High inflation in America: How to deal with this problem and my thoughts and observations…
 |
| Ocean City, Maryland |
It seems every day these day, anyone who is even remotely interested in money matters is closely watching the inflation rate. I for one, is in that group.
When going grocery shopping seems expensive compared to just 4 years ago, or when going out to eat at a sit down restaurant costs an arm and a leg, we can’t help but notice how much more expensive things have become.
I remember the early days of 2022, just prior to the Russian invasion of Ukraine, when a gallon of gasoline near Myrtle Beach (where we were staying at during that winter) was around $2.25. Fast forward to this year, and we’re seeing that same gallon of gasoline cost upwards of $3.00 or more.
Going grocery shopping is one of the most unmistakable things I notice since the pandemic. Just even 3 years ago, we spent roughly around $300-$400 on groceries per month. These days, we’re spending something like $400-$500 per month.
Sure, you can blame greedy corporations that raised prices on everything in many cases de-contenting (putting in less of everything in a package of say potato chips or turkey) everything. We’re getting less but paying more? That hurts.
We’re right when we say many corporations are definitely greedy and they have taken advantage of the pandemic to fill their pockets with more money. This, however, is not the only reason why things are so expensive these days.
Let me give you some other reasons:
- Majority of boomers have retired since 2020 en masse equaling less workers for everything from retail, home improvement, restaurants, etc. Of course, this will be inflationary. Companies have to pay workers more to fill those vacancies equaling higher cost of doing business, which gets handed down to consumers.
- Broken supply chain issues exacerbated by the pandemic, especially those coming from China. Although some issues have resolved, the ongoing trade war between the US and China will not go away anytime soon, and we should expect more supply chain issues going forth, increasing prices for consumers.
- Russia-Ukraine War does not help. Since early days of 2022, many commodity prices (gasoline, natural gas, wheat, rare earth metals, minerals, fertilizers) have gone up thanks to Russia invading Ukraine. Russia is one of the leading exporters of many of these commodities and so is Ukraine. Disrupting the normal flow of trade will of course raise prices for consumers.
- Houthis/Persian Gulf. Houthis have successfully disrupted and raised insurance premiums for all shippers traversing through the Persian Gulf. This will always raise prices for end consumers.
- Higher insurance costs for cars and homes thanks to many weather related issues like wildfires and flooding in places like California, Texas, and Florida not helping the situation. All insurance companies have jacked up their premiums to help offset their losses.
I’m no expert, but these and probably other reasons exist why things are more expensive these days. I’m an end consumer myself, so I’m also hurting. But, like anything in life, you can either complain all day and not do anything about it, or you can take action to figure out what YOU can do to help the situation.
With that preamble out of the way, here are my suggestions on how to deal with this persistently high inflation:
- Despite what some people will have you to believe, high inflation is not the only problem; spending too much is still the other problem
I see too many news articles about fellow Americans complaining about high inflation these days. On one hand, they’re complaining about the high grocery prices (rightfully so!), but on the other hand, some of those same people are taking flights going on expensive international vacations despite their high ticket prices and high hotel rates!
What is wrong with that picture? !?
You can’t complain about high cost of everything when you’re contributing mightily to the problem! Spend less on things and watch prices eventually come down. We can all contribute and make a difference to help this problem.
When people started to spend less at large retailers like Target and Walmart the last few months, they announced lower prices on hundreds of items in their stores. We can either make the problem better or worse by our own actions.
How many times have I read about people who took out car loans with $1000 monthly payments for a Ford F-150 or a Dodge Ram? Are these people out of their minds???
High inflation is part of the problem, but the real problem is us spending on stuff we don’t really need, like on a $70000 truck or on a $1000 flight to Amsterdam when you’re making $50,000 per year. When did international travel become something that everyone and their dog is doing on summer vacations?
It used to be, we’d take a classic American road trip to parks to save money. I know I sound like an old fart, but it doesn’t mean I’m wrong about this.
Sure, if you’re making $200,000 living in a not-so-expensive city like say Pittsburgh (PA), and you’re budgeting well, then maybe that international vacation is warranted, provided you’ve saved up the money for that travel.
My point in all this is this: You can’t have everything in life. That goes for expensive vacations, expensive cars, or expensive habits like daily Starbucks runs, or daily lunches at local restaurants! You have to choose where you spend your money on.
You can’t spend your way to retirement is the bottom line. Spend less yourself, buying essentials, and not on frivolous things or expensive vacations. Eventually, we’ll all see lower inflation by everyone chipping in to help out.
- When going shopping for anything, buy less and/or figure out what you can live without
This is what we had to do to survive these high inflationary times. I used to buy a 12 pack of beers few times a year because I’m a beer kind of guy.
Since last year, I stopped buying beers. Why? I’m trying to save money when grocery shopping, and I’m also trying to watch what I eat or drink. Drinking beers, especially IPA (India Pale Ale) beers are high in calories. I figured it’s not a bad idea to kill 2 birds with 1 stone when prices are so darn high!
We can all buy less or not buy something at all if we think things through. If I can forgo one of my favorite things in life (beers), anyone can forgo at least one or two things…
- We’re dining out at sit down restaurants much less compared to 5 years ago, just before the pandemic
We used to love going out to eat at sit down restaurants for the ambiance and for the food. We liked the feeling of being pampered and not having to prepare/cook/clean up after our meals. Who doesn’t?
We switched to fast casual restaurants for most of our meals eaten outside when we noticed ever so slight price creep since the pandemic. Of course, we do splurge once in awhile when we’re treating our parents, but when it’s just the two of us, we usually stick to much less expensive fast casual restaurants like Chick Fil A, Panera Bread, or anywhere else where we order food ourselves then pick up the food ourselves so as to save money on tips.
Tips have been a point of contention these days, and we, like most of you, hate seeing tip prompts whenever we order even from fast casual places in some places. But at least we can choose to skip over that particular prompt at fast casual places.
Tips at sit down restaurants are fine but we can’t afford to do that on every meal we eat when we go outside. These really add up at 15-20% of the check total.
Add to that, we’ve seen miscellaneous charges like “service fees” at some of the sit down restaurants. When did this become a thing? Although not big (usually 1-3% of the check), they add up quickly once you add tip on top of this mysterious charge. For this reason, we’re trying not to go and eat at sit down restaurants.
You can choose to make little changes like this to help yourself. I’m not suggesting you stop going to sit down restaurants. Go once in awhile, just not for every meal outside.
One more thing: I personally like chain restaurants like Chili’s as they now feature lunch menus at around $11 for an entree/soup or salad/drink. This to me is a better value than getting a Big Mac value meal at some places like on the I-95 Connecticut rest stops where they charge $18(!). In this case, I don’t mind paying the tip as it’ll cost the same, and I get a soup or salad with my meal.
Consider doing something similar. There are better values out there if you look.
- When did flying international become a common thing for a summer vacation?
I simply laughed when I started to hear about “revenge travel” during the pandemic, when people took vacations again after being quarantined for months on end. This trend has not changed much.
I still hear news about people going on international trips paying upwards of $1000+ on flights alone to visit places like Europe, Asia, and so on. I personally cannot justify paying $5000 for a week long trip for 2 people to visit Europe when it’s so darn expensive! *I’m calculating flight for 2 people at around $2000, hotel for a week at $1400, foods at $1000, plus price for attractions/transportation.
For that kind of money, I’d rather do a cross country road trip in the USA that’ll last me like 4-6 weeks!
Growing up, only the well-to-do people took summer vacations to Europe. The rest of us plebeians took short road trips to parks somewhere nearby. Did all of the common folks suddenly become rich???
Why are you complaining about high inflation when you’re taking expensive trips to Europe??? Something doesn’t add up for me. Either live frugally while doing everything you can do help the situation, then complain about high inflation (you’ve then earned the right to complain) or take the expensive vacation but don’t complain about high inflation!
It’s hypocritical to complain while adding to the problem. This drives me insane!!!
- Figure out what else can I live without or with less of, and what else I can do to save money elsewhere…
You can’t expect different results when you’re not changing your behavior. This goes for living with high inflation.
Figure out other things you can cut out, change, or live with less of. Instead of always wanting your case of beers every month, see if you can live with one case every other month. If you drink lots of sodas, see if you can substitute that with something much less expensive like home brewed iced teas. If you love snacks like I do, cut out some. Instead of buying 10 bags of chips, buy 5 and so on.
There are things we can all do to help the situation.
Consider shopping around for cheaper insurance. I changed mine 2 years ago and I ended up saving around 10% compared to my previous insurance premium.
Consider cutting out paid subscription to services like Netflix, Amazon, Disney+ for something that’s free, like Peacock, YouTube, or Crackle. If you have a gym subscription, consider doing at-home training using body weight exercises or with dumbbells. I get a heck of a workout training this way for free! I don’t have to drive to the gym and burn gasoline, and I save time and money by working out from home.
Consider signing up for rebate services like “Rakuten” which gives you money back when you sign up and add your credit card(s) to the account. It’s not a huge amount, but every little bit helps here. Why not get something for things you shop for anyway, like dining out, shopping for hotels, etc.?
If you look, there are things you can do to make your money go farther.
In conclusion:
Nobody in the world likes high inflation. As bad as it seems, there are always some things we can all do to help the situation.
I don’t like people who constantly complain about things. If you don’t like something, do something about it. Blaming others for problems is usually not the most productive way to resolve that problem.
Instead, own the problem, and see what you can do to help the situation. This is true for dealing with high inflation, planning for your retirement, or any other problem you’ll likely to encounter in your life.
No one will fix the issue for you: not the government, not your family, not your friends, and certainly not some fairy godmother. Man up, take ownership, and stop complaining. No one likes whiners, complainers, and negative people.
Figure out things for yourself, take action, find ways to spend less, and we’ll all see inflation start to come down. We can all help the situation!
Thank you for reading my sometimes controversial thoughts and observations, but sometimes everyone needs a little spanking (verbally) once in a while.
Jake
Wandering Money Pig
If you missed the post ‘What’s it like to hand in your resignation...’, please click here.
If you missed the post ‘How to retire early...’, please click here.
If you missed the post ‘We sold our home during the pandemic...’, please click here.
If you missed the post ‘What is the FIRE (financial independence retire early) movement...’, please click here.
If you missed the post ‘Magic of compounding interest...’, please click here.
If you missed the post ‘Our minimalist update…’, please click here.
If you missed the post ‘Dangers of entitlement on your path to happiness…’, please click here.
If you missed the post ‘Get rid of debt to reach your goal of financial independence…’, please click here.
If you missed the post ‘Thinking of moving to Pennsylvania…’, please click here.
If you missed the post ‘Learn to say enough to be happy on your path to financial independence and to retire early…’, please click here.
If you missed the post ‘Why is downsizing/minimalism so difficult…’, please click here.
If you missed the post ‘Is America still a land of opportunity…’, please click here.
If you missed the post ‘Learn a skill that pays you well to retire early…’, please click here.
If you missed the post ‘Invest and not save for retirement…’, please click here.
If you missed the post ‘Learn to enjoy the moment for life and for FIRE…’, please click here.
If you missed the post ‘The correlation between consumerism and early retirement…’, please click here.
If you missed the post ‘Retire on $200,000 (200k)…’, please click here.
If you missed the post ‘Adapting to change for life and for FIRE…’, please click here.
If you missed the post ‘Thinking of moving to Hawaii…’, please click here.
If you missed the post ‘Tough childhood leads to success in later life…’, please click here.
If you missed the post ‘Thinking of moving to New York City…’, please click here.
If you missed the post ‘Importance of finding purpose in early retirement…’, please click here.
If you missed the post ‘What is the rule of 72…’, please click here.
If you missed the post ‘Retire on $100,000 (100k)…’, please click here.
If you missed the post ‘The importance of a significant other’s role in your path to FIRE…’, please click here.
If you missed the post ‘Save for retirement or pay off debt…’, please click here.
If you missed the post ‘How much do I need to retire…’, please click here.
If you missed the post ‘Early Retirement Manifesto…’, please click here.
If you missed the post ‘Pros and cons of early retirement…’, please click here.
If you missed the post ‘How to save money when traveling…’, please click here.
If you missed the post ‘What is the average 401k balance…’, please click here.
If you missed the post ‘Doing a garage sale during the pandemic…’, please click here.
If you missed the post ‘First few months after early retirement…’, please click here.
If you missed the post ‘Not caring too much equals happiness…’, please click here.
Please check out our YouTube channel ‘Wandering Money Pig’ showcasing our travels and our Pomeranian dog! https://www.youtube.com/channel/UC3kl9f4W9sfNG5h1l-x6nHw
