Why inflation sucks and what you can do to protect yourself
‘To gauge inflation’s effect, use the Rule of 72. Divide 72 by the inflation rate to find out how long it will take prices to double. At 3 percent, it will take 24 years; at 6 percent just 12 years.
In recent years, some public universities have raised tuition by 10 percent to 12 percent a year. If that continued, the price of a college education could double in just six years.
While we can hope that Greenspan and his successors will battle overall inflation effectively, we each need to fight our personal inflation demon.
With expenses, the strategy is plain: Don’t drive a gas-guzzler, improve the attic insulation, offset the rising price of necessities by cutting out frills.
As a renter, you can bet your housing costs will rise each year. But if you buy a house with a fixed-rate mortgage, the biggest part of your housing cost, principal and interest payments, will be immune from even the worst inflation.’
Read more at Personal Finance: Why inflation sucks and what you can do to protect yourself
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August 31st, 2005 at 1:18 pm
I don’t think using the “Rule Of 72″ is a good example to use when explaining inflation. Most western economies keep inflation between 2.5-3%.
Also, the rise in tuition fees doesn’t really have anything to do with inflation since i am sure there are many more important factors influencing the price hikes.
September 5th, 2005 at 4:56 am
Inflation is caused by two main factors. First, when too much money is chasing too few goods, demand is growing faster than supply and prices rise.
Second, when a company’s costs go up it needs to increase prices to maintain its profit margins. Increased costs can include things such as wages, taxes or higher import duties.
BUt this is just my take on the matter… keep up the good work
September 18th, 2005 at 2:34 pm
The cost of tution is a very big issue for students because it is going up faster than people can afford. Inflation isn’ the only thing driving tuition increases.
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