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Ken,
As I am looking at your posts, in the order you posted them, I think we can see where certain people misinterpreted statements. PLEASE UNDERSTAND THIS: this is not an attack, but a genuine attept to see if there really was a mis-communication between us. Below is my account of both of our statements, and what I believe to be the rational interpretation of them:
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I stated that Kens 127k, as the highest level of income achieved, wasnt really that much. See my statement:
"The most you ever made at Pru was 127k?"
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The next statement from Ken is a reply to my statement. It is:
" I thought that you stated that you were well versed on financial matters, did you not?
You claim you work at a bank now instead of working in an office as you previously stated and you don't even know the rule of thumb that twelve years ago $127,000 a year would have had the purchasing power of approximately $250,000 in today's money? Good grief, how did any organization dealing in consumers financial matters ever hire you? Is that what you refer to as making claim to also being a Financial Planner? Not with my money you wouldn't be considered as one."
Notice that nowhere in this statement are we talking about Kens particular situation. So how am I to assume we are? Ken is talking about financial matters of 127k from 1990 and its purchasing power today, not his personal situation. What would working in a Bank have to do with knowing your personal situation? And at this time you had not shown your personal examples of inflation. You state that I should know the rule of thumb....the only rule of thumb is to calculate for inflation in the future, not the past, and it is approx 3%. You say NOW this rule of thumb is your own personal 6%, yet you do not state that anywhere in THIS post. Can you now see why I said you were wrong? Your post is not specific to you personally, AND you use a rule of thumb that is known only to you! As an person reading this post, one can only infer that you made up a rule of thumb to calculate the time value of money! Lets assume you have calculated the inflation for all of your goods and services for the last 12 years, and it is 6%. That is fine, but Ken, you must realize that you did not say that in your post, and that doesnt make it a rule of thumb that I should know about.
Now can you see how your post was interpreted? It was interpreted the only way possible.
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Then I posted a reply:
"Kenny, where do you get your information? What is this rule of thumb? Try this, my figures show the Inflation rates over the last 12 years to be approximately 2.6%. This statistic comes from:
Inflation Rates Tables Cost of Living Index (First Security Bank/Wells Fargo and US Dept of Labor, Bureau of Labor Statistics).
So, your 127k would be equivalent to 172k."
Notice, we still have not discussed this as your own personal situation, and you have posted nothing to make anyone infer that it was your personal situation. I did what any Financial Planner would do, just as Mr. Cobbe said, and that was to use the CPI to calculate the time value of money. If we were talking about Inflation in general, this would be correct. But you say NOW we were talking about your personal situation. But, Ken, up to this point we have not seen anything in your posts to show that we are talking about you in particular. Also, your use of the term "rule of thumb" was incorrect, as there is no rule of thumb at 6% (you say it applies to your situation). Again, by you not informing us it was specifically about You, I did what anyone would in the situation...I say you were wrong using a "rule of thumb", and I use the CPI.
Can you see how using a term like "rule of thumb", and not making it specific to your situation, one is left with only one interpretation to your statement?
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Only at this point in your posted response, do you state your examples of inflation:
"In 1976 I puchased a home in Dallas, Tx. for $85,000. I sold it in 1988 for $222,000.
In 1992 I purchased a home in Florida for $201,000 and in 1991 I sold it for $287,000.
In 1973 I purchased my first Cadillac for $6,300 and the same Caddy today is $42,000.
In 1963 a cup of coffee was 10-cents and today it is $1.35.
In 1974 a three-egg breakfast with toast and coffee was 99-cents at a restaurant and today that same breakfast is $3.95.
A pair of Nunn Bush shoes in 1990 was $17.95 and today it costs $44.95.
I purchased my first new boat and trailer in 1967. It was a 18-footer with a Johnson 85-outboard. Today that same boat would cost you about $21,000.
A new Van Husan shirt in 1995 could be purchased for $7.95 and today it costs you $15.95 on sale if you are lucky.
In 1988 I purchased my wife a medium length mink coat for $1,500. That same coat today costs about Today that same mink coat costs $$6,500 and so on and so on.
As you so readily admitted yourself, you can not even purchase a decent condo for $127,000. In 1986 I purchased two one-bedroom foreclosed condo units as an investment to rent out. They cost me $27,000 each. Today those same units are going for approximately $125,000 each and the rent on them has tripled."
Only now is it made apparent that this is a discussion only pertaining to your situation. So, as a Financial Planner, I calculate the inflation rates of these examples, and I find they are 7.85%, and not the 6% you used. Can you see why I would say you were incorrect again? You could have just said my personal situation has an inflation rate of 6%. Only using 10 examples from differing time periods with an inflation rate of 7.8% doesnt jive with 6%. Can you see how anyone would interpret your post as incorrect? I was only calculating the numbers you gave.
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In the same post you say:
"We are not talking about inflation, Moe, WE ARE TALKING ABOUT THE PRICES OF GOODS as I previous stated has the purchasing power of."
What would you have me say about this post? The price of Goods & Services and their increase of cost IS Inflation. There is only one interpretation to this statement, and that is to think you do not know what inflation is. Which can only lead me to believe even more you are incorrect. Perhaps you mis-spoke when making this statement, but the point is, would anyone interpret it any different?
--------------------------------------------------So, I reply with a challenge that there is no a "rule of thumb" of 6%. Why didnt you just say it was a mistake to say there was a rule of thumb? Why didnt you just say it was your own personal rate of inflation? Do you see how we all were still interpreting your posts? You never answered the challenge. We know now that there is no 6% "rule of thumb", and you have acknowledged that fact it in later posts. So why dont you say that you mis-spoke, and used the wrong term? I really believe we were correct in interpreting what you said, even though you say it wasnt what you meant. There is no way we could know what you meant, if what you were saying was different.
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You then post:
"You don't under stand what you are reading. How can you project what the future holds until you have experienced it?
You can only quote past track record. I specificly out lined specific items to you but you are attempting to use averages to support your case."
Again, I was never projecting the future, only past numbers. That is what we were talking about...the past. Again, you say you gave me specific examples, but Ken...these averaged out to 7.8%, so I still dont understand how they could possibly support your arguement.
You are shooting down my averages, when it is the accepted way to show Inflation/Future value of a dollar. If you would have shown examples that incresded 6% then maybe it would have been different. At this point, you still have not shown how you got to the 6%, and you still have not addressed how you mistakenly referred to it as a "rule of thumb". can you see how this is still interpreted by me as you being incorrect?
I show 2.65%
You show 7.8%
I still didnt see where the 6% came in, because you havent stated it. See why I interpreted this the way I did?...because the only facts before me allowed only one interpretation. If you were thinking something else, I didnt see you explain it.
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Anyway, the posts go on and on, as I am sure you know. The point is Ken, you have now admitted that my 2.65% figures and calculations were correct...IF I hadnt misinterpreted your posts. But I hope you can see by these posts, it was the correct interpretation. You may have been thinking all along it was your own particular case....But there is nowhere in your original posts where that fact is mentioned. You say that this is all because I did not interpret your message correctly. This post is to illustrate that I did interpret it as it was posted. Your original post may have not conveyed your true thoughts, but that was not my fault. I interpreted it the only way possible, and I made my calculations as such.
I intend this post to be a civil one, and I hope for a civil response. But please examine the posts, and tell me truthfully, how could anyone respond any different?
Eric