Let’s talk about the elephant in the room – inflation. You hear about inflation everywhere and feel it every time you fill up your car at the gas station or pop into the store to buy some food. Inflation is currently around 7.7%, which is the highest it has been since the early 1980s, and it looks like it’s here to stay much longer than Pumpkin Spiced Lattes. You might be asking, who benefits from inflation and where’s my inflation relief? It’s not all bad though – higher inflation typically means higher interest rates on your savings accounts which will have your emergency fund singing hallelujah for a change. So I went to my fellow podcaster, Chris Browning, host of the award-winning short-form podcast Popcorn Finance to join us for a conversation all about inflation. This episode isn’t filled with boring stats, instead, Chris shares thought-provoking details like the psychology behind inflation, a deep dive into potential pros for inflation, and the exact steps you need to take to set your money up in 2023 to help combat inflation. Grab a beverage, sit back, and let’s start talkin’.
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Chris Browning 00:00:10
I think particularly what really brought this a lot of people’s attention, our gas prices. And I think the reason why is that they’re just so visible, right. If you’re driving to work, you’re probably going to pass, like, five or six gas stations easily on your route in. And so you just see this big number plastered on a big giant sign on the corner of a street everywhere you’re going. So it’s, like, right in your face. Oh, I see that numbers are higher. And for a long time, gas was one of the biggest contributing factors to the high inflation number. And so it’s very visible. And then now also grocery stores. When you go to the grocery store, I know I for sure I’m seeing a big jump in prices. And so I think it’s a combination of we actually are really noticing it because the prices price increases have become so significant combined with the fact that people are just talking about it.
Shannah Game 00:00:56
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Cachava is offering 10% off for a limited time. Go to kachava.com MyMoney. That is spelled kachava, and get 10% off your first order. That’s k a chava.com MyMoney. Let’s talk about the elephant in the room inflation. You hear about inflation everywhere, and you feel it every time you go to fill up your car with gas or you pop in the store to buy some food. Wait, okay. I bought a small bag of food with milk, eggs, and cereal and dog treats, and it cost how much?
Speaker 3 00:03:05
Don’t even get me started on bacon. That is just through the roof.
Shannah Game 00:03:09
Inflation is currently around 7.7%, which is the highest it’s been since the early 1980s.
Speaker 3 00:03:15
And it looks like it’s here to.
Shannah Game 00:03:16
Stay much longer than pumpkin spiced lattes. It’s not all bad, though. Higher inflation typically means higher interest rates on your savings accounts, which will have your emergency fund singing Hallelujah for a change. So I went to my fellow podcaster, Chris Browning, host of the awardwinning short form podcast Popcorn Finance, to join us for a conversation all about inflation. This episode isn’t filled with boring stats, I promise you. Instead, Chris shares thoughtprovoking details like the psychology behind inflation, a deep dive into potential pros for inflation, and the exact steps you need to take to set your money up in 2023 to help combat inflation. Grab a beverage, sit back and let’s start talking.
Speaker 3 00:04:00
We’re talking about this super heavy topic, inflation, and hopefully we’re going to do our best to really break it down in this episode. But I know it’s something, it’s causing a lot of pain for so many of us listening. It’s currently around 7.7%, as we’re recording right now in November 2022. But historically it’s been pretty low since the 70s when inflation was at another peak, about ten to 14%. So I really think the numbers are one thing, but what I want to talk to you about is really what does inflation mean for everyone listening? Like, why should we care and what.
Shannah Game 00:04:36
Can we do about it in terms.
Speaker 3 00:04:37
Of our money and goals going forward? So, Chris, let’s just kind of start at the beginning if we can. Can you break down for us what exactly is inflation?
Chris Browning 00:04:48
Yeah, inflation is one of those terms that we all hear constantly, especially right now, while inflation is higher than it typically is. But it’s almost like this really vague term like, oh, I hate inflation, but we don’t all know exactly what that means. There’s a few ways to measure it, and I think that’s why it’s confusing, because not only is it a very vague term, but there’s multiple measurements of inflation. So, like, one that you see out there, this is what the Federal Reserve uses. So whenever the Federal Reserve meets, they meet a handful of times throughout the year, and that’s when we get those big news reports about interest rates going up. They use a measure of inflation called the personal consumption expenditure. And this is like managed and created by another government organization out there called the Bureau of Economic Analysis. And it’s like this really broad business data driven number would actually go out and interview different businesses, and they’re asking them, what are your costs? What is it costing you? What do you think people buy from you, where your price is at? And they have this very complex system of putting all this data together, coming up with a percentage that they use to say, okay, this is our measurement of inflation. On the other hand, there’s another one that’s more consumer focused, and it’s called CPI, you might have heard of, referred to, and this is what you see in like the news stories every month, the Bureau of Labor Statistics, another government entity, they come out with this number called the Consumer Price Index. And it’s measuring what us as individuals are paying for goods. They literally go out and interview people. They’ll just call people up and say, hey, what did you spend on socks this month? What have you been on? Cheese? It gets super granular. And they go through, they take all that data and they compile it together and they use that to come up with this index. And what they’re doing is they’re looking back over periods of time. So when you hear an inflation number reported, they’re looking at like a twelve month span of time. So they’re saying, alright, this is how much this basket of goods and services cost this month. How much did the same grouping of things cost twelve months ago? And that difference in price is that percentage you see. And so it’s that kind of constantly moving. Every month is changing because not only our price is changing, but they’re also comparing it to a different month twelve months ago. And so it can get like really granular. I don’t know why I just read out on this. I love to go to their website and I go and look at the report and it shows you how detailed it is. It gets to the point where they’re calling out like, the price of beef steaks and how much those have changed month over month. That feeds into the overall equation they put together. And it’s this big weighted average where everything in there has a different kind of impact on the inflation number. So for example, like housing, that makes up about a third of the overall inflation percentage you’re seeing, whereas food is about 14%, gas is about 4% of that overall score. So it can get really detailed, but that’s basically, in a nutshell what inflation is. And those numbers you see report in the news, where they’re coming from, I.
Speaker 3 00:07:41
Love that you nerd out on this and kind of go to the website and look up beef steak. That’s fabulous. I was thinking about kind of like how we break this down for everyone listening. And I saw this graphic and it talked about the simplest way to get inflation and it showed like a cup of coffee. And in the 70s it was like twenty five cents for a cup of coffee. And in 2022 it’s now the average like a dollar and not think that there is a huge difference between twenty five cents and a dollar and eighty five cents. But that is a lot of inflation, like causing that cup of coffee to get more and more expensive over time. And I was kind of thinking about how this year we’re so hyper focused on inflation. Like you watch the news, you go on CNN or any of your news outlets, and they’re always talking about inflation. We’re going to talk a little bit later about Black Friday and Cyber Monday sales and kind of how people went out and shopped regardless of inflation. But I’m wondering, do we really care about inflation when the inflation number is lower? Or the reason we’re caring about it now is just because inflation is being talked about everywhere.
Chris Browning 00:08:58
I think it’s a combination of it’s being talked about constantly. I mean, constantly. If you think about 2019, nobody was talking about inflation. Yes, it got reported every month. So the data was out there, but no one cared because it was relatively low. Because the goal, like the government’s goal, except the Federal Reserve’s goal, because the Federal Reserve, they’re in charge of our monetary policy to make sure everything’s running smoothly. And their big thing is inflation. They want to keep it in check, but their goal is 2%. That’s like what they’re aiming for. They want inflation to be around 2% every single year or every month when they look back twelve months. And right now it’s clearly much higher than 2%. And I think it’s a combination of inflation actually being higher. You can physically go out and see that prices are higher than they were before. I think particularly what really brought this a lot of people’s attention are gas prices. And the reason why is that they’re just so visible, right? If you’re driving to work, you’re probably going to pass like five or six gas stations easily on your route in. And so you just see this big number plastered on a big giant sign on the corner of the street everywhere you’re going. So it’s like right in your face. Oh, I see that numbers are higher. And for a long time, gas was one of the biggest contributing factors to the high inflation number. And so it’s very visible. And then now also grocery stores. And you go to the grocery store, you’re seeing I know, I for sure I’m seeing a big jump in prices. And so I think it’s a combination of we actually are really noticing it because the price increases have become so significant combined with the fact that people are just talking about it. And one of the weird things about inflation is that, yes, it is a real thing, but also it’s a psychological thing at the same time. And the more people believe there will be inflation, the more likely it is that we will have higher inflation. It’s kind of like a self fulfilling prophecy. Not saying that companies right now aren’t raising their prices ridiculously, because they can, because they for sure are. But also it can be this kind of psychological thing that if we believe things are going to be more expensive, then we might go out and buy things now versus waiting, because if we buy it now, maybe we’ll catch it before the prices rise. And then by doing that, you’re kind of feeding into inflation. You’re making prices rise because you’re creating all this demand for things. Like we saw during the pandemic where people were going out and buying what were some of the big things that was like bread making was huge.
Speaker 3 00:11:17
Chris Browning 00:11:18
Doing home remodeling.
Speaker 3 00:11:20
People take peloton, bikes.
Chris Browning 00:11:22
Peloton. You see, when everybody wants something, you grab it, it starts to sell out. And then these couples and say, well, hey, look, we can barely keep this in stocks. We’ll raise their prices because the demand is so high. So it’s kind of a mixture of prices really truly being raised and getting kind of out of control. Plus us all really being like having inflation just thrown in our faces and it’s just on our minds. We’re really thinking about it. And we can cause higher inflation just by the belief that there will be inflation.
Speaker 3 00:11:50
I think that’s a really interesting point to bring out and talk about because I feel like for so many people, inflation feels like yet another thing around money that they have absolutely no control over. And you know, that this somehow in the background, inflation goes up, goes down. And how I feel it is at the gas station, at the grocery store and then that makes me really frustrated and really angry at the system around money. And then I create these negative emotions around money and then I don’t want to deal with my own money. And so it’s really interesting to kind of think about it as this onion where there are lots of these layers that we can peel back. And one of those layers is literally our mindset around the idea of inflation. Obviously we can’t control the prices of things, but maybe we can in some way.
Chris Browning 00:12:41
Yeah, we do have some impact, but then also whenever I talk about this, because the psychological part is a real thing, but what we’re seeing right now is that it’s kind of hard to reconcile the fact that prices are raising but then companies are having record profits at the same time. You’re kind of like, yes, we do have an impact on the overall economy and prices because our actions affect the price of the goods that we go and buy. But also at the same time, these companies, they got shareholders are trying to keep happy. They got to keep their profits up. And so one of the ways they can keep their profits up or by raising prices and just keeping more of the money so I don’t want to minimize the impact and how significant that part alone might be having on inflation.
Speaker 3 00:13:26
And what do you think we talked about the 70s in terms of like a cup of coffee in the 70s was also when inflation was most recently at the highest, higher than it’s been at this point in time. What do you think the differences are between the kind of now are we just going down this whole cyclical track where we’ll kind of end up maybe more around like a 10% inflation before it starts coming back again?
Chris Browning 00:13:53
It’s really hard to say. I think what’s going on now and what was going on in the are both kind of unique from each other. So when you look back at like the think it was like around the middle of 1978 through like early 1982, inflation was high. It was like consistently above, well above 7%. And it actually reached a peak of around 14.8, like almost 15% in 1980. And so we’re still a long way away from that. Our numbers, although they are high, we’re still pretty far from that and we’re actually starting to see inflation come down a little bit. It’s not low, but it’s around excess 7.7% compared to being like around 9% a few months ago. So we’re not quite there. That was all spurred by the energy crisis and the revolution in Iran and all the conflict going on over there and oil prices and that kind of spurred a lot of what was happening there where what we’re seeing now, it was kind of triggered by the pandemic. Right? We had just a world changing once in a generation event happened where everything just completely changed. Everyone locked down. You had what company stop was going to be a complete drop off in demand. You assume that when people have to stay at home and people aren’t working because they can’t, they’re losing jobs and losing income, is the world going to end? No one knew what was going to happen. So there’s this assumption that, well obviously the world’s going to end, so people aren’t going to just be buying things. So a lot of companies completely shifted what they were doing and they shut down factories, they decreased production, thinking that why would we make all of this stuff and have it just sit in our warehouse and just eat up our revenue or our money but just sitting in inventory? But the opposite happened. People were at home and a lot of people weren’t working, but demand still was there that actually increased and jumped. And so we had all this demand still pulling in, trying to pull for these products that weren’t being produced at the same volume as they were before. And then you combine that with what’s happening worldwide, everyone’s experiencing similar things with demand is up. Even though people thought there wasn’t going to be demand, you have people not going to work because it wasn’t safe, so they didn’t have the capacity to produce as much as they did before. You had all these issues with like in the harbor. I live in Southern California. I used to live in Long Beach where there’s a huge port there between Long Beach and San Pedro. And I would drive out there and you would see just ships way out into the distance, sitting there, just waiting to come in full of stuff, full of stuff, and they couldn’t get it off the ships fast enough. But also what happened is you had all these shipping containers just sitting here in our ports, and so those shipping containers have to go back so they can put more stuff on them to bring it back over to us. And so because of that, they also created like an imbalance where now there wasn’t a way to get enough stuff here faster because we couldn’t get it processed and shipped out to all the stores. So I think it’s a different situation. So I don’t know if we’ll actually get to the same point where we were in the but it is its own really unique and weird situation that we’re all trying to see how this will shake out.
Speaker 3 00:16:55
Let’s hope we don’t get there.
Chris Browning 00:16:57
Speaker 3 00:16:57
I remember stories of gas lines and all sorts of craziness that happened during that time period. But I think what you’re talking about, at the core of inflation, there’s always this contrast of supply versus demand and can we get the goods? Can we not get the goods? How many people want the goods? What was the demand? And so there’s always kind of this conversation around supply and demand. If we think back to 2020 and toilet paper debacle, we were paying outrageous prices for toilet paper because it’s an essential we needed toilet paper. But the demand was so high that people could literally charge who had toilet paper charge a ton of money. I mean, that is inflation in itself. Just with a roll of toilet paper.
Chris Browning 00:17:47
Yeah, I mean, you saw it with hand sanitizer and mask for a period of time. I’m sure people see it with concert tickets when there’s not enough of something. But a lot of people want it. It tends to make people say, well, here’s an opportunity for me to make some more money. They’ll just raise prices because they said they said basically, I know I can keep raising this and people are going to buy it. So I’ll stop raising my prices when people stop buying it. And sometimes it takes a really long time, right.
Speaker 3 00:18:12
The prices get really, really high. And I feel like we’ve been talking for a little bit now about kind of all the cons to inflation. And I feel like with money, there’s always a pro and a con. Sometimes it’s hard to find a pro, but it does exist there. So we know as interest rates rise, you are going to earn more in things like your high yield savings accounts, all sorts of stuff. There are definitely some pro. We’re used to hearing inflation as this terrible thing. But I’m curious, Chris, how do we develop a balanced mindset with inflation? And maybe what are some of the pros and cons that you see with inflation?
Chris Browning 00:18:53
I definitely know the cons, and I had to really sit and think about the pros. What would be the positive of stuff getting more expensive? So, I mean, like I said, one thing that you could see as a positive, right, is that the response to high inflation is the raising of interest rates. Because when the price is going to get out of control, the Federal Reserve will raise interest rates. And what it does, it kind of causes like a cooling effect because as the interest rates rise, businesses will stop borrowing so much money. Businesses and people both will stop borrowing so much money. As you borrow less money, you tend to spend less money. And when you spend less, it causes like an overall cooling because you’re decreasing demand. Businesses aren’t making as much stuff, people aren’t buying as much. So it causes prices to either stabilize or tend to fall a little bit because it’s the opposite, right? Like when there’s not enough of something, everyone wants it, prices go up. When there’s too much of something and not enough people want it, they have to lower the prices to get rid of it. So in this type of environment, you may see that some prices may start to fall. That’s the hope. We’re kind of seeing it play out a little bit in the housing market. It’s still early.
Speaker 3 00:19:58
Chris Browning 00:19:58
But prices were crazy over the past two years, were already crazy and they got really crazy. And so you’re seeing now that people are like, hey look, 2% mortgage looks a lot different than like a six or 7% mortgage. It’s a lot more money per month. So people are like, you know what, I think I’m going to hold off. I’m not going to buy a house right now. And so all those people who were like, oh, I can’t wait to sell my house and get this high price, they’re finding that it’s not there. They’re having to lower the prices. And so you’re seeing that either the amount of houses that are selling are starting to fall. Some markets, the prices are actually coming down. So that could be one positive effect of a high inflation environment, is that it can cause some markets that were maybe too hot and prices were going out of control to kind of come back down and be a little more realistic. Now prices are going to have to fall a lot more to offset the higher interest rate for it to be affordable for people. So we’ll see how big of a benefit that is. But that’s one thing. And like I said, as interest rates fall, as interest rates rise, it’s good for your savings account. So if you’re someone who has an emergency fund out there and you were getting like 2% for the longest time, or 0.001% of some of these banks, you can now look at these bank accounts, they’re paying 3%, getting closer to 4% eventually. So that is going to be a good thing to wear now, at least you have a better return. I mean, it’s still not outpacing inflation, but it is better than it was before. So I’d say on the pro side, that some of the positives you can take from this, because there’s a lot of economists who believe that inflation is a good thing for the economy. Not everyone believes that, but it’s a feeling of, like, this idea that rising prices kind of incentivize consistent growth. And if you borrowed money when prices were one amount and ten years later, that same dollar amount means less. It’s like if you borrowed 10,010 years ago, that was a lot more money than $10,000 right now. So there’s all these thoughts that inflation, the constant growth in prices, is a good thing overall. But there’s also a lot of people say it’s an unequal thing. It affects those at the bottom way more than people at the top.
Speaker 3 00:22:03
Chris Browning 00:22:04
But those are some of the pros I can think of when I really sat and thought about how inflation can be a positive thing.
Shannah Game 00:22:12
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Speaker 3 00:28:12
A little bit there for sure. And we mentioned this a little bit earlier, and I was kind of surprised, and yet, I guess not surprised. I’m not quite sure how to think about it. But we’ve seen data now. We’re just past Black Friday and Cyber Monday, and we had record sales and a lot of the experts we even had a couple of experts on the show and they were talking about how retailers were prepared, that sales would be down because of inflation, that people just weren’t going to go out and buy as much this year. But obviously that is not what’s happening. And I’m wondering if, like, do you think people are getting sucked into the sales and deals, or are people just not caring and they just want to spend money and they’re just going to figure out how to pay for it later? I think it’s so interesting because all we hear is inflation and how that’s impacting you. But then when we look at, like, this data of what happened over Black Friday and Cyber Monday, it appears that most of us just don’t really care.
Chris Browning 00:29:18
Well, you know, the one thing is we’re going to shop, right? Like, we’re going to still spend money. It’s going to take a lot to stop us from going to the stores. Little inflation is not enough to keep you from going to buy things. But when I was kind of reading up on some of this and kind of seeing some of the updates, we still kind of early. They’re still getting in some of the data for last weekend. And then also Cyber Monday data hasn’t come in fully yet. One thing that they were saying was that prior to the pandemic, black Friday was kind of losing its shine. It wasn’t as big of a deal as before, and people were starting to kind of spread their spending out over the entire holiday season. So it used to be Black Friday. Everyone was getting up four in the morning. I used to work in retail, and I hated it. I had to get up early to go open the store and just be miserable because I wanted to be, but it was a big deal. There was lines outside of stores, and you’re seeing you saw like, 2019, it was starting to shift where people like, you know, I can get this. We realize this deal isn’t that special. They’re probably going to keep offering the deal for like a month long type of thing. So people were just spreading their money out over the entire month, essentially a month and a half. Whereas what they saw was that this year people were kind of going back to that old habit of, oh, let me hop in here and get these Black Friday deals. And it could be because of inflation, people who seem prices are so high that they’re like, hey, let me try to get the best possible deal. And that’s combined with the fact that a lot of these companies are sitting on a lot of inventory because they ordered a bunch of stuff, because obviously they couldn’t get a lot of their inventory in for months and months because of how backed up the harbors were and production lines. And so now they have all this inventory, but they’re like, we got to get rid of this because they want the cash back, right? They spend all this money to buy this stuff, and they have to sell it to get their money. So a lot of them are putting out slightly better deals than you might see in the hope of getting rid of some of this stuff. So I think it’s a combination of people being like, hey, prices are high. Let me try to get as much of a discount as I can and try to hop on these Black Friday deals, plus companies being like, yeah, we got to get rid of some of this stuff because we have too many things. And I think that might have pushed a lot of people back towards making Black Friday a bigger, like, shopping day compared to what had been a few years ago.
Speaker 3 00:31:24
Well, I don’t know if you did any Black Friday shopping, but I did. I will certainly raise my hand. And I did an experiment this year where I had a couple of windows open of stuff that I was going to buy. And I saw I had the windows open from, I believe, like Tuesday before Black Friday, and I was just kind of tracking how the sales would increase and then just to see, does it really change? And then this year, a couple of the places on Black Friday, they did do a much bigger deal than they did the day before, the day after. So I think what you’re saying is really interesting. Like, maybe the real titles were like, okay, let’s just pour everything on so that people are so jazzed on Black Friday that they just kind of spend with reckless caution.
Chris Browning 00:32:12
Yeah, exactly. They were really trying to bait people to get in because they really wanted them to come in. I did a little bit always online. Because the trauma from working in retail Friday means I can never step foot in store.
Speaker 3 00:32:25
We all have trauma. We can’t step foot in store.
Chris Browning 00:32:30
You definitely are saying that they’re trying to get people to come in, but it will be interesting to see if, yes, we have higher sales during Black Friday. But will that really pan out when you zoom out and look at the entire holiday season and also take into account inflation? Right, because obviously things are more expensive, so it’s going to make the number higher. Like even if people bought fewer things, they cost more. So you could still end up with a higher overall total spent without really the demand being exactly the same. So it’s interesting to see how it plays out overall.
Speaker 3 00:33:00
Yeah, it’s sneaky, isn’t it, how that works?
Chris Browning 00:33:03
Speaker 3 00:33:04
Well, you are the brilliant host over at Popcorn Finance. I love the theory behind your show of talking about money topics and the time it takes you to pop a bag of popcorn, which is just brilliant. And it’s always fun to talk to another money expert, really geek out about these topics. I’m wondering if you have seen inflation impact your community of listeners and are there any questions that are kind of popping up around inflation that people are asking you?
Chris Browning 00:33:34
I think the biggest thing, the biggest impact I know for me personally and for people who listen to the show, it’s food. I think we’ve all seen the price at the grocery store go up to where you spend $200 and you’re looking at what you got and you’re just like, where’s the rest of the food? This is the fact that this should cost this much money. I’m not someone cheating me somewhere, right?
Speaker 3 00:33:56
Somebody took somebody had to take like a bag home or something, right?
Chris Browning 00:33:59
Yeah, I must have missed something. Unless something in the store. Let me go back and check. Yeah, that is for sure the biggest area because we all need to eat, obviously. So we’re constantly in the habit of going and buying food. So it’s right there in your face. And I think that’s the biggest thing, and I’m seeing a lot more people turn to cooking at home because eating out, as much as getting food from grocery stores is expensive. Eating out is crazy. You’re not getting out of there without spending 40, $50 easily if it’s a couple of two people. So I think people definitely shift to trying to cook more at home and people are really looking for ways to find deals. I wouldn’t be surprised if we see a resurgence in coupon clipping and things like that that maybe were big for a while and kind of faded away. But I think that’s like the biggest thing I’m seeing. And also, obviously housing, with rental prices like, skyrocketing, the price of rent has gone up. So much in different neighborhoods. But I think with the housing market, the housing market kind of cooling, you’re starting to see the rental market cool a little bit as well. Especially depends on where you live. Obviously, some places super popular, the demand is going to stay kind of high, but housing for sure is taking up a huge portion of people’s incomes. I think between food and housing, you’re seeing a lot of people spend the vast majority of their income in those two areas. And that has a significant impact because, you know, that takes up all your all the rest of your discretionary income. So, you know, if you don’t have the same amount of money to save, to put it into retirement, to go do the things you enjoy to do, so you definitely see the weight of those things pressing on people right now.
Speaker 3 00:35:30
It’s funny you bring up the cost of food because when I was a practicing financial planner and I would work with people, I mean, I could give so many stories, but I always loved when I would have somebody show me their budget they’re currently using, and then I would say, OK, give me your bank statements. Let me compare and contrast and see what’s, like, actually happening with your money and why you’re not able to achieve certain goals. And there was always a very clear disconnect between what we thought we were spending on eating out, specifically, not groceries, the actual eating out versus what we thought versus what we were actually spending. I mean, I would watch people’s mouths just like, drop open, like, there’s no possible way I spent that much money eating out. And I’m like, well, somehow you did, you know? So I think it’s really interesting specifically around eating out, how even with the high costs of inflation and everything costing more, we still can kind of convince ourselves that we’re spending a certain amount of money eating out to kind of justify, like, how much we’re spending, how much we think we’re spending, I should say on eating out versus the reality of what’s really happening. So I always tell people, I’m like, if you’re struggling and you’re, like, trying to figure out how you can achieve a money goal, just go straight to your eating out and look what’s happening there, and you will be just astonished.
Chris Browning 00:36:55
I’ve been shocked many times when I look at how much I spent on food. I’m fine with being transparent with how much I spend on food. My budget is like, I think it’s like six or $700 a month for, like, groceries and eating out, which is I’m just lying to myself because it never happens. And I remember one month I looked and it was like $200. I was like, Are you kidding me? $200? I was like, you know what I could have done? I could have gone on a vacation. I could have done a lot of things with that but it’s like it’s going to go like a death by a thousand cuts, right? You’re spending small amounts of money, 2030, $40 at a time. So it doesn’t seem like a lot, but when you add it all up, if you’ve been doing it for 30 days, it ends up being a lot more than we think. We’re all horrible at record keeping, none of us. We all think we are keeping track. I know much way off. Like, not even close.
Speaker 3 00:37:44
I love it. Yes. I love that you’re so transparent, too, because this is something literally, we all suffer from. And I mentioned I was just on your podcast recently. We had such a fun conversation. You cover so many topics on your show, like what we’re talking about right now. You talk about fire investing and side hustles and tiny living, which I love. Tell us a little bit, Chris, about what has your own money journey been like that kind of led you to Popcorn Finance?
Chris Browning 00:38:14
Yeah, you know, I never thought I’d be doing a podcast. Like, I’m a super introvert. I really hate it. Speaking in front of people when I was younger, I’m shocked. I would never have dreamed I’d be doing something like this. But I remember I went to school as an art major because I didn’t know what I wanted to do. And I loved Pixar. I was like, oh, yeah, that’s what I’m doing. I work at Pixar. But I got into college and I was like, oh, you know what? I’m not as passionate as some of these other people. Plus, I didn’t realize I had to take all these other art classes that I didn’t want to take. So just by chance, I took a finance class because it’s, like, fit in my schedule. And I was like, this is really interesting. I don’t know any of this information. I didn’t learn any of this growing up. My family, we didn’t have deep money conversations for sure, didn’t learn it in school. And I was at a point where I was like, well, I don’t know what I want to do. This is really interesting. Maybe I’ll switch over. And it was just pure chance that I was at a school that had an amazing business program and they had a concentration or an emphasis on financial planning. So that’s kind of like my introduction. That’s why I got my degree in. And it really kind of got me really interested in all this. But at the same time, I knew all of this stuff, and I still got myself in a bad financial situation. I ended up when my wife got married, we obviously wouldn’t have any money. I graduated in the middle of the recession, so it wasn’t like my job prospects were horrible. But I ended up spending, like, $14,000 on a wedding. And then we moved in together, and we didn’t have furniture, so we bought all this furniture, and then she had school expenses and then we had medical bills that came up and we weren’t really good at talking about money, so we ended up just both using credit cards and not paying it off. And long story short, we ended up with like, $27,000 in credit card debt. And that was like, my first experience really dealing with debt. I hadn’t really had any prior to that, and it was just such a burden. Like, I thought about it all the time. I mean, I had $27,000 in credit card debt and we’re probably taking home like $45,000 combined. So it was a lot of money compared to our income. And I think that really solidified in me, that I needed to do better. But also it gave me a lot of empathy. I think sometimes it’s easy to get disconnected from people’s journeys and people’s struggles, especially if you like, if you’re in a good place, it’s kind of hard to empathize and see where people are and how you can fall into these situations even if you know better. And so I think going through that, as much as I hated it and as stressful as it was and how it consumed me every single day, it gave me a lot of perspective. And it also is something I always try to hold onto and remember as I continue to make this content, just think this is difficult for a lot of people. And I was fortunate to kind of catch it and make some changes and get myself in a better situation financially because a lot of people that’s still a very difficult struggle that they’re going through, and it’s uphill battle. So for me, going through that realizing, okay, I need to make these changes. And then because my career went a different direction, I ended up going to bookkeeping and accounting work and analysis. I was like, I really want to still talk about this personal finance stuff. I see how much of a struggle it is for me. I know a lot of people don’t know this stuff, and that was kind of the inspiration. I’m starting the podcast. I was like, I’m in a career that I originally set out to be in, but I still really love this stuff, and I think it’s really useful information for all of us to know. And one day I decided to just go for it, and five years later, it’s still going, thankfully. And yeah, it’s what I do now.
Speaker 3 00:41:49
I love that you just plug in the mic, started talking, and you’re amazing. You got a great voice, you got amazing content topics that you talk about in such an original format. And people I can totally tell why people just kind of gravitate towards you. And I love that you shared that. Money hasn’t always been easy. I share that a lot about my own story. Even as a certified financial planner, I’ve made a million money mistakes, and I think that’s what’s so tough about money is we can study the theory behind money, and we can study different things that you should do at different stages in your life. But the reality is life happens. And sometimes you get into debt, and a lot of times you get into debt. You get out of debt and you get back into debt, and none of these things make you a bad person or a failure or any of that. They just make you a real person who’s out there trying to figure this out just like all the rest of us.
Chris Browning 00:42:45
Exactly. We’re all faced with the same temptations. We all know we should do better, but it’s not as easy as just knowing it, right? Money is so emotional. It’s not just a math equation. There’s so much that goes into it. Like your past with money. Like, did you grow up without money? Did you grow up not valuing money? Did you grow up with difficult family situations? We had to help other people out financially. Are you in a relationship where you’re not able to have autonomy to make decisions on your own? There’s so many things that play into how we all handle money and takes it from being a simple, just do this, do that, to being a no, this is hard. And a lot of times we make a lot of decisions because of all the stuff we’ve just experienced.
Speaker 3 00:43:25
Yeah, for sure. Well, we’ve been talking about this heavy weighty topic, inflation, and we’ve been talking a lot about how, you know, money is cyclical. It used to be about, like, every ten years, everything would cycle between bull and bear markets, with investing in the housing market, unemployment, even recessions. But I feel like over the last ten years, maybe 20 years, we haven’t really followed the cycle. So there’s a little bit of unpredictability. Are we in a recession or we don’t? In a recession, you know what’s going to happen in 2023. So as we wrap up, Chris, what do you think we need to be prepared for in 2023 in terms of inflation? How do we prepare our money for what might happen next year?
Chris Browning 00:44:16
I really wish I could predict the future. I wish I knew exactly what was coming. I could be like, okay, just do this. It’s all you have to do is going to be great. But I see a lot of people trying to predict the future and are almost always wrong. But what we can do is focus on what we know is coming, right? So we know that for sure, interest rates are going to keep rising. So the Federal Reserve, they come out, they do the press conference, and the Federal Reserve Chairman, Jerome Powell, he already said, look, interest rates are going to keep going up. So they’ve been saying that all year long. But then people are as shocked when it comes to these new stories. Oh, no, our interest rates are rising, like we all know, they said they’re going to raise it and they’re going to keep raising them. So no one should be surprised when interest rates keep going up. The meeting in December, the meeting again, I believe in February. And so they’re expecting to raise rates somewhere of around 5% and they could change. They can have a target. They can say, well that’s not good enough, we could change it to something else. But we know for sure interest rates are probably going to raise another 1% roughly, maybe a little bit more. So higher interest rates, that means a few things for us, right? So it means that debt is going to be more expensive. Credit card interest rates are variable, meaning that they can just change at any time. Typically they do something like some type of formula where it’s like a set rate plus another rate. On top of that, another rate is one that changes. And so as the Federal Reserve raises interest rates indirectly raises a bunch of other interest rates. So you’re going to see credit card rates continue to climb. I know they’re already north of 20% now. So I mean seeing a 30% rate if you have a lower credit score is probably not out of the realm of possibility coming in 2023. So I think it’s so important if you have credit card specifically because it’s such a high interest type of debt to focus on paying that off as much as you can. Like I know most people, you probably can’t just write a check and pay it all off. But if you have extra money, try to put it there, that’s probably going to be the most impactful for you going forward is paying off that credit card debt. Another thing though is that probably going to be pressure on the housing market. We talked about how housing market is kind of starting to slow and cool down a little bit. As interest rates continue to rise, there probably be more pressure on housing market. So maybe you’re looking at a house right now, maybe you want to wait and see what’s going to happen. I mean, you buy a house when you’re ready. Don’t try to time it because we’re all going to be wrong trying to guess what happens to be at the cheapest point. But that could be something to look out for. And then overall just the economy is going to continue to slow. I talked a little bit about how the business cycle works and as it just rates rise, you start to see the economy cool down. We’ve seen layoffs and primarily concentrated in the tech sector right now, so false in the headlines of like Facebook and Twitter and all these companies doing these layoffs. Part of that is because maybe they overheard, part of it is they thought things were going to keep going as great as they were for them and they’re not. But we don’t know if it’s going to bleed into the rest of the job market. So that’s kind of like a wait and see type of thing. If things continue to slow and other companies start to feel like for the pressure of that and they’re seeing their sales fall, you might start seeing some layoffs there. So I think the best thing you can do, I think there’s like four things you can do to really be prepared for the possibility of what 2023 could be. So number one was pay down any high interest debt. Build up an emergency fund if you don’t have one, just because we saw during the Pandemic when people had to go out on unemployment, if the system gets really hectic and bogged down with a lot of applications, it can take a really long time to get those unemployment payments. So an emergency fund can help carry you through those periods of time where you don’t have enough money to get by. You want to do your best to keep yourself out of a really tough situation and keep your household running and covering the bare minimum if you can. Another thing I’ve been hearing a lot about is like networking. Just kind of being out there, making yourself visible, letting people know what you’re working on, getting on LinkedIn, just building like a personal brand. I talked to Mandy from the Brown Ambition podcast and she talked all about building a personal brand and really letting people know who you are and what you do and being active and visible because it’s already hard enough finding a job. But if you can be on people’s minds already, it just makes it that much easier to find a new job. And then lastly, just keep investing. Even though it’s scary. And I think when people see the stock market not doing well, it’s like, well, it’s not doing well, I’m not putting my money in there. But when it’s doing poorly, that’s probably where you’re going to be able to see the best returns. Because the whole thing you don’t want to buy when things are super high, like when the prices are all time high. I want to say it’s the worst time to buy, but you got to get the least amount of return, obviously, because if they’re there high, if they go up again, it’s probably going to be less than if you bought when everything is down like it is now. And when the market recovers, you get to benefit from that. So don’t let the fear of what’s going on right now make you feel like, oh, I shouldn’t have tested because the stock markets aren’t poorly. It’s probably a great time to hop in and do it, to be consistent and don’t let your emotions determine when you decide to invest in the future. But I think those four things are the best thing you can do. Obviously, it’s not going to protect all of us in every situation, but at least give you a nice, strong foundation to work off of and hopefully help you ride out whatever is coming in 2023.
Speaker 3 00:49:30
I was recently hanging ornaments on my.
Shannah Game 00:49:32
Christmas tree, and I pulled out the.
Speaker 3 00:49:33
One we got in 2020.
Shannah Game 00:49:35
I don’t know if you have this ornament but it is a butte and that is simply a toilet paper roll. I’m not sure there was ever a better real life show of inflation that we all live through and the search for toilet paper at whatever it costs in 2020. As Chris said, Inflation, the big old beast of an elephant in here is here to stay for a while. That’s cool. While you may not like it, you can be smart and set your money up to shield against inflation and even work with inflation. If you want to learn more about Chris, you can check out his podcast, Popcorn Finance on any podcast player, or.
Speaker 3 00:50:12
You can find them on Instagram at.
Shannah Game 00:50:14
Popcorn finance podcast or Popcorn Finance on TikTok. If you enjoyed this podcast, share it with a friend or family member who might also want to take a deep dive into inflation. As always, you can head to the.
Speaker 3 00:50:26
Show notes for all the links to.
Shannah Game 00:50:27
Our episode guest, as well as the amazing sponsors that make this show possible. I’ll see you back here in a few days for a brand new episode. You.