Festival of Frugality

The cost of a first-class stamp is currently 41 cents, and it will go up to 42 cents starting May 12. With the new law, the post office is allowed to increase rates with 45-days notice as long as changes are within the rate of inflation for the previous 12 months (source: CNN Money) So this raise the question, is it frugal to buy forever stamp and hedge yourself against these rate increases.

Let’s take a look at the historical postage rate:

Basically, it went up from 22 cents in 1985 to 42 cents in 2008, or about 2.85% per year. This is roughly the same as the inflation rate for the same period. It appears forever stamps aren’t bad for your pocket. It’s like owning an inflation protected dollar. At least, it’s better than keeping your money under the mattress, or in a savings account.

That’s said, it’s even more frugal if you pay your bills online. For example, I managed to save about $55 per year through online bills payment, and get back about another $100 in cashback reward for using my credit card instead of checks.

Happy Valentine’s Day

Written by Pinyo of Moolanomy

This entry was posted on Thursday, February 14th, 2008 at 7:00 am and is filed under Frugal Tip. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.