally too late to reach the goal. This time I’m going to be setting a short term goal of losing one pound a week. To hold myself accountable I’m going to be sharing my weight each week. If I meet my goal I will reward myself (incentive) and if I don’t meet my goal it will cost me (loss aversion). I haven’t decided on what my specific incentive and loss aversion will be. I could do something similar to my weight loss challenge and pay the readers of this blog each time I fail to meet my goal. I am open to suggestions on both the incentive and the loss aversion.

For controlling my space I will be keeping junk food in the house to a minimum. I will also not do any fast food mystery shops unless I am receiving bonus pay. And I have looked over the nutritional facts of the fast food restaurants so I can choose the less unhealthy options on their menu.

I probably need to add a few more behaviors to reach my weight loss goal. I currently weigh 222.4 pounds and would like to get down to 170. At a rate of one pound a week it will be next year before I reach my goal but as long as I make steady progress I’ll be ok with how long it takes. My plan is to update my weight every Saturday. If you have any suggestions I’d be happy to hear them.

Although I wrote this review about using the book to help me lose weight the strategies in the book can be used to change many different behaviors. They can be used to help you stop smoking, get out of debt or to advance your career. Even with the use of these strategies it will still take work to change these behaviors these strategies just allow one to need a little less willpower to change their behavior.