[tirebob]

Originally Posted by Dean2

So my wife just got done finalising the new Budget for the coming year. We have kept a detailed budget of all expenditures going back to 1985. Looking at this year's budget versus 3 years ago, monthly living costs are up almost 40%, and we have not changed anything material. (We pay zero in interest so that isn't a factor). The government claims inflation is MUCH lower than it actually is. Real world tracking and numbers show that it is closer to 13% a year, over the past 3 years.

This is a prime reason why all households need to pay off any non-tax deductible debt, as well as build an investment program that accommodates inflation. Invested in interest bearing securities like GICs, Bonds and the like, you would be backwards at least 9% per year against inflation, and further backwards by the tax on any interest on investments that aren't tax sheltered. Effectively, money in interest bearing investments will have lost at minimum 27% of its purchasing power, and if taxed on the interest the purchasing power is even more eroded.

Another issue to consider, is the budget numbers we are tracking do not account for increases in Fed and Provincial Government income taxes, CPP and the like, it only accounts for municipal taxes, utilities, and GST etc.

Inflation is a truly regressive tax. It hits low income people who have to spend everything they make to live, far harder than it impacts higher income earners. The government is intentionally driving inflation as a way to reduce government debt and show growth in the economy. That growth is an illusion. We need to get rid of the current government before everyone truly has nothing and is completely dependant on government handouts.

That is some genuinely scary realities... You give much pause for thought good sir!