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Weekend Reading: Household Inflation Edition

One of the benefits of tracking our expenses each year is that we can identify spending trends and highlight any areas of concern. One troubling area is our overall household spending, which is on the rise. Those of you with growing families know that there’s the Consumer Price Index (CPI), which has hovered around 2.3 percent this year, and then there’s true household inflation.

Of note, our grocery spending increased 7.7 percent this year (even with a conscious effort to eat less meat). Our clothing budget stayed the same at just under $200 per month, thanks to having two girls (hand-me-downs!). We spent 8.5 percent more at restaurants this year, which is most likely a testament to our busier schedule. Perhaps related, we also spent 100 percent more on alcohol this year!

One often overlooked area that I touched on in my recent rent vs. buy post is concerning household maintenance. Last year we spent about $1,900 on this category, which broadly includes lawn care, supplies, maintenance, and improvements. This year that amount surged to $2,630, an increase of 38.5 percent.

Weekend Reading: Household Inflation Edition

Our house is now eight years old and showing signs of wear. First, a television dies. Then random buttons stop working on the microwave. Ducts need cleaning. Windows and doors need better sealing. The washing machine stops spinning. It all adds up.

While I have nothing specifically budgeted to replace in 2019 I know I should plan for at least $2,500 in household maintenance next year. That’s in addition to factoring in higher household inflation for food, clothing, and kids’ activities. To counter that, we’ll try to reign in our restaurant spending and aim to cook more meals at home.

All of this to say that we’ll once again have to get creative with our finances to combat rising household inflation. Cutting back only takes you so far. We need to find ways to generate more income. I explained how we do that when I shared my financial goals for 2019.

What was your personal inflation rate this year? Was it higher than CPI?

This Week’s Recap:

Earlier this week I wrote about 4 ways we keep kicking debt down the road.

I also posted a new Money Bag feature and answered questions about how best to invest $1M, the risks of labour sponsored investment funds, and compared VGRO with my two-ETF investment solution.

Promo of the Week:

We’re going to Scotland and Ireland for 32 days next summer. We saved big on accommodations in Edinburgh through the Marriott / SPG hotel rewards program. When you book five nights at a Marriott property with points, you get the fifth night free. We’re staying at the Sheraton Grand Hotel & Spa – all booked on hotel points!

How did we save up enough points to do that? The quickest way is to sign up for The Starwood Preferred Guest Credit Card from American Express (use my referral link). Both my wife and I signed up this summer and each quickly earned 50,000 Marriott Points. We combined those points (you can transfer up to 100,000 points per year to another member) and I also applied for the SPG Business Card for an additional 50,000 points, plus transferred over another 40,000 Membership Rewards points from American Express.

Starwood Preferred Guest Credit Card

Armed with 200,000 Marriott points we were able to book our five night stay at the Sheraton Grand Hotel & Spa in Edinburgh. Rates at that hotel during the summer time are typically $500 CDN per night, giving us tremendous value for our rewards.

Even with the annual fees ($120 x three cards) we still got $2,500 worth of luxury accommodations for $360. By the way, SPG cardholders also receive an Annual Free Night Award after their anniversary each year.

If you’re into hotel rewards then you’ve got to become a Marriott Rewards member and use The Starwood Preferred Guest Credit Card from American Express (use my referral link) to accelerate your points earnings.

Weekend Reading:

Our intuition is usually wrong. At the World Business Forum, Daniel Kahneman explained when people can trust their intuitive judgment and when they shouldn’t.

Billionaire Warren Buffett shares some wisdom on how to boost your earnings – by honing your communication skills, both written and verbal:

“If you can’t communicate, it’s like winking at a girl in the dark — nothing happens. You can have all the brainpower in the world, but you have to be able to transmit it.”

Newly retired Michael James churned out some great articles this week:

First, he looks at when permanent life insurance makes sense (hint: rarely).

Then he dives into the popular dividend tax credit to determine whether it’s as beneficial as some say it is.

Finally, he tackles the controversial CPP expansion and picks apart the bad arguments against enhancing CPP.

Lots of talk lately about a recession and specifically how robo-advisors will fare in a market downturn. For the record, I think they’ll perform better than expected.

Today’s seniors are healthier, better educated, and more productive than ever. So let’s retire the idea of retirement.

Pre-retirees, here’s what people already retired can tell you about your future standard of living

A concerned reader wants to know if $600,000 is enough to cover retirement expenses for her 92-year-old mother after she sold the family home.

She paid the insurance premiums for 13 years, but his new spouse got the payout — until the court intervened.

Preet’s going vegan and he explains how even a small shift in your diet can add up to big savings:

A very technical yet solid explanation of deferring Old Age Security benefits past age 65.

Dale Roberts on retiring early and waiting for your spouse. The waiting is the hardest part.

Here’s a fun look at the 11 types of financial friends.

Living like a fancy Millennial, she used all the best stuff for a week and it nearly broke her.

Looking to do some financial goal setting for the New Year? Des Odjick explains why you need focus areas, goals, and tactics to make a successful plan.

A young investor asks: Can I put 90% of my investments into equities?.

Margaret wants to know how to avoid losing some of her pension if she transfers it into an RRSP at retirement.

An honest look at the gender wage gap:

“Women experience the negative effects of the pay gap from their very first paycheck to their very last Social Security check. They often need a bigger retirement nest egg, thanks to their longer life expectancy. Yet the career wage gap makes it harder for women to save as much as men do.”

Finally, here’s Frugal Trader at Million Dollar Journey explaining how his family collected $1,560 in cash back rewards this year. Well done!

Have a great weekend, everyone!

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10 Comments

  1. Matthew on December 15, 2018 at 4:46 pm

    Great selection of articles this week!

  2. Bill on December 16, 2018 at 1:45 am

    Rob Engen what spread sheet do you use, or is it your own, what spread sheet(s) do you recommend to track all expense household or our wise. Thank you season best to you.

  3. Dale Roberts on December 16, 2018 at 4:29 am

    Thanks Robb for the shares and great post and links to a lot of great reading.

    I’d share that we were hit with so many spending ‘surprises’ soon after I semi-retired. We discovered that our green house kitchen roof was not re-shingled properly several years ago. They did not put in ice shields or bring the shingles out far enough to direct all water to the eavestrough.

    New roof and soffit and fascia more. $3400

    Both older cars needed work, about $1200 each

    Dog need eye surgery – about $2300

    Son’s baseball team cost increased to over $7200, Spring Training is in Cuba this year, ha.

    This all occurred as soon as I cut my income to near zero. We have to be prepared with that emergency fund. Oh and the house is generally falling apart, ha.

    Live’s many spending surprises should not really come as a surprise. Have a generous emergency fund.

    Dale

    • Robb Engen on December 16, 2018 at 12:28 pm

      Hi Dale, thanks for sharing. Having a generous emergency fund is sound advice at any stage.

  4. Kevin on December 16, 2018 at 10:49 am

    Robb, great article. We are trying to book Marriott hotels on SPG points for next summer but I do not get anything for a family of four. Did you book for more than two people and if so how? We do not have the SPG business but will get it only if we can use Marriott points for the family.

    Thanks
    Kevin

    • Robb Engen on December 16, 2018 at 5:44 pm

      Hi Kevin, what city are you trying to book? Many hotels in the U.K. don’t allow more than 2 people per room for some reason, but some hotels do. For example, we were looking at the Westin in Dublin and they have a 2 person per room maximum, but their sister Marriott property – The Shelbourne – does allow up to 4 people per room.

      Best to call SPG to find out, but if they don’t know the individual hotel policies then you’ll have to contact the hotel directly.

      • Kevin on December 17, 2018 at 12:33 pm

        Hi Robb, will be going to Italy (Florence and Rome) and Lisbon Portugal.
        We have tried a few hotels but it does not allow more than 2 people.

  5. GYM on December 16, 2018 at 9:18 pm

    Great job on the Marriott points! I applied for the Amex gold card for 25000 MR points and did the $1500 minimum spend and in my travel hacking haste I canceled the card before I transferred the points over to Marriott. Painful lesson just learned today lol. I’m going to try and apply again hopefully they approve. $500 a night can’t wait to see pictures of what the Sheraton Grand looks like!

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