Financial analysis

After working for three years and one month, driving a bike for two years and six months, and living in my own house for nine months, it's time for a small analysis of my financial situation and general economic trends. I'm not an economist, so please forgive the flagrant mistakes and errors I make in my assumptions and calculations.

First of all, the government calculates and publishes a monthly consumer price index, a measure of inflation with respect to a certain reference year (the most recent one being 2004). The general index includes various products typical households consume, each with a certain weight according to their importance. Next to the general index, there is also a so-called 'health index,' which excludes items such as tobacco, alcohol and ... vehicle fuels. The reasoning behind the latter is that these are already represented in the cost of all other products in the index as they need to be transported, which consumes fuel.
Without starting an argument about any unfairness in the fact that salaries are inflation-adjusted using the health index, let's accept the facts as they are and reverse the line of thought: since all products require fuels in their harvesting, manufacturing and transport, let's take fuel cost as the base for cost of living. It's also the only product of which I have more-or-less accurate data.

In this graph, the blue line represents the absolute petrol price I have paid, starting from the day I bought my bike. The first months I usually went to Antol, as they were the cheapest petrol station in Lier at the time. Later on, Dats opened a station that was marginally cheaper, and by May 2007 I went to Maes (which had taken over Antol and dropped prices to be the cheapest in each station's region).
The period of missing data was when I crashed my bike and had to wait a few months until it was repaired. The serious dip you see is an outlier related to me siphoning petrol from my mother's car after she accidentally filled up completely some days before buying a new car.

As you can see, at my last petrol purchase I paid the third lowest price ever (in the past 2.5 years). The third lowest absolute price, that is. The magenta line depicts the inflation-adjusted petrol price, using the general consumer index (which includes petrol). You can see we're still a long way off from paying a low value for our petrol.

Speaking of petrol value, let's see what the value of my income is with which I have to pay these exorbitant petrol prices (and, by extension, everything else I have to buy to live).


Again, the blue line is my absolute gross (before taxes) monthly income. It does not take holiday money, bonuses or tax deductions into account. Taxes, even after deductions, are at about 30% on average at my current salary (but I'm in the highest tax scale, so every increase in salary is taxed at 50%).
The graph, like the previous one, starts at the day I bought my bike. At that time the salary at which I started (marked by the red line) had already been inflation-adjusted for 2005. As you can see from the magenta line (inflation adjustment based on the health index), in November 2006 the value of my salary had dropped below the value of my salary at the start of my employment. Another conclusion based on the numbers is that, over the past three years, I have received an increase in salary value of 50 euros (calculated now, in October, by December it will be less). Moreover, those 50 euros are September-2005-euros; in October-2005-euros they would value at 47.

Now, let's compare the value of my salary to the value of petrol. That's where the yellow line comes into play: it's the ratio of (general) inflation-adjusted petrol price to (health) inflation-adjusted income. In an ideal world, this would be a straight horizontal line. In a perfect world, it would be a line that goes down. In the real world, however, it's a line which general direction is slightly upwards. Luckily for me, the inclination of that ratio is slightly less than the inclination of my income.
Luckily again (in the context of petrol prices at least), the economic crisis and pending recession has caused petrol prices to drop back to their level of two years ago during the last few weeks.

The green line, in case you're wondering is what I could be earning if I had dome some jobhopping. Although I have expressly removed absolute values from the last chart, I can say that the difference between red and green is 550 euros.

My conclusions? None specifically, I just threw some facts and calculations into the world, feel free to draw your own conclusions. I'll just repeat the well-known facts that employer loyalty is never rewarded and that petrol prices are just way too high.