Entering the Deflationary Phase of Our Lives

It is the end of the year time to start gathering all the bits and pieces of data to start our annual tax preparation process.  Many of my friends look upon the tax preparation process as being capture by the secret police, being held in incommunicado and being questioned with techniques that Richard Cheney would approve.

I look at it as a time to compare the data to our annual plan.  Yes we actually do have a plan for our finances, technically I currently am pretty much the only one in the household who actually looks at and acts upon it.  I do present a quarter report to the family as to where we are according to the plan.  This is as exciting as dry toast, and for some just as palatable, their eyes actually do roll up into the back of their heads.  I do update the plan annually during tax time.

But in reviewing the plans of the past few years something has quietly slipped into the documents.  That something is that our expenditure on durable goods has all but disappeared, and that our expenditures for nondurable goods for at least 2/3 of our household have taken a significant downturn.  The only exception is for the last of our children who in a few years will be on his way in the world.  We have started down the slipper slope of becoming a deflationary household.  I full expect that within 8 years we will be a fully deflationary household.

Yes we still buy food, and we buy some clothing (when they wear out as opposed to out growing them), the number of gallons of gasoline that we purchase is down (I know what some of you might be thinking, this guy is anal retentive or suffers from some compulsive disorder if he tracks fuel usage on his vehicle) (fuel use is down not because of the price, but mainly because of the lack of need).  We currently live in a town that is walk able, and to tell the truth rather difficult to find places to park a car, so we walk.  Instead of buying new books at the bookstore we frequent the used bookstore.  Some of the books we keep, some we recycle back to store for others. For me there is something about reading a real book as to reading a book on the computer screen.  Call me old fashion, it is ok my son does it all of the time, but I can fix the car and he cannot.

Now for a little side trip about E-readers (If you are not interested skip to the next paragraph, otherwise just humor an old man).  What I really dislike about them is why does Amazon really need to know what books I read, how long it took me to read it, and what pages did I seem to spend the greatest amount of time on, and how many times did I look at that page.  Amazons ability to delete products off my system, for whatever reason is scary.  The device is a “Chatty Cathy” trying to gain access thru any and all networks.  I see my wife’s e-reader trying to gain access to our home network all the time (it was given to her, and not by me).   Her little device has found a neighbors network (Wide Open) to stick its vampire fangs into (it can now talk to the mother ship all the time) so it happy now and is not an issue to me anymore.

Back to the post, as I started looking at the 2013 plan I see more indications that our household will become even more deflationary.  We currently have no plans to replace automobiles, we currently have no plans to purchase any replacement electronic equipment (just had the caps replaced on my computer monitor, it’s a good monitor should last another 5 years), no purchases planned for kitchen equipment.  No plans to remodel our home.  As I look out into next year as far as our household is concern we currently do not have plans to purchase any durable goods we are in the mid life of all of our major household system, and we have found that in several cases it was cheaper to replace the compressor in the refrigerator rather than purchase a new one.  We do not eat out much, prepare most of our food, some prepared food items, but not many.  We do have a few vacation trips planned, but nothing earthshaking.

As I stated earlier we are well on our way to being deflationary; it appears that we will not be stimulating growth of the economy in any meaning full way.  The really bad news is at some point in the future it is only going to get worse as we start to draw our respective (my) social security, and (her) government retirement.  The only ray of sunshine is that I plan to wait on my social security, I do not need it at this time and it appears that the government does.