Sure, we all know that inflation can ravage your budget over time. But it's already clear that prices for five popular items are going up in 2014, which gives consumers a chance to sidestep some of the cost by making smart moves now.
Here are five items certain to cost more in 2014 and what you can do about it.
The U.S. Postal Service is at it again. After raising the cost
of a first-class stamp by a penny last January, they've got the encore
performance this January, with first class stamp prices slated to rise to 47
cents from today's 46 cents. The price of mailing a package is going up too.
Overall, prices are expected to rise by an average of 2.4 percent.
Congress is in the midst of debating a new farm
bill, which has some pundits crying that the price of milk could hit $8 a
gallon. Why? If Congress doesn't act, they're compelled to go back to a 1949 formula for figuring "the floor" price for milk, butter and cheese. But before you
go out and buy your own cow, realize that Congress would take even more heat
for letting milk prices double than it did for letting the government shut down
for 16 days. Thus there's a good chance that the farm bill will be extended and the
formula fixed before milk prices soar. They still are likely to rise in 2014 -- just not by triple digits.
What if milk prices do soar? How will you handle breakfast? One word: Oatmeal. It's good and good for you. No milk required.
You may not have thought that these German-made cars were a big bargain in the past, but hold onto your ultimate driving machine. The automaker has announced that it's hiking prices on BMWs and MINIs by 7 percent to 10 percent in 2014. Ouch. On a car that easily run between $30,000 and $70,000 that's no small hike.
If you still feel you must buy that Beemer, Jeanette Pavini of Coupons.com suggests
you wait to buy until September, which is traditionally the best month to buy a
new car. Another alternative? Buy a certified pre-owned car, she suggests. A three-year-old
BMW will not only have missed the price hike, it's likely to be 60 percent cheaper
than a new model, and many offer warranties that are comparable to those
offered on a new car.
Two factors are likely to impact
the cost of buying a home in 2014. The improving economy and relatively low
inventory of homes for sale is driving up prices, and even causing bidding wars
for some more affordable homes. And, with the Federal Reserve likely to start
tightening the money supply, financing rates could start to climb too.
That combination can prove a one-two punch. Consider a $200,000 home that would cost 4.5 percent to finance with a 30-year fixed-rate mortgage in 2013. Assuming the buyer borrowed $150,000 and put $50,000 down, the monthly payment would work out to just $760. If this home sold for 5 percent more, you'd pay an extra $10,000, or $210,000. However, the bigger worry could be the interest rate. If interest rates rose by just one percentage point to 5.5 percent and this buyer still only financed $150,000 of the price, his monthly payments would rise 12 percent to $851.
Consumers hoping to buy in 2014 should save prodigiously for an adequate down payment and watch their credit score. A good score gets you the best rate.
Travel to Asia
While economic malaise may keep travel prices low in Europe, Asian economies are thriving and that's got prices rising for everything from flights and meals to hotel rooms, says Pavini. However, where you'll pay dearly to go to Hong Kong, Tokyo or Singapore, not all of Asia is richly priced.
Indeed, trips to Malaysia can be downright
affordable (if you can use frequent flier miles to handle the often startling
cost of the airfare). And those who learn to dine at street vendors and local
restaurants, rather than the tourist-friendly restaurants will save a fortune
on meals. Indeed, blogger Kristin Addis says she spent under $8,000 -- including
flights and travel insurance -- on her 8 month sojourn through Southeast Asia.
Cambodia is a particular bargain, she says. Best advice: Stay off the beaten track.