WEBVTT - Is Inflation Making us Crazy? #449 0:00:00.120 --> 0:00:02.759 Welcome to How the Money. I'm Joel and I am Matt. 0:00:02.920 --> 0:00:26.880 Today we're asking the question, is inflation making us crazy? Inflation? Man, 0:00:26.920 --> 0:00:28.920 it has been in the headlines, and so we felt 0:00:28.920 --> 0:00:31.080 that it was time for us to devote an entire 0:00:31.120 --> 0:00:33.960 episode to talking about inflation a little bit more. We're 0:00:33.960 --> 0:00:36.880 gonna do that during this episode. Inflation has us living 0:00:36.960 --> 0:00:40.120 la vida loca, I would say, Matt. Uh, So, here's 0:00:40.120 --> 0:00:41.680 the thing. Speaking of inflation, I wanted to tell you 0:00:41.680 --> 0:00:44.920 a little story about where do you go get gash nearby? 0:00:45.080 --> 0:00:47.400 So I don't know, it just depends on Usually it's 0:00:47.440 --> 0:00:50.360 when I'm just at Costco. I try to fill up 0:00:50.360 --> 0:00:52.440 at costcocause it's always cheaper than But there are a 0:00:52.479 --> 0:00:54.040 couple of places. It turns out. I used to think 0:00:54.040 --> 0:00:56.520 that the Kroger. The Kroger has got to be the 0:00:56.560 --> 0:00:59.240 most expensive place. So that's what I was gonna say, 0:00:59.280 --> 0:01:01.040 is we used to always go to the local Kroger. 0:01:01.080 --> 0:01:03.360 It's really close to our house. Um, and because occasionally 0:01:03.360 --> 0:01:05.120 we go to Kroger for some groceries and we always 0:01:05.160 --> 0:01:07.400 have some points where we get the discounted price per 0:01:07.480 --> 0:01:10.960 gallon on gas. But recently I noticed that just a 0:01:10.959 --> 0:01:13.240 gas station a BP just a mile down the road. 0:01:13.480 --> 0:01:16.160 It was something like twenty cents cheaper per gallon. Uh. 0:01:16.200 --> 0:01:17.840 And here's the thing, this isn't a gas station that 0:01:17.880 --> 0:01:20.040 I have to go out of my way to reach. 0:01:20.200 --> 0:01:22.520 This is on the way to Aldie. We've always said 0:01:22.560 --> 0:01:24.520 it's cheap if you're gonna drive across town of the same, 0:01:25.040 --> 0:01:27.600 but if it's easy to save, go save the money, exactly. 0:01:27.840 --> 0:01:30.360 And so initially I noticed this a couple of months ago, 0:01:30.400 --> 0:01:32.640 And initially I thought that maybe they had just not 0:01:33.080 --> 0:01:34.959 raised their prices, because this is when price we were 0:01:34.959 --> 0:01:38.680 seeing prices take up pretty significantly, pretty dramatically. Uh. But dude, 0:01:38.840 --> 0:01:41.400 it has consistently stayed twenty cents at least twenty cents 0:01:41.480 --> 0:01:44.160 cheaper than Kroger, uh than the shell further up the 0:01:44.240 --> 0:01:46.840 road as well. And so I have changed. I mean, 0:01:46.840 --> 0:01:48.360 this isn't a big deal, right, Like, you're only talking 0:01:48.520 --> 0:01:50.320 twenty cents per gallon, and we don't even drive all 0:01:50.360 --> 0:01:53.160 that much. The bottom line doesn't impact us all that much. No, 0:01:53.640 --> 0:01:56.320 But I wanted to share the story because it takes 0:01:56.800 --> 0:01:59.160 breaking out of the habits and the mindset that we 0:01:59.200 --> 0:02:02.400 typically do think sometimes in order to save us money. Right, 0:02:02.440 --> 0:02:04.480 So I think like when it comes to groceries, sometimes 0:02:04.520 --> 0:02:06.240 we might think, oh, well, we always have to get 0:02:06.280 --> 0:02:08.720 this product or or this cut of meat. This is 0:02:08.760 --> 0:02:11.359 we always eat ribbies, you know, we always eat boneless, 0:02:11.360 --> 0:02:14.520 skinless chicken, yes exactly, but instead to consider some of 0:02:14.520 --> 0:02:17.200 the other options. Ever, we're more flexible. That can save 0:02:17.280 --> 0:02:18.799 us in a big way. It also makes me think 0:02:18.880 --> 0:02:20.799 about like cell phone service. I was just talking to 0:02:20.840 --> 0:02:23.760 a buddy recently and he was like, yeah, I'm still 0:02:23.800 --> 0:02:27.120 paying a lot of money for my Verizon service. And 0:02:27.120 --> 0:02:29.680 I spent a good five minutes and he was interested, 0:02:29.720 --> 0:02:31.600 and I wasn't just like brading it down the throat, 0:02:31.600 --> 0:02:33.359 and I was explaining to him h M v n 0:02:33.400 --> 0:02:35.920 o s, which are the mobile virtual network operators which 0:02:35.960 --> 0:02:39.600 operate on the backbones on the networks of the major 0:02:39.680 --> 0:02:42.560 you know, big names, but they charge you a fraction 0:02:42.680 --> 0:02:44.600 of the cost. And so, for instance, you and I 0:02:44.680 --> 0:02:47.560 were on Mint Mobile, right, and they operate off of 0:02:47.639 --> 0:02:50.680 T Mobiles networks, and you get all the great speed 0:02:50.680 --> 0:02:52.840 that comes with a T mobile, uh service, but at 0:02:52.840 --> 0:02:55.040 a fraction of the cost exactly. But so many people 0:02:55.120 --> 0:02:58.160 are just stuck in their ways paying the same phone 0:02:58.160 --> 0:03:00.760 company the same amount of money every single month. And 0:03:00.760 --> 0:03:03.760 and yeah, actually right now, like Mint has that three 0:03:03.960 --> 0:03:07.360 by three months, get three months, three get three so 0:03:07.400 --> 0:03:09.520 it like takes that super cheap phone service down to 0:03:10.000 --> 0:03:13.399 an even lower price for those new customers. So yeah, 0:03:13.440 --> 0:03:15.040 well we'll link that in the show notes. By the way, 0:03:15.320 --> 0:03:18.160 people want to know about it. But Matt, let's move on. 0:03:18.280 --> 0:03:20.320 Let's talk about the beer that we're having on this show. 0:03:20.360 --> 0:03:27.280 This one is called Chocolate Pecan Porter. Do you say pecan? Pecan? Uh? Pecan? Okay? Wecan? 0:03:27.440 --> 0:03:29.120 I think I did like a blending of it too, 0:03:29.840 --> 0:03:31.440 like a hybrid. I had it in my mind. So 0:03:31.760 --> 0:03:35.080 I grew up saying pecan because I was raised in 0:03:35.120 --> 0:03:38.000 the South. Yes, but now I say pecan because I 0:03:38.040 --> 0:03:42.080 live in the city. Now you're you're very refined. But yeah, 0:03:42.480 --> 0:03:44.800 this one is by Tim Blore Brewing, and this one 0:03:44.840 --> 0:03:47.640 was sent to us by listener Ryan, who works for 0:03:47.680 --> 0:03:52.080 the brewery. So we're always always down for delicious craft beers. Ryan, 0:03:52.120 --> 0:03:54.400 thanks for sending these ones to us. But Matt, let's 0:03:54.400 --> 0:03:57.200 get onto the subject at hand. Let's talk about inflation. 0:03:57.280 --> 0:03:59.360 Let's do it. And you know, it just kind of 0:03:59.360 --> 0:04:01.920 made me think the other today, how how nutty the 0:04:02.040 --> 0:04:05.600 conversation around inflation has gotten. Uh it, I don't know why. 0:04:05.640 --> 0:04:07.560 It kind of made me reflect on one of my 0:04:07.600 --> 0:04:11.400 friends who like a decade ago, ended up getting diagnosed 0:04:11.400 --> 0:04:15.520 with prostate cancer. And yeah, tough diagnosis to receive, and 0:04:15.520 --> 0:04:18.120 it was like obviously just an emotionally difficult time for him, 0:04:18.160 --> 0:04:20.040 for his friends and family, everybody who was close to 0:04:20.120 --> 0:04:23.520 him and who loved him. Um, but there's this belief, 0:04:23.560 --> 0:04:25.760 I think when it comes to cancer that you gotta 0:04:25.800 --> 0:04:29.120 go like harden fast in order to eradicate it, right, 0:04:29.200 --> 0:04:32.880 that it's the fight against cancer exactly exactly, And so 0:04:33.160 --> 0:04:35.159 there's this, Yeah, there's this belief that you gotta treat it, 0:04:35.400 --> 0:04:38.040 you know, treaty quickly, and you gotta throw like all 0:04:38.040 --> 0:04:41.600 the ammunition at it at once, exactly. And so yeah, 0:04:41.640 --> 0:04:44.560 for unfortunately, my friend, he's doing really really well these days. 0:04:44.600 --> 0:04:48.000 But that's actually largely because he took the opposite approach. 0:04:48.200 --> 0:04:51.080 He decided not to throw the kitchen snake at this cancer. 0:04:51.760 --> 0:04:54.600 He decided to do something called watchful waiting or it's 0:04:54.640 --> 0:04:57.640 also known as active surveillance in the prostate cancer community, 0:04:57.800 --> 0:04:59.680 basically keeping an eye on the growth rate of the 0:04:59.680 --> 0:05:02.960 cancer and the potential symptoms, so that action can be 0:05:03.000 --> 0:05:06.000 taken if need be, But the point the hope is 0:05:06.040 --> 0:05:09.360 to not take action too soon because that could actually 0:05:09.640 --> 0:05:12.279 greatly diminish the quality of life for the patient. That 0:05:12.360 --> 0:05:16.360 surgery is obviously invasive, and you and I were obviously 0:05:16.440 --> 0:05:20.520 we're not doctors, were not cancer experts. Recently, we did 0:05:20.560 --> 0:05:22.520 an episode where we talked about I feel like we 0:05:22.600 --> 0:05:24.560 talked a lot about dieting recently, and so what we're 0:05:24.560 --> 0:05:27.960 definitely not nutritionists, we're not doctors either. It's just anecdotal 0:05:28.000 --> 0:05:30.359 evidence to support something that we're gonna talk about this 0:05:30.360 --> 0:05:33.479 outside like we'd like to dabble, right, But it's just 0:05:33.560 --> 0:05:37.120 interesting to see how overreacting can actually create more problems 0:05:37.160 --> 0:05:40.320 depending on the circumstance that you're going through, right, And 0:05:40.640 --> 0:05:44.000 so in this case, reacting too quickly and having that 0:05:44.120 --> 0:05:47.160 invasive surgery could have had other more consequential side effects, 0:05:47.200 --> 0:05:50.000 and so waiting made the most sense. And you know what, 0:05:50.120 --> 0:05:52.320 in over a decade, he hasn't had to have any 0:05:52.320 --> 0:05:54.520 surgery and he's living a great life. And so yeah, 0:05:54.560 --> 0:05:56.880 could the same be true when it comes to inflation 0:05:57.200 --> 0:06:00.040 that maybe we're overreacting a little bit. That's kind of 0:06:00.160 --> 0:06:02.160 what we want to talk about today. Yeah, that's right. 0:06:02.200 --> 0:06:04.920 You know, it's understandable that many folks are starting to 0:06:04.920 --> 0:06:09.279 worry about inflation. For the most part, it's been minimally impactful, 0:06:09.360 --> 0:06:11.800 you know, for so long that most of us hardly 0:06:11.800 --> 0:06:14.640 even remember that it exists. But that's all changed over 0:06:14.680 --> 0:06:16.960 the past year due to a variety of factors. Right. 0:06:17.000 --> 0:06:19.039 First of all, many of us have more cash in 0:06:19.040 --> 0:06:22.440 our bank accounts due to stimulus payments, due to the 0:06:22.480 --> 0:06:25.200 inability to spend our money like we normally would due 0:06:25.240 --> 0:06:27.960 to COVID, so there's a ton of pent up demand. 0:06:28.360 --> 0:06:30.880 And then on the supply side of the equation that 0:06:30.960 --> 0:06:33.680 has also been massively disrupted and companies are having a 0:06:33.680 --> 0:06:37.800 tough time catching up. Pandemic related shutdowns are still impacting 0:06:37.800 --> 0:06:40.040 companies across the world. And so you combine all these 0:06:40.040 --> 0:06:43.159 different factors, UH and inflation. It hasn't been as high 0:06:43.160 --> 0:06:45.960 as it is currently for over thirty years. But the 0:06:46.040 --> 0:06:47.719 question that we want to ask, though, is that should 0:06:47.800 --> 0:06:50.280 we be concerned about it? Because you know, we we 0:06:50.320 --> 0:06:52.279 don't want to read the headlines or watch the news 0:06:52.480 --> 0:06:55.159 and then just react in drastic ways that are gonna 0:06:55.240 --> 0:06:58.240 undermine our finances. Um And it turns out in a 0:06:58.240 --> 0:07:00.640 recent poll we saw that of few well said that 0:07:00.680 --> 0:07:04.120 they are very worried about inflation. And you know, all 0:07:04.160 --> 0:07:08.200 these substantial levels of concern about inflation, they're actually starting 0:07:08.200 --> 0:07:11.560 to concern us, concern you and me. Yeah, we're like, no, 0:07:11.800 --> 0:07:14.120 there's just maybe too much talk about it. It's it's 0:07:14.160 --> 0:07:16.520 gotten overblown, and it just seems like it's one of 0:07:16.560 --> 0:07:19.720 those narratives that's spun out of control where we're all 0:07:19.760 --> 0:07:22.840 talking about inflation and we're all like looking at it constantly. 0:07:23.040 --> 0:07:25.600 We're looking for signs of relief or we're looking to 0:07:25.680 --> 0:07:28.840 numbers to prove how bad it's gotten. Yeah, for political reasons. Yes, 0:07:28.880 --> 0:07:31.680 sometimes it gets hyped up because folks have a different 0:07:31.720 --> 0:07:35.200 agenda exactly. Yeah, And it feels like there's like some 0:07:35.240 --> 0:07:39.360 sort of a psychological shift taking place in our brains collectively, 0:07:39.560 --> 0:07:42.560 because in that same survey, forty percent of folks said 0:07:42.600 --> 0:07:45.280 they plan to reduce their spending on restaurant meals and 0:07:45.360 --> 0:07:49.200 on takeout, said they plan to skip upgrading their personal 0:07:49.240 --> 0:07:53.040 technology devices. Folks said they're going to purchase less clothing 0:07:54.040 --> 0:07:57.120 or delaying or canceling travel plans, and of folks said 0:07:57.120 --> 0:07:59.120 they plan to drive less, a lot of changes. Yeah, 0:07:59.120 --> 0:08:00.760 there's a lot of changes that people are making their 0:08:00.800 --> 0:08:04.480 lives because of inflation. But yeah, holding off on purchases, 0:08:04.520 --> 0:08:08.640 buying fewer things overall, that's a natural reaction to rising prices. 0:08:08.680 --> 0:08:11.200 I get it, and those can be wise financial moves 0:08:11.440 --> 0:08:15.720 no matter what's happening with the inflationary numbers, you know, anecdotally, Matt, 0:08:15.760 --> 0:08:17.440 there was a post in the how to Money Facebook 0:08:17.480 --> 0:08:19.240 group that I think it kind of echoes how a 0:08:19.240 --> 0:08:22.560 lot of people are are feeling right now. A listener said, 0:08:22.680 --> 0:08:25.240 should I be buying more stuff now because of the 0:08:25.280 --> 0:08:27.640 fear that prices are gonna rise in the future. It's like, 0:08:27.680 --> 0:08:30.720 should I should I frontload those things that they're on 0:08:30.760 --> 0:08:32.720 my wish list? I was planning on holding off until 0:08:32.840 --> 0:08:36.560 next year or till like, yeah, like fall of next year. 0:08:36.880 --> 0:08:39.240 But I'm just worried it's gonna cost more now, so 0:08:39.240 --> 0:08:41.040 should I jump in on that thing? I think that 0:08:41.120 --> 0:08:45.200 question reflects another place that this inflationary environment can push 0:08:45.280 --> 0:08:47.920 us towards. It can push us towards spending more money now, 0:08:48.640 --> 0:08:51.040 even if maybe we don't have that money exactly. Yeah, 0:08:51.080 --> 0:08:53.520 So but before that we talk about how to ensure 0:08:53.600 --> 0:08:57.880 that rising costs inflation prognostications don't make you crazy. I 0:08:57.920 --> 0:09:00.839 think it's really important to remind everyone at inflation is 0:09:00.880 --> 0:09:03.520 just something that is always taking place in the background 0:09:03.640 --> 0:09:05.640 of our economy. You know, most of the time, it's 0:09:05.640 --> 0:09:08.160 it's something that we just don't even notice, you now, 0:09:08.200 --> 0:09:10.199 even though it's still kind of humming along. It's sort 0:09:10.200 --> 0:09:12.640 of like the sound of the like the compressor fan 0:09:13.040 --> 0:09:15.160 on your fridge. Like, just because you get used to 0:09:15.240 --> 0:09:17.839 it doesn't mean that it's not consistently chugging along, or 0:09:17.840 --> 0:09:19.640 at least that it you know, it should be. That's 0:09:19.679 --> 0:09:22.640 how your fridge days cold. And so just because inflation 0:09:22.679 --> 0:09:25.079 isn't typically in the headlines, that doesn't mean that it's 0:09:25.200 --> 0:09:27.600 you know, been sitting at zero up until now. If 0:09:27.679 --> 0:09:29.160 if you look back at the data actually over the 0:09:29.240 --> 0:09:32.400 last thirty years, the average consumer price index is two 0:09:32.400 --> 0:09:35.280 point four percent. Like that is a real rate of inflation. 0:09:35.559 --> 0:09:37.440 And so it's it's just important to keep that in 0:09:37.440 --> 0:09:41.200 mind because they can often get discounted when inflation is 0:09:41.320 --> 0:09:44.040 discussed today. Um, when when you see it in the headlines. 0:09:44.160 --> 0:09:46.240 And I wanted to mention this too, because we're talking 0:09:46.240 --> 0:09:48.040 about inflation right now, so aren't we a part of 0:09:48.040 --> 0:09:49.480 the problem. But I just want to make it clear 0:09:49.480 --> 0:09:51.880 that we've been talking about inflation way before it was cool. 0:09:52.040 --> 0:09:55.679 We've been basically ever since we started talking about investing 0:09:55.679 --> 0:09:58.560 on this show four years ago. Inflation was one of 0:09:58.559 --> 0:10:00.880 the reasons that you should be investing. I will say, 0:10:00.920 --> 0:10:03.720 we are always a part of the problem. Just that's 0:10:03.720 --> 0:10:05.760 just generally how we roll. It's true we we like 0:10:05.800 --> 0:10:08.000 to make trouble. But yes, I agree we we have 0:10:08.040 --> 0:10:09.760 been talking about inflation every time we have to talk 0:10:09.800 --> 0:10:12.600 about risk when it comes to investing, Inflation is the 0:10:12.640 --> 0:10:14.480 thing that pops up, because that is the thing in 0:10:14.520 --> 0:10:17.439 the background continually eating at your money if you don't 0:10:17.440 --> 0:10:21.160 take the necessary risk of investing. There's a known quantity 0:10:21.200 --> 0:10:23.520 of risk, and that is inflation. So it's important, the 0:10:23.559 --> 0:10:25.880 sure and steady risk exactly. It comes up in every 0:10:25.880 --> 0:10:29.880 conversation that we have about investing. It seems like in appropriately. 0:10:29.920 --> 0:10:32.679 So so yeah, we're not trying to be fearmongers here 0:10:32.800 --> 0:10:34.520 when it comes to inflation. I think, in fact, we're 0:10:34.520 --> 0:10:37.360 trying to do the opposite with this conversation, and maybe 0:10:37.520 --> 0:10:40.240 trying to tamp down the fears the people that people 0:10:40.280 --> 0:10:42.640 have and and hopefully we'll all become a little less 0:10:42.640 --> 0:10:44.800 crazy when it comes to how we think about inflation 0:10:44.840 --> 0:10:46.520 and how we react to it. I think it's also 0:10:46.600 --> 0:10:49.960 important to note that age likely plays a factor in 0:10:50.000 --> 0:10:53.640 how you perceive inflation, because, yeah, even though inflation has 0:10:53.679 --> 0:10:56.520 been like you said, Matt Humming in the background, it's 0:10:56.520 --> 0:11:00.800 still significantly higher than what our generation has ever experience. Right, 0:11:00.840 --> 0:11:04.319 Let's say you graduated from high school or college ten 0:11:04.360 --> 0:11:07.920 years ago, and only then did you start paying attention 0:11:07.960 --> 0:11:11.280 to prices, really, uh, except for maybe prices right with 0:11:11.320 --> 0:11:14.360 your grandma on like a Tuesday afternoon when you were 0:11:14.360 --> 0:11:17.440 out of school, Well, you only experienced inflation that was 0:11:17.520 --> 0:11:20.679 an average of one point seven percent. So those prices 0:11:20.679 --> 0:11:23.440 were taking up just incredibly slowly. And so many of 0:11:23.520 --> 0:11:26.720 us have never experienced inflation like we're currently seeing it, 0:11:27.520 --> 0:11:30.320 but our parents have. Right back in the seventies and eighties, 0:11:30.320 --> 0:11:33.439 the average inflation rate was over six percent, kind of 0:11:33.480 --> 0:11:35.680 similar to where we're at now. And so yeah, if 0:11:35.720 --> 0:11:37.679 you wanted a mortgage back then, you were looking at 0:11:37.679 --> 0:11:40.320 a thirty year fixed rates that were bumping up close 0:11:40.320 --> 0:11:43.240 to eight per cent. So we just like live in 0:11:43.320 --> 0:11:46.280 different financial times, and I do think age provides some 0:11:46.320 --> 0:11:49.320 proper perspective, or at least knowing your history can provide 0:11:49.360 --> 0:11:54.000 some proper perspective into that reality that inflation is always 0:11:54.040 --> 0:11:57.000 at play in some form or fashion. Uh and that 0:11:57.120 --> 0:12:00.320 rate of inflation just changes over time depending on other 0:12:00.400 --> 0:12:03.440 circumstances happening in the economy and in the world. That's true, man, 0:12:03.520 --> 0:12:04.960 I think it's in what you said to just what 0:12:05.000 --> 0:12:07.720 we've experienced over the past decade is something that we 0:12:07.760 --> 0:12:10.160 can't underestimate. Right. For a lot of us, we've never 0:12:10.200 --> 0:12:14.600 experienced a bear market, We've never experienced rates of inflation 0:12:14.880 --> 0:12:16.360 that have been this high. Like a lot of folks 0:12:16.440 --> 0:12:20.200 came into their professional careers seeing a negative inflation rate. 0:12:20.320 --> 0:12:22.559 And so it's really important to keep in mind our 0:12:22.600 --> 0:12:26.199 own lived experiences and how that impacts how we interpret 0:12:26.200 --> 0:12:29.120 the news and the headlines in our world. Yeah, exactly, 0:12:29.160 --> 0:12:32.160 Like I became an investor in two thousand seven, and 0:12:32.400 --> 0:12:35.880 uh so, you know kind of I certainly was an 0:12:35.880 --> 0:12:39.120 investor while the market was having a moment, was having 0:12:39.440 --> 0:12:41.800 you know, while we were going through a recession. But 0:12:42.200 --> 0:12:44.440 I didn't have like a lump sum that took a 0:12:44.440 --> 0:12:46.280 big hit, and so it didn't impact me in the 0:12:46.320 --> 0:12:49.199 same way, uh that as it would have someone who 0:12:49.280 --> 0:12:51.600 was twenty years older than me and had been investing 0:12:51.840 --> 0:12:54.280 a whole lot longer. And speaking of just kind of 0:12:54.320 --> 0:12:57.240 like your personal situation and how that impacts things, Matt, 0:12:57.280 --> 0:13:01.200 there's actually a way too personally calculate eight the inflation 0:13:01.240 --> 0:13:02.839 that you as an individual or seeing. We're going to 0:13:02.920 --> 0:13:05.679 talk about that and getting to more about how you 0:13:05.679 --> 0:13:08.480 should be reacting to what's happening when it comes to inflation. 0:13:08.760 --> 0:13:20.160 Right after this, all right, we are back from the break. 0:13:20.200 --> 0:13:24.400 We're talking about inflation, and it's true, prices are actually rising. 0:13:24.640 --> 0:13:27.400 You know, we're seeing prices go up at the grocery store. 0:13:27.280 --> 0:13:30.400 We're seeing at the gas pump at Kroger specifically, their 0:13:30.400 --> 0:13:34.560 prices are really high, at least at the gas pump. Yeah. Uh, 0:13:35.000 --> 0:13:37.120 Like houses and cars, like they are way more expensive 0:13:37.160 --> 0:13:39.040 than they were just a year ago. And so across 0:13:39.080 --> 0:13:41.439 the board we're seeing higher prices. But keep in mind 0:13:41.800 --> 0:13:44.320 that that's just simply how inflation works, right, Like, this 0:13:44.400 --> 0:13:47.040 is a part of progress and innovation, This is a 0:13:47.040 --> 0:13:49.400 part of the growth of our economy. Uh, it would 0:13:49.400 --> 0:13:52.480 actually be a bad sign if we saw prices dropping 0:13:52.679 --> 0:13:55.800 and we were entering into a deflationary environment. That's actually 0:13:55.800 --> 0:13:57.920 what we saw back in two thousand nine, Jewel, you 0:13:57.960 --> 0:13:59.719 mentioned that right before the break, how we saw the 0:13:59.760 --> 0:14:04.160 market tank than but we saw a deflationary environment. In 0:14:04.200 --> 0:14:06.800 two thousand and nine, inflation was actually at negative point 0:14:06.880 --> 0:14:10.240 four percent. Uh. And you probably don't need a reminder 0:14:10.559 --> 0:14:12.679 how difficult it was to land a good job back then. 0:14:13.080 --> 0:14:16.120 But the big question right now, though, is is inflation 0:14:16.320 --> 0:14:18.080 something that you should be paying attention to? You know, 0:14:18.120 --> 0:14:21.280 how concerned should you be? Uh? And like you said, 0:14:21.280 --> 0:14:25.040 so much of this comes down to what exactly you 0:14:25.120 --> 0:14:27.600 are buying, what you're spending your money on. That's right, 0:14:27.600 --> 0:14:29.880 that's right. And yeah, we're seeing the headline number, the 0:14:30.480 --> 0:14:34.600 actual percentage rate that is getting up in the high 0:14:34.680 --> 0:14:37.560 single digits of where inflation is at right now, but 0:14:38.040 --> 0:14:41.280 the overall rate of inflation. While it's it's good to know, 0:14:41.680 --> 0:14:44.520 drilling down to see how inflation is actually impacting you 0:14:44.680 --> 0:14:47.320 and your family is even more helpful, like seeing what 0:14:47.360 --> 0:14:49.640 inflation is doing at a personal level. And obviously, if 0:14:49.680 --> 0:14:51.720 you're a good budger, if you track your expense as well. 0:14:51.920 --> 0:14:55.040 You can probably run the numbers like Matt, with how 0:14:55.120 --> 0:14:58.080 much data you have about your own household spending. I'm 0:14:58.120 --> 0:15:00.480 sure you could figure out that compared to last year, 0:15:00.520 --> 0:15:03.520 exactly how much inflation is impact your finances. You can 0:15:03.520 --> 0:15:07.560 probase you in like twenty minutes, right, that's true. Literally, well, 0:15:07.680 --> 0:15:10.080 we were talking about something the other day and it 0:15:10.160 --> 0:15:12.800 was something from like two thousand and eight, and I 0:15:12.840 --> 0:15:14.960 was able to literally tell you how much I spent 0:15:15.040 --> 0:15:16.880 on something because I was just like, well, let me 0:15:16.920 --> 0:15:21.920 pull up the eight budget dot xls excel file and 0:15:21.960 --> 0:15:23.200 I was able to nerd out and let you know 0:15:23.200 --> 0:15:26.640 my numbers. It's quite impressive. Also, um, yeah, there's also 0:15:26.720 --> 0:15:30.720 my dedication. Also, I need help just beyond the professional help. Yes, 0:15:31.160 --> 0:15:33.720 but yeah. Interestingly enough, the Wall Street Journal has this 0:15:33.800 --> 0:15:37.000 like inflation calculator that will link to, which can be 0:15:37.040 --> 0:15:39.600 helpful if you don't have the numbers, the raw data 0:15:39.680 --> 0:15:41.600 that Matt has, but you want to see how much 0:15:41.600 --> 0:15:44.080 inflation is actually impacting you based on how you spend. 0:15:44.120 --> 0:15:45.960 You can kind of plug some numbers in there. We'll 0:15:45.960 --> 0:15:48.560 put that in our show notes. For instance, like if 0:15:48.560 --> 0:15:50.840 you only have one car in that car is an 0:15:50.840 --> 0:15:53.720 electric vehicle. Right. The fact that the massive run up 0:15:53.760 --> 0:15:57.120 in fuel prices is a huge component in the overall 0:15:57.200 --> 0:16:00.120 rate of inflation, well, that's not affecting you, So your 0:16:00.120 --> 0:16:02.720 personal rate of inflation is going to be far lower. Also, 0:16:02.920 --> 0:16:04.680 you know the run up in car prices, We've talked 0:16:04.720 --> 0:16:06.960 about that on the show, Well, it's made up a 0:16:07.000 --> 0:16:10.680 huge aspect of the increased inflation exactly. And if you 0:16:10.760 --> 0:16:13.280 are like content with the one eight year old car 0:16:13.400 --> 0:16:15.560 that you have or whatever, like you're not looking to 0:16:15.600 --> 0:16:18.320 buy a new car, well, inflation is impacting you in 0:16:18.400 --> 0:16:20.680 a much more minimal way. And so yeah, if you 0:16:20.760 --> 0:16:22.840 really want to nerd out, you can check out the 0:16:22.920 --> 0:16:25.760 Bureau of Labor Statistics CPI report, which will link to 0:16:25.760 --> 0:16:27.800 in the show notes, which goes into a great deal, 0:16:27.920 --> 0:16:30.520 almost as much detail as Matt's two thousand eight budget. 0:16:30.760 --> 0:16:34.000 But I look at those reports and not totally heard out. 0:16:34.880 --> 0:16:37.480 So yeah, it's it's it's interesting stuff. But it's also 0:16:37.480 --> 0:16:40.240 important to note that those overall headline numbers are not 0:16:40.360 --> 0:16:43.240 the necessarily the rate of inflation you are paying, and 0:16:43.720 --> 0:16:46.400 your rate of inflation could be half of what you're 0:16:46.400 --> 0:16:48.720 seeing as a headline number, or or maybe less, and 0:16:48.760 --> 0:16:51.240 so kind of figuring out what it's looking like and 0:16:51.320 --> 0:16:54.440 where it's actually impacting you is helpful. Yes, we share 0:16:54.480 --> 0:16:56.800 all that to help you to realize how big or 0:16:56.840 --> 0:16:58.400 how little of a deal this is going to have 0:16:58.440 --> 0:17:01.160 on your finances. Uh. And dude, that's another whole side 0:17:01.160 --> 0:17:04.440 of this too, is the fact that this is uh 0:17:04.520 --> 0:17:07.200 an increase in prices, right, And so that means if 0:17:07.240 --> 0:17:08.920 you are spending your money, like, there's a whole side 0:17:08.920 --> 0:17:11.199 of our finances that don't have to do with spending. 0:17:11.359 --> 0:17:14.120 And hopefully we see that decrease over time as we 0:17:14.240 --> 0:17:17.000 tend to earn more money over our lifetimes, we'll see 0:17:17.080 --> 0:17:19.800 the percentage of money that is going towards expenses. We'll 0:17:19.800 --> 0:17:22.760 see that decrease as we increase our savings rate. Right, 0:17:23.040 --> 0:17:25.439 But okay, let's talk about what to do. How you 0:17:25.480 --> 0:17:28.720 can go about not freaking out about inflation because you 0:17:28.760 --> 0:17:30.760 know the headlines they're not going to stop. And inflation 0:17:30.760 --> 0:17:33.680 itself could be a more meaningful part of our lives, 0:17:33.720 --> 0:17:35.960 and it's been over the past couple of decades. But 0:17:36.000 --> 0:17:38.760 that doesn't mean that we have to yo yo back 0:17:38.800 --> 0:17:42.440 and forth with every piece of inflation information that comes 0:17:42.440 --> 0:17:44.760 our way. And so some of it starts with how 0:17:44.840 --> 0:17:47.720 we consume news. This is uh one of these areas 0:17:47.720 --> 0:17:50.280 where we feel that less can be more, especially if 0:17:50.280 --> 0:17:52.800 your tendency is to freat more based on your news consumption, 0:17:53.400 --> 0:17:55.040 and you know, along those lines, I think it can 0:17:55.080 --> 0:17:58.600 be helpful if you are aware of some definitions, because yes, 0:17:58.680 --> 0:18:01.280 we are dealing with higher inflation, but we're not talking 0:18:01.280 --> 0:18:04.280 about hyper inflation, which means a rise in prices to 0:18:04.320 --> 0:18:07.479 the tune of one thousand percent annually every single year here. 0:18:07.600 --> 0:18:10.359 You know, we talked about that after Jack Dorsey tweet 0:18:10.359 --> 0:18:12.200 a couple of months ago, the former CEO of Twitter, 0:18:12.200 --> 0:18:14.240 And maybe that's why he stepped down, because I realized 0:18:14.280 --> 0:18:16.440 he's like, I was a fool. I shouldn't have said that. 0:18:16.440 --> 0:18:18.560 I can believe that tweet. Um. And you know, we're 0:18:18.560 --> 0:18:20.879 also not dealing with stagflation. I feel like that's the 0:18:20.960 --> 0:18:23.879 term we here thrown around occasionally because that's when you 0:18:23.920 --> 0:18:27.639 see inflation coupled with slow economic growth and high unemployment, 0:18:28.000 --> 0:18:31.959 both of which we've seen rebound significantly since the coronavirus 0:18:32.040 --> 0:18:34.880 hit last spring. UH. So it's helpful to push back 0:18:34.920 --> 0:18:38.280 against the fear of inflation just by knowing you know 0:18:38.320 --> 0:18:40.440 what it is that we're actually living through, just by 0:18:40.440 --> 0:18:43.800 having some definitions and to realize that we're not working 0:18:43.800 --> 0:18:47.080 our way through regular inflation to these more exotic forms 0:18:47.080 --> 0:18:49.119 of inflation or just I don't know, do you just 0:18:49.160 --> 0:18:53.760 say inflation generally speaking as like the the broader concept 0:18:53.960 --> 0:18:56.080 that is not what we're dealing with right now, Yeah, 0:18:56.240 --> 0:18:59.240 for sure. And so yeah, knowing those definitions, knowing what 0:18:59.320 --> 0:19:01.399 exactly we're do link with this is helpful. But there 0:19:01.400 --> 0:19:04.600 are also some practical steps that we can take to 0:19:04.600 --> 0:19:08.159 to fight back against inflation in our own lives and 0:19:08.160 --> 0:19:10.040 and to make sure that it isn't, like we said, 0:19:10.280 --> 0:19:13.399 slowly eroding the value of our money or as is 0:19:13.400 --> 0:19:16.160 happening right now a little more quickly than it has 0:19:16.359 --> 0:19:19.320 in the in the best in the previous a few years. 0:19:19.520 --> 0:19:21.640