Core Consumer Price Index Inflation Vs. True Inflation

http://www.statcan.gc.ca/subjects-sujets/cpi-ipc/cpi-ipc-eng.htm

On this latest release from Statistics Canada it is stated that “Overall, energy prices went up 8.2% between January 2009 and January 2010, following a 5.9% increase in the 12 months to December 2009.” Yet at the same time the Media continually states that Inflation never seems to be more than 2-3%? That’s because they are going by the Core Consumer Price Index which is a complicated calculation that does not seem to give us a clear picture of true inflation in Canada. How much have fuel, groceries and taxes gone up over the last 10 years, 2% per year? When I ask many people the question of how much they think true inflation is, they reply that they believe true inflation has to be at least 6%, and I’ve even had some reply that they think actual inflation is closer to as high as 9%. What do you think True Inflation is?

Canada is Golden!

The Olympics is a great example to us of what we can accomplish in Canada. Leading the Gold Podium at 14 Gold Medals in the 2010 Winter Olympics, Canada has set the new record! We’ve all been given gifts and talents, but many never exercise them regularly or fail to stay the course when things get tough. Keep in mind that an athlete practices and competes for 4 years before they get to the Main Event: The Olympics. With Canada’s hockey teams winning Gold again, it goes to show us that not only do we breed the best hockey players in the world, but we also have the heart needed to accomplish anything we put our minds to, and as a TEAM everyone achieves more! No matter what our calling is in life we must do it with Excellence, and NEVER, NEVER, NEVER GIVE UP!

Increasing Interest Rates in Canada

http://www.financialpost.com/news-sectors/economy/story.html?id=2631601

This article in the Financial Post eluded to the possibility of Interest Rates increasing in Canada as early as July 2010. Originally the projection for the beginning of the increase was to be in October, then retracted to possibly September, now maybe July? Canada went beyond the projections for 2010. Over the last 2 quarters of 2010 output was increased in Canada and it was announced that inflation was increasing at a faster rate than expected. As demand in the economy increases so does interest rates typically rise. Is the economy coming back or will there be another major downturn? In many of the financial downturns in history there was a big down swing, followed by a short up swing and then a bigger down swing! Because much of the East Coast in Canada is still suffering from the recession we need to still keep the cost of living low. People cannot get caught up in the media hype that states the economy is rebounding at a fast rate. As we’ve seen in the past when economies rise at a fast rate it is not sustainable. Even though core inflation is stated to remain under 2%, that does not mean that true inflation is not rising at a rapid rate.

For more information on the Core Consumer Price Index Inflation vs. True inflation, please check back here in the next few days for my new blog entries.

Tips on the Closed Circle

How you can you ensure an effective and successful Closed Circle? Here are a few important points to remember:

• It is very important for married couples to agree on their Closed Circle. One of the main causes for divorce is division over finances. When a couple agrees on “How Much is Enough”, finances are much less of an issue.
• Be diligent and consistent with your Closed Circle, enter your receipts daily or weekly.
• Your Closed Circle should be reviewed and adjusted annually and upon any major life changes.
• Accountability is important. If you are married, your spouse is your accountability partner. If you are single, you need to appoint a family member, friend or mentor to be your accountability partner.

I hope you have more of an understanding about the Closed Circle budget by this time. If you need my help in clarifying some points, let me know. I will be glad to help!

Steps to creating a Closed Circle

These are the steps to creating a Closed Circle Budget:

1. Track your expenditures. You must track your expenses on a regular basis – daily, weekly, monthly, annually.
2. Total your expenditures. When starting your Closed Circle, it is good to have at least 3 months worth of expenditures so you can get an accurate picture of what you are spending monthly. Separate your obligations from your necessities.
3. Capture sources of income. It is important to know where your income is coming from and how much.
4. Determine your wants. Make a full list of your wants and if you are married, have your spouse do the same and agree on all wants.