COLA, Not the Beverage

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Every year the Social Security Administration looks at the increase in the cost of living in the U.S. and raises their payments to individuals by 2%. This year, however, they looked in all the wrong places and decided that there was no cost of living increase. (I know; they’re idiots.)Therefore, no one on social security received an increase in their payments. My pension operates differently. We receive a cost of living adjustment of 2% annually. No one looks at a set of prices to figure this out. They know that the choice of where to look is arbitrary, and that prices increase based upon how people live their lives. I no longer drive as much, so it matters not if the price of gas goes down at the pump. But, I use more natural gas and electricity now that I am retired. While 2% isn’t very much, it is steady. The unfortunate aspect, however, is that the amount was set based upon my first pension check. It is not reworked every year. This means that as inflation continues throughout my lifetime, the impact of this increase will be swallowed whole by the actual cost of living increases. I developed a philosophy about the effects of inflation when I was in my twenties. My then grand-father-in-law had been a chauffeur to a wealthy financial expert during his working years. When the man for whom he worked died, his will gave each family employee a new car, a new house and a lifetime pension. The man’s intent was kindness. He didn’t want them to ever have to work again. Because of inflation, however, the money my relative received each month went from being a living income, to pocket change. I realized then, that if an expert in finance could not figure out how to create a pension that would last a lifetime, we non-experts are doomed. Because of this realization, I put money into savings each month. I also work on lowering my non-discretionary spending, without negatively affecting my standard of living. That last part is important to me. I worked hard all my life and I want to continue living better than I did before doing all that work. My actual expenses for rent, utilities, haircuts, etc. have gone up $173 monthly over last year. I negotiated some decreases, and reduced a few bills by $73. This is a net increase of $100 per month. But I also paid off my car (yippee). This makes my decrease more like $400 monthly. So I’m in the good each month. One cost I can control is how much I pay to have my hair cut. My salon increased their prices this year by a whopping 12.5%. Who does that? I wouldn’t mind so much if each haircut was just what I wanted, but it isn’t. I love the salon. It’s neat, clean and the people there are friendly. I love that it is only five minutes from my house, no traffic at all. The man who cuts my hair is interesting and lives on the hill where I live, so we always have things to discuss. But he cannot seem to give me the haircut I want each time I am there. Sometimes it’s great, sometimes a disaster. I discussed this with my sister yesterday and she mentioned that she gets her haircut at Supercuts. She pays $20. Wow. I went online and found a Supercuts shop in an upscale shopping center in my community. It’s very near the Italian restaurant that I like. I’m going to check it out. If it works for me, it will reduce my costs by $50 each month. This would fit right in with my efforts to reduce fixed costs. How do you protect yourself from the constant increase in the cost of living?