This was my thought as well! Glad someone else caught this too

Right, question number 2 could have been false if the person went into a higher tax bracket.

Interesting to think about! If only we could move our friends and family along with us to these cheaper areas, haha…

It’s such a good point!

It seems, though, that inflation doesn’t hit all areas the same. I look at the cities I have lived in (inflation!!!) and the small towns I drive through (so cheap!) and wonder about how to game that system.

Assuming a steady income in both a thriving city and poor backwater town (often the worst assumption in the latter, but follow me down this road; maybe imagine retiring with steady investment income)…

In the thriving city, prices go up and explode in certain categories ($20k houses turn into $1.5M houses, transit, alcohol in bars).

In the depressed town, those areas don’t explode (stagnant house prices even after generations, like my friend’s home house, or only modest inflation), there is no transit but gas is cheap, and prices in stores and groceries are lower than big cities (in part because they don’t have some of the fancier items, but simple healthy cooking is still possible).

Doesn’t that mean that to some extent inflation is a reflection of location?

Unpossible!

Ok, likely what you said :)

It was useful though… researching simple vs compound interest on debt clarified the answer in my mind, where before it was kind of mushy.

Because credit card debt is compounded daily, and other debt (car, house, education) is simple, the first question does not have enough information to answer.

I don’t think that’s true – credit card debt is compound… And even worse, it is compounded DAILY.

http://www.bankingmyway.com/credit-center/credit-cards/credit-card-compound-interest-trap

http://blog.readyforzero.com/how-does-credit-card-interest-work/#.VmWC7XNOnqB

Yup, credit card debt is compound interest. http://www.bankingmyway.com/credit-center/credit-cards/credit-card-compound-interest-trap