2022 April 26 Plan for Inflation

Hi, this is Jim Cranston from 7EveryMinute and 7EveryMinute.com, the podcast and website by, for, and about Baby Boomers. Thanks for joining me tonight as we do a quick review of some practical matters like living with high inflation, which is what’s going on right now. Perhaps even on a fixed income, but our attitude can make a huge difference. So let’s get started. 

First, we have the regular reminder. I’m not a medical professional. I’ll be talking about things that I personally find useful and helpful. If you find yourself feeling truly hopeless or depressed, please seek professional help immediately, or just dial (911). Also, starting July 16th, 2022 (and it’s available in some areas now), dialing (988) should connect you with immediate assistance. The National Suicide Prevention Lifeline number is (800) 273-8255. Good to know for yourself or a friend. Keep that in mind. 

So, inflation’s all over the news and it’s clearly visible. If you go shopping, it’s in the stores, at the gas stations in particular. But what exactly is inflation? It’s simply when prices start to increase,  usually because the cost of materials or the cost of labor becomes more expensive. Often this is accompanied by a rise in wages, but the increased wages make goods even more expensive, which drives up the wages further, and so the circle goes on and on. 

It’s important to keep in mind that even things like increased taxes, increased shipping costs, or any other costs that affect the overall cost of the product can have an inflationary effect. Right now what’s going on in some areas, particularly in the Silicon Valley area with all the technology companies because the job market is so tight. Their wages are going up very fast. So it drives inflation from the other side. Their wages are going up to get skilled people, because there’s a lot of competition right now. The cost of their products are going up. It’s the same thing. But either wages or the cost of the goods go up. 

Speaking of taxes, the next time that your Congressperson, or the president, says, We’re only going to tax the corporations,  it doesn’t work like that. Those taxes come back to you in the form of increased prices. No matter how you raise the prices, one way or another, it comes back to the consumer. This whole cycle has a lot of really difficult side effects to it, particularly for those on the lower end of the wage scale, and most especially for those living on a fixed income such as a pension or social security.

For low wage earners, even a small increase in prices has an oversized effect on the total cost of living, because they probably didn’t have a lot of extra money to begin with. For example, if your family’s food costs increase by $50 a week, which is realistic these days, it’s probably tolerable if your normal food budget was already $800 or a 1000 a week. That’s just the price of food. I know a lot of people that spend that size budget for a full-size family. A couple adults, a few kids, and so you figure $50 over $1,000. Okay, it’s noticeable, but it’s not the end of the world. But if your food budget was $400 a week, that increase may be more than you can afford, even if you’re getting SNAP or other benefits, because that’s 50 out of 400. That’s 12.5%.

The  rate of inflation is 8.5%. That’s the average of many different sectors, and food and fuel and transportation in particular are going up even more than the overall rate of inflation. 

So if you’re on a fixed income, especially one where there are adjustments, one of the big problems is that those adjustments probably only occur once every year. That’s how Social Security works, and that makes it really difficult because right now, you have months to go before another adjustment comes around. So, it's a really very difficult situation. You are faced  with the option to either cut back, or work part time or do something to get more money coming in each month. 

Currently in the US in March 2022, the latest recorded inflation rate was 8.5%. That’s way better than Argentina right now. Their inflation rate is at 52.3% right now. That means in a year, prices will be up by half, which means if you don’t get a 50% raise, you’re falling behind the cost of living.  

But 8.5% is still pretty significant, as we just showed. That can make, even for a very small food budget, a $50 a week increase in prices. If this continues next year, you can expect to be paying  on average about 8.5% more expensive. 

Plus, there are secondary increases,  We’re talking about taxes. Sales tax usually is on the total cost of the amount that you buy. New York has certain exemptions for certain foods. This is coming from New York as I remind you. In New York, if it’s for prepared food - for example: if you buy beans, they’re considered a basic commodity and necessary, and they don’t tax it. That’s not true in all states, by the way. So they don’t tax that, but if I buy from the deli counter where they’ve made them, then I pay tax on it as a prepared food. So if you normally buy $100 of taxable food, you have to pay $8 of tax. Now you’re paying a $108 total for that basket of food and veggies. Your potato chips, everything that the state has decreed to be “prepared.”

Next year, that same food, on average, will cost you $108.50. That’s up 8.5%. That’s $8.50, but you’ll also be paying more in taxes because now you’re paying taxes on $108.50. Now, you’re paying $8.68 in tax. So, your total food bill now is $117.18, for what used to cost you $108.50 last year. A total increase of $10.18,  You do that across a couple different categories and that really starts to add up pretty quick. 

So, what can you do about it? Well, there’s a few options. What we have been talking about right along here. Goal setting and envisionment. So, we’re very well prepared for how we can evaluate what options fit the best into our lifestyle and life choices. If you’re financially set at the moment, that’s excellent. Now is the time to talk to your adviser about the money you have saved, and what impact inflation will have upon it. Maybe your current lifestyle is such that inflation doesn’t really affect you at all for the foreseeable future. That’s excellent.

As we all know, planning in advance is endlessly easier than trying to recover. If you get behind in things, especially if you’re living off of investments, and now you dig into the principle, that’s the double whammy. You’re getting less money than you expected from your investments, and the principal’s lower to get even less money. I would encourage you, even if you think you’re set now, to talk to your financial planner and think very carefully about what you want to do as the cost of goods keeps going up. 

If you’re partially set, and perhaps working part time for some extra money, or for vacations or things like that, maybe it’s worth putting in a few extra hours each week, or asking for a raise. Or try to do both. As we talked about before, asking for money usually goes better if you can offer more value. Now is also a good time to consider if you have any other skills that you can bring to the job, or perhaps learn a new trade or a skill, and if you’re really good at at negotiating, you can offer to do something else and get them to train you for it too, and then pay you more money. So, just things you can possibly do. 

If you’re in that borderline place where you’re set, but you’re able to make extra money, you might want to consider putting a little more money away if you can. But what if you’re already living frugally, or perhaps just cannot go out and get another part-time job? Maybe you have medical reasons, location, whatever. We’ll have another episode coming on this. Because of the internet, location really shouldn’t be too much of an issue for a lot of skill sets. We’ll talk about that another time. 

Let’s say that you’re just stuck right now, that you’ve already cut back, and it’s not easy to get more income in. This is where some very careful self evaluation and goal setting will be especially valuable. First off, if you’re currently living a life that you’re satisfied with, that’s great. Just make sure that, with inflation, you still have enough money. Even if you have to live frugally, you will have enough money to maintain your current lifestyle. That’s really important. Inflation is one of those little problems that comes in little cat’s feet. You hardly notice it. This is up 10 cents. That’s up 15 cents and all of a sudden, the grocery bill is up a couple bucks, and all of a sudden, you realize everything’s up a little bit. You really have to keep track of it. 

If you’ve thought about doing a budget at some point, now might be a good time to do it. If you live a cash life, you can always use the envelope system. Take some money, stick it in an envelope. I’m going to spend $75 a week on groceries. You put $75 a week in the envelope. You get done paying for groceries with $6 left, life is good. Two months from now, you go pay for groceries and you realize, Wow, I have to take another $2 out of my pocket. It’s just a really good reminder, and an easy way to keep track of how much money you’re spending and how much things are costing. 

Just be careful that you can maintain your current lifestyle, but what if you’re dissatisfied with how you’re living now? Well, then it’s time for some serious soul searching, goal setting and envisionment work. That’s what we do here. This is true no matter where you are financially. If you’re really happy and content with the way things are, then that’s great. It doesn’t matter whether you have a lot of money coming in, or a little bit of money, but if you’re not really happy with where you are, it’s time to change it.  

Who drives the change? You drive the change. I just saw a saying today in the paper that said, Life is not determined by what you want. Life is determined by the choices you make. I think that’s really important. Life is by the choices that you make. Two lines sums it up pretty clearly. It’s also said Contentment comes from being happy with what you have. Another important thing: if what you envision going forward is something extremely grandiose,and you’ve never really worked to prepare yourself for having that lifestyle, you’re going to be very disappointed with what you have.

 But if you’ve always wanted to live just a comfortable not extraordinary life, and you’re living a comfortable but not extraordinary life, then you’re living what you want and you’ll be content with what you have. It’s super important. Contentment comes from being happy with what you have, and being happy comes from setting the proper goals and envisioning the proper life that you want.  The threat of inflation is a major disruptor of our lives but if you look around the news, that’s all you see in the news. That’s what all the headlines are about. It’s very concerning at a gut level. If prices go up, and I live on a fixed income, or I’m supposed to retire in 2 years. My company has been talking about maybe it’s time for you to retire.

I saw an amazing article on agism, and my mentor included this and I just forgot. A lot of the very progressive liberal papers are talking about how it’s time to kick most of these Congress people out, the senators specifically. They’re too old. There were some very serious ageism comments. If I had used that in terms of race or ethnicity, or any other metric, I would immediately be called up on charges. But these papers feel it’s just fine to talk about old people that way. That in and of itself was pretty enlightening. We’re going to do another whole episode on recognizing and not tolerating ageism. 

The headlines are always talking about this big disruption coming. It’s always this or that. There are going to be food shortages. It’s going to be global warming. The police are out of control. There’s not enough police for that. It’s too hot. It’s too cold. They’re coming up with these things because that’s what sells news. They always know the disruption waiting for you will catch your attention. 

However, we have some very powerful tools to help us - not only navigate inflation, of course, but all the other things that arise in life. Don’t misunderstand me - if you really are strapped for cash and really have no extra money,  any increases in costs are a serious threat. Go look for places you can get aid. Search them out. Go to your church. Go to the government. Get as much aid as you can if you’re truly in a serious situation. 

For many of us, we have a lot of options available. From learning new skills that may allow us to earn a little more money, or even just bartering for something that’s of interest or value to somebody else.  We went through this a couple weeks ago.  Learn how to use a computer or a smartphone, then you can get your other friends who are good at baking and make really awesome desserts in exchange for tutoring him. Whatever skills you have, leverage them. It doesn’t have to be that you’re getting cash in necessarily. But working as a community and helping each other out, that’s really the first step in getting through any difficult situation. Remember that you play the most significant role in deciding if you want to be happy or not, and you have the ability to change things, to bring more happiness into your life.

Back to our inflation example. If you want to listen to all the headlines and feel everything is hopeless, that’s certainly a choice. You can shake your head and say, Look at that, $1.99 for a pound of green beans on sale. It’s  goodness gracious. The other way of looking at it is Wow, green beans are $1.99. I was going to plant two rows of green beans. Maybe I’ll plant four rows of green beans, and sell them to my neighbors, or barter them. 

It’s up to you how you view a situation and how you react to the situation. At this stage of our lives, it’s unlikely that we’re going to run out and get  some advanced medical degree and start doing breakthrough research. We talked about this before. The goals have to be reasonable. They can be stretched goals. They can be really hard goals. But if your goal is I’m going to learn how to flap my arms and learn how to fly, you’re probably going to be disappointed. We have the ability to look into our own future and plot any course that we want, and try as hard as we want to make that become a reality. There's nothing stopping you from doing that. There really isn’t. You may have to temper your reality a little bit. We talked about that before too, but within the constraints of all that you have at your disposal, there’s a lot of things that you can still do. If you can do those things and attain those things, you’ll be satisfied. If you’re satisfied then that’ll be your contentment and happiness. So you really are in control of things, more so than the news would like you to think.

So our answer to inflation is the same as all the other bad things in the world. It’s always the same answer. It’s up to each one of us to either be a leader or a follower in everything that we do. We don’t have to be a public figure or politician. It’s as simple as being interested in the world around us, setting goals for ourselves, and then living our life in a way that those goals can be realized.  We can lead ourselves to a place of happiness, and we can follow all the naysayers saying, Ugh, things are miserable and say, Oh, I guess I should be miserable or we can say, I’m sorry, things are miserable for you, but I see goodness and opportunities, and I’m going to pursue that. 

If we’re doing things that aren’t making us happy, in most cases, we have the ability to either change what we’re doing or change our attitude about what we’re doing. Don’t forget that’s a valid response too. I’m working in a job that’s not awesome. It has a lot of good things to it. I work with a lot of good people, but there’s a lot of things that are very trying. I can either let that gnaw at me every day, every waking and sleeping moment, or I can say, Wow. This part of it’s bad, but I work with really awesome people, and they pay me okay, and they give me flexibility to work at home. Overall, It may not be perfect, far from perfect, but it’s really not a bad thing. That’s strictly attitude based. Nothing about the job changed. It’s what I want to focus on. 

We just need to believe in ourselves and to keep a positive attitude and envision the outcomes we want, and that will help guide us to make decisions to create the life that we desire. So, good luck on your journey to start rewriting your own future. Choose to succeed and to see all the good and of course to never give up.

As a reminder to support Ukraine, or support whatever cause you want, here is the shortcut that takes you to the Congressional Office where you can enter your address and find your senators.  7em.link/Congress Your senators are easy to find. They’re statewide. But your representative is sometimes a little more challenging. If you put in your whole zip code, it’ll take you right there. Once you get to the senator’s official Congressional page, they have a link to a webpage that they themselves put up. When you go to that page, you can find a Contact Me form. Then you can fill out the reason you’re writing them, and put in all the lovely things you want to say to them. There’s a couple techniques that make it more effective, and we’ll go through those and do some example letters.   7em.link/Congress

Remember that acting even in small ways, and especially acting in a manner consistent with your core beliefs, you’ll find you feel a lot less threatened by the world, and a lot more involved and competent in all your actions, and all the things that you do. Then to me, the most important one. Of course, please don’t forget about the war in Ukraine. It is still raging. I know the news keeps trying to push other things in front of it. Still, Putin has upped it even further and more amazingly, he attacked a bunch of places and people on Orthodox Easter, just to be a real pain and it's totally out of control.   Ukr7.com

You can donate. This is a list of links to other pages that accept donations. There’s a lot of them. Remember one of the ways to care for yourself is to care for others. It takes your mind off your own issues, which is step one. That’s good. Then it also makes you feel good about helping others which is step two. That’s good. Then step three, which is very good, it actually does help others. So it's good all around. If you’re able please check it out at UKR7.com.  You can read through the list of websites and you can go to different things. 

Just a quick side note in general. I’m doing a number of really pretty minor things, so there’s a couple that I do to support Ukraine. I told you about most of them. I have a one person rally at least one time a week. I had to cut back for other reasons, but I’m still out at least once a week. I’m out by the roadside. It’s my big sign that says Support Ukraine, and there’s a couple things that come from that. Some people who try and put it out of their minds, they see it and it forces them to think about it a little bit and hopefully it gets them to think about some of the suffering that’s going on, and gets them more motivated to be a little more proactive about it.

The other thing is a lot of people blow their horns or give me a thumbs up, and the neat thing about that is it really psyches you up when you’re standing out there in the rain and it’s 28 degrees, and somebody honks the horn. It gives you a big smile. That’s nice, but more importantly, is all the people around them hear that, and they see that and they go, Wow, that person looks like a reasonable person, and they believe in supporting Ukraine. Maybe I should look into it more. So, it helps spread it around a little bit and that’s really important.  

I do the rally one time a week. I wear a little pin that says Peace for Ukraine that I was given, and I made my poster designs, the ones that say Support Ukraine, and some others available for anyone that are on that same support page. They’re available for anyone to take and use. I write to my Congress people not often, but it repeatedly.  Those are all pretty minor things. It’s not like I’m doing stuff every day. They’re all just  little minor steps but when enough people do really minor things or pretty minor things, a funny thing happens. It becomes a pretty big thing. 

We’ve seen this before, and some other things, but it can be whatever cause is important to you. If you can get other people to do it, and you do it consistently, if it’s a cause that you strongly believe in, I would encourage you to support it regularly and that’s really important. Support it regularly in any legal way you feel comfortable with. I’m out. I go and I stand by the roadside and it’s usually around the same time on the same day. It’s the one where I'm always there, and there’s a lot of regular people there. They go by, and I recognize some of the bus drivers. There’s a whole bunch of people I recognize. Every week they blow their horns and every week I wave to them. 

But the really important thing is all the other people see me. I’ve seen this dude out here before. What’s he doing? It must be pretty important to him to be out here  on a sunny day, on a rainy day, doesn’t matter. He’s still out here. So if it matters to him, maybe I should check it out a little bit. So if there’s something you believe in strongly, support it regularly in any legal way that you feel comfortable with. It’s super important. 

As always, be true to yourself and live a life aligned with your true goals and feelings. Be aware and have empathy for others. Try to respond to everybody with kindness, encouragement, and find new opportunities for friendship and growth. 

So, that’s it for the week. Thanks so much for stopping by. If you found something interesting or useful, please pass it along. If not, please drop me a comment as to what you’d like to hear. Have a great week and thanks for visiting. Remember, always to live the life that you dreamed of because that’s the path to true contentment. Love and encourage to everyone and see you next week on 7EveryMinute and  7EveryMinute.com.