Is the cost of living holding you back?

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Unless you’re a politician, the days are gone where most of us can secure a nice pay rise that keeps up with the seemingly painful hike of inflation. Each week we struggle to stretch our hard earned wages to make ends meet and provide the best possible lifestyle for our families with what we have.

To understand the beast that is inflation let’s look a little deeper into what makes up this necessary evil and crack the code of spending to unlock the savings that could be made and applied to your future Debt Destroyer Plan.

The Reserve Bank of Australia has an inflation calculator http://www.rba.gov.au/calculator/ that compares inflation year to year on a basket of goods and services. Let’s look at a basket of goods and services of $200.00

From To Increase $$$ % increase
2011 2012 $203.53 1.8%
2012 2013 $204.90 2.4%
2013 2014 $204.98 2.5%
2014 2015 $203.02 1.5%
2011 2015 $2016.92 2.1%

 

So I guess right now you’re saying “NO WAY”. It seems much more higher than that right. And you’re probably right DEPENDING ON THE GOODS AND SERVICES you bought. That’s the trick.

If we look at the consumer price index from December 2015 we will see that, in total, the increase to the CSI was 1.7%. But that’s the total average percent. Did you buy a new phone or a new car during 2015 because both those items decreased by 8%, however alcohol, insurance and education went up by over 13%.

What about just a basket of groceries? According to Choice, Citigroup the average basket of groceries increased from $136 in 2009 to $164 in 2011. That’s $28 and over seventeen percent. This is where most of us get caught, because we have to eat.

Chocolate lovers unimpressed as Cadbury cuts family block size by 20g, keeps price tag

And then of course there is this. Companies are changing the packaging size to keep their costs down, but not down to you, which means you probably run out between pay cycles and buy more. When was the last time you tried to fit a cheese slice on a piece of toast without needing two?

I don’t know about you, but in my current job I received a 2.3% pay rise last year and their explanation was that the pay rise was in line with inflation: Hardly enough to cover the real living expenses. Inflation on everyday products is seemingly creeping beyond our reach which is why, more than ever, we need to take control of our spending and reduce and eliminate the waste in things like interest repayments, food wastage and impulse buying.

It’s easy sometimes to just pay for things using our credit cards or store cards with the intention of paying it off later. But unfortunately that’s not always the case and we get caught paying interest. Before we know it, we can’t keep up. When I started my debt recovery project I was paying over one hundred dollars a month in credit card interest which means I could have been saving $1,200 a year. Into the draw went my credit card.