Kyrk and Rick take on the latest headlines around inflation and give you some simple steps you can take starting today to help protect yourself and your savings.
Kyrk Davis is a Registered Representative offering Securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way Cincinnati, Ohio 45242 (513) 794-6794. Kyrk Davis is an Investment Advisor Representative offering Investment Advisory services through O.N. Investment Management Company. Estate planning services provided in conjunction with your licensed legal professional.
Kyrk and Rick take on the latest headlines around inflation and give you some simple steps you can take starting today to help protect yourself and your savings.
Kyrk Davis is a Registered Representative offering Securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way Cincinnati, Ohio 45242 (513) 794-6794. Kyrk Davis is an Investment Advisor Representative offering Investment Advisory services through O.N. Investment Management Company. Estate planning services provided in conjunction with your licensed legal professional.
Welcome to the How to Win podcast. I'm Kyrk Davis. And I'm Rick Gregory. Want to know how to win in life and in your finances? Then you're in the right place. On this podcast, we'll be talking about everyday topics and how they relate to your overall financial future. Hello everyone. This is Kyrk and Rick again with the How to Win Podcast. I hope you guys have enjoyed the ones we've done before and we're recording another one on the July 13th and well, which is four days away from my birthday in case anybody wants to get me a birthday present here coming up on the 17th. How old are you turning now, Rick? Thanks Kyrk for asking that question. That's really nice. I will be 60. Ah, a new decade. Yeah. Yeah. Thanks. That's elder abuse, I think. But it's okay. I'm still here. Still kicking. I think the oldest person in the office, besides you and the youngest person in the office, if we add their ages together, they're probably, they won't make it to me. I know, I know. Here we go again. That's okay. You guys are pretty good, even if you do make fun of me. All right, so./Yesterday I saw a headline on the news, and I think it's probably everywhere. It said, we're now at the lowest level of inflation that we have seen over the past two years. Now when I go to the grocery or the gas station, I'm sitting there thinking, I don't know that these guys on the news are telling the whole story. Am I thinking incorrectly or something wrong with me? Or are the news guys leading us on? Well, Rick, even though you're getting older, you're not senile, you're not crazy. Prices are still extremely high. But also the headlines aren't necessarily lying either. We are at the now the lowest level of inflation that we've had in the past two years. And if you're wondering, well, how is that true? Well, first we have to understand what exactly inflation is and how it works./ So simply put, inflation is the rate at which prices increased for goods and services over a period of time. I would say the rate at which they increased, not just they have increased. So now that we have seen over the past couple years, inflation that has been almost at record highs, those prices have come up. And even though we see inflation coming down, that doesn't mean prices come down. It just means that they're starting to go up at a slower pace. So, does that make sense? Yeah, it makes sense. So in other words, instead of gaining seven pounds a month with 7% inflation, we're only gaining three pounds a month. Yeah. Something like that. Okay. Well hopefully we're not gaining that much weight. Well sometimes I wonder when I'm sitting down to dinner about that, but that's another thing we can talk about. So, Are prices ever going to come back down to what they were before? You know, even the pandemic levels? Honestly, probably not. Now as a whole, there's gonna be some items that do come back down. That's gonna be more supply and demand driven, but as a whole, once in inflation has come and set in and prices have increased, they're at those levels and they're going to continue to increase. They're just not going to increase quite as fast. So, unfortunately, when you go to the grocery, everything's gonna be more expensive than it was two years ago. And that's always gonna be the case. Well, so obviously that affects everybody. I mean everybody has to drive to work or take their kids to school or go to the grocery cause everybody has to eat. And you know, even if you go out to eat, So what can we do to lessen that? Increase or make it easier on ourselves, by spending less money or some somehow that we can kind of beat down the inflation thing. Yeah. So there's two perspectives that I like to look at. There's tons of different strategies we can use. So in general we look at how do we protect ourself in from inflation in retirement. So, maybe that's 10 years from now, or maybe it's 30 years from now, but how do we protect ourselves from there? The other side is, well, that's great if we can figure out a plan for the future, but I'm still dealing with problems today. So how do we fix it today? Which would you want to start with, Rick? Well, I think retirement, because obviously I'm retired or kind of retired and that affects me obviously a little bit because obviously when you retire you don't have a steady income where you can get increases unless you take more money out of your retirement. So let's talk about that because everybody would like to have enough money for the next 30 or 40 years once they retire. So I think that's the road I'd like to go down. Yeah. So the biggest thing that's gonna help combat this inflation in retirement is going to be our investing whether it be in your IRAs or 401ks or even just a taxable brokerage account. And I say investing versus savings. There's a distinct difference between investing in savings and sometimes people kind of combine the two together. So when we think savings, we're thinking, Hey, this is money that keeping it in cash, throwing it in the gun safe, putting it in the savings account, or heck even putting it in our 401k, but leaving it in something called like a money market fund or just cash within the 401k. That's not going to help us for dealing with inflation in the future because all of those dollars, while they're growing a little bit, they're not growing enough to keep up with the rate of inflation. So that a hundred dollars that we put in today is not gonna buy the same amount of goods and services in 20 years that it does today. So the important piece is going to be investing. We want to invest in things that are going to fit our risk profile as well as our timeline and, equally as important, We want things that are going to, at a minimum, grow enough to keep up with inflation and ideally multiply on top of that. So multiply our purchasing power on top of that, that's gonna be the biggest thing that we can do to protect ourselves in the future in retirement. So if you have questions about that definitely give us a call. I can't really give real advice for everybody on this podcast because everybody's risk profile and everybody's timeline's gonna be a little bit different. But in general, yeah, we need to make sure that we're investing properly for that. Okay. So I saw another news article, which I know we touched on at the start that said that our credit card debt is at the highest it's ever been. Everybody is using their credit cards more and more. So what can we do to slow that down and what can we do to help ourselves with the inflation bug today? Yeah, so I think a lot of people their credit card balances grew because they thought inflation was going to be more temporary than it was, and it was just a short term problem that they could charge with their credit card and use that for six months or so and then, Pay it off slowly once prices come back down and no harm, no foul. Unfortunately that's not the case. Inflation kind of stuck around a little bit longer than most people thought. And it was higher than most people thought it would be. So now everybody has this credit card debt. And so that's weighing on them. And also just the, the increase of prices is weighing on them. And unfortunately wages for the most part haven't kept up with that increase yet. So what I would do if I was somebody in that situation, I'm trying to get some relief today, the biggest thing we have to do is take control of your paycheck. So that means we need to pay down that debt as soon as possible. So if there's anything we can do to adjust our budget where maybe it's canceled the vacation this year. I know nobody wants to hear that, but if we need to cancel the vacation, if there's some things that we can sell so that we can pay off some of that bad debt and bad debt, meaning Credit cards or any like, high interest personal loans or anything like that, I'm not necessarily talking about your mortgage that's at a pretty low rate, but just all the bad debt that's weighing down on us. We need to clear that from our lives as much as possible. So now that we actually have control of our paycheck and every dollar, we can start sending it to the places that we need to, maybe that place is increasing 401K contributions to help with stuff in the future as well. But also, food prices and gas prices are more expensive now, so we need to use those dollars that were previously going towards minimum credit card payments. We need to re divert those dollars to helping give some more relief today. So here's another question. I'm gonna bring up the age thing again. So people at my age that are thinking about retirement, which, when you get to a certain age, you're gonna say, Hey, I wanna retire . But inflation's bad, credit card debt's bad. So is this a bad time to retire? So in general, no. Now that's not the answer for everybody. Everybody's situation's gonna be a little bit different. If you were somebody that had a financial plan that barely got you to retirement, then it was a little bit shaky to begin with. Well then maybe we need to readdress all of that and maybe we need to push it down the road another year or two. If you were one of my clients or any client of FFP and you've been working with us for some time, we've built a plan for you that that takes into account that these situations are possible and we have a plan for that already. So for our clients, if you've listened to our advice, and we said you could retire now, yeah, you can definitely keep retiring. Everybody else, I can't speak to that. So if you're kind of in that boat and you're thinking, Hey, maybe I need to kick this down the road, or maybe I can retire, but I'm not quite sure, come talk to us. We'll give you an honest opinion of where you're at to show you with using real math and real modeling how that's going to play out. And if you need to work an extra a year or two, that's fine. We'll let you know. And if you're good to go retire, then we'll tell you that as well. Kyrk, I'm gonna ask you a serious question. What can we do today to help ourselves? So there's a lot of different things that we can do today. I think the biggest thing that we can do is really just take control of your paycheck. So I know there's a, a lot of people out there who have all sorts of different debts that are, that are built up and they're just making minimum payments on 'em, and those minimum payments plus their, I'll call 'em fixed expenses. So just the basic things that it cost to live life that might be taking up 75% or more of their, of their income. Well, when we have inflation at levels that we've had for the past two years, that extra 25% buffer, if you will, gets eaten away really, really quick. So what I mean by take control of your paycheck is let's make some sacrifices today so that we can pay off any of those bad debts as soon as possible. And by bad debts, I mean credit cards that have a high interest rate. Maybe it's a personal loan a car loan in there, you know, cause the car loan's on a depreciating asset for the most part. We want to clean up all that debt that way we have just more, more wiggle room within our, our budget so that we can adapt to these changes and prices and it not really put us into a bind. So that would be probably the first thing that I would say that everybody can do to help provide some relief today. When we make a plan, when somebody comes in and we make a plan, don't we take all of that into consideration? Yeah, that's a big, a big piece of it. So we'll look at your current budget if you have one or just your current spending plan and see where you fall and help you. If there's a lot of debt in there, we will help you develop a plan to systematically pay that debt off in a way that makes the most sense. In doing so, in reviewing that budget and your spending plan, the next thing we can do, and this is something I've done personally over the last month or so to help with this is review all of your spending and make sure that it lines up with your priorities. So I'm not somebody that likes to track every dollar that I spend every single month. It just brings me stress sometimes and maybe I'm a little lazy with it. So what I do is I'll track my spending for maybe a two month period and just see where the trends are with that. And if I notice something that's out of whack, then I can start making the changes for the next six months or so. And then I come back and just check in. So you check on the things, like when you and I drive over to Chick-fil-A and go through the drive through and they say, oh, Mr. Davis, here, we have your order ready. Is that the kind of things you track or. Well, kinda. For me, one of the big things that I've made a change in over the past couple months is my eating habits and where I've spent money on food. So fortunately I have paid off a lot of my bad debts before. So I have a lot of wiggle room in my budget that we were talking about. The good thing with that is that now you can kind of adapt to different changes. The bad news is when you have that extra wiggle room in the budget, we call it lifestyle creep, so other things kind of creep up in your life. And for me, the big thing was food. So reviewing what we'd spent on food over the last couple months, it was outrageous and I'm a foodie. I love food, but the kinds of food that I was buying wasn't really in line with my priorities. We're not gonna tell anybody not to go to McDonald's or whatever. I mean, that's not the thing. Everybody goes, oh, well, just don't buy that Happy Meal and put it in your 401k. Well that's not what we're telling you. We're just saying that tracking that stuff, especially during the time of inflation is so bad could help you a lot. Yeah. So for me, again, I'm not telling people not to go buy McDonald's or Chick-fil-A or anything like that. But for me, I noticed a lot of money going to those areas and it wasn't something that was really a priority to me. It was just convenience and being a little bit lazy and using the card maybe. Yeah, cash does help with that, kind of reduce spending a little bit. But yeah, just make sure that your spending is in line with your priorities. If you notice one line item that is kind of creeping out of control and it's not something that's a big priority to you, then that's a good place that you can start making cuts and see some real changes in your budget and use those changes and that extra cash that you found, if you will to help smooth out the other areas that inflation has roughed up for you. Well, I know if they don't hurry up and make the price of shotgun shells go down a little bit. I'm gonna have to cut back on that cause I haven't been shooting good. So I'm wasting shells. Yeah. A another really good area to kind of help with to today, or help battle inflation today is to, and this is gonna sound really, really simple and really dumb, but increase your income. And you're saying, Of course. Well, if I could just increase my income, all my problems would go away. And you might think it's not that simple, but honestly, it's probably not as difficult as you think. I've talked to a lot of people over the years that have been offered promotions at work and have turned them down because they told me they didn't want to manage people and they would rather just come into work and do their job and go home and not have to deal with it. And that's fine, but it's a really good way, with prices being where they're at, inflation still here, it might be the time to actually take that promotion if it's offered to you to increase your income. Well, it seems like the job market's good. I think that's a probably a good thing for people to look at because it seems like when you change employers nowadays, you get a raise. Yeah. I mean, you know, for doing, maybe you're doing the same thing. No, absolutely. That's a real thing. I was reading another article within the last week or two, that was kind of outlining that exactly. The labor market right now is if you want a job, you can go and get one. And employers are being forced to pay higher starting wages. So if you're needing to increase income, maybe it's worth looking at another employer and like I said, probably doing the same job or a similar job and potentially making that 10, 12% bump in salary. Getting a raise is a good deal. I understand the responsibility thing, but hopefully you guys got something outta this and it was really a eyeopening for me to see some of those news things. And if you need us, please call Kyrk or myself. Email. Call the office. So if you guys need anything, please call us and thanks for listening to the How to Win Podcast. All right, we'll talk to you next time. Thanks for listening to the How to Win Podcast. We hope you enjoyed the episode, and if you did, be sure to like us or follow us on your favorite podcast platform so you'll never miss an episode. If you have questions about your finances, visit our website at family financial partners com or give us a call at 859.219.1006