In this first Friday episode of Fiscally Savage in 2023, Dylan answers some interesting questions from his Instagram followers, tackling relevant topics like inflation and offering some hard-hitting personal finance advice while he’s at it.
- [01:22] Where you can start on your personal finance journey
- [06:06] Explaining zero-based budgeting to friends and family
- [07:56] On slipping backward with your budget
- [10:25] The most significant resistance to changing your relationship with money
- [18:07] Dylan’s biggest inspiration in the workplace
- [19:40] Transitioning from a blue-collar job to a commission-based job
- [25:14] Myths about financial security
- [29:15] On purchasing power and inflation
- [34:30] What you can do about inflation
[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.
[00:00:15] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. And today, as always, in these Friday episodes, we take something in the news and go one step deeper. But today, we’re actually not gonna do that. On the very first one of our Friday episodes in 2023, my year of emancipation, hopefully you have a theme for your year as well, we’ve done it. We hit 200 followers on Instagram, I opened it up for an AMA, and you all responded. So, I’m gonna go through each one of the questions that I got and we’re gonna answer them to the best of our abilities. So, for those of you who responded, thank you so much for interacting with the Instagram account, making this a conversation that I’m so excited to be having in a way that is not very common I feel in the let’s just call it the social media personal finance space. This is exactly what I was hoping we would turn into and as we grow, we’re gonna be doing more AMAs, but we’re gonna have checkpoints with that as we go along. So, without further ado and preamble on my part, let me just say thank you and let’s just get to the questions.
[00:01:22] Question number one is coming from Michael O. He came to me through Instagram and his question was: So, maybe it’s obvious or it’s been covered before but where do I start? Alright, Michael, so here’s the deal. This is a really glib answer, but you start at the beginning with small things. And now, that might seem obvious, but it’s actually not. The reason I feel that people have issues getting started is because they can see the mountain. And I found this to be true when I had my vision of the house with the yard then the kids playing and the steaks in the grill and the compliment from my wife was that I longed for that today. I wanted it right now. And there was literally no way that I could go from where I was at that time to that house. That transition took me five years. That involved — it was five years, four addresses, three jobs, two degrees, and a hell of a vision and time doing it. And that’s not glib; that’s just the truth. It was a lot of different things, so when I say you have to start at the beginning with something small, I really do mean it.
[00:02:32] So, if you’re looking at your finances here in 2023 and you say, “No, I’m getting this shit together this year,” well, ladies and gentlemen, you gotta start by knowing where your finances are. You gotta go take a look at it. And if you go to fiscallysavage.com/tools, you can sign up for our email list and that will give you our free tools. And in there, you’re gonna have a spending analyzer, which you can use to figure out what your spending looks like right now, you’ll have a zero budget spreadsheet to help you budget along, and a personal balance sheet that will help you know where your net worth is at so that you can grow it. That’s a place you can start. Sit down and do one month of the spending analyzer to figure out how much money did I actually spend at the grocery store? How much money did I actually spend on dining out? How much do I actually spend on streaming activities? And some of you immediately got uncomfortable in your chair because you’re saying, or at least you’re hearing, “Well, Dylan’s gonna take that away from me” and I’m not. I’m telling you that a starting point is to know what the reality of your life is. Now, what we do about that is a completely different story. This is where that intentionality piece that I’m so frequently talking about comes in because when it comes down to the trade-offs and like the coffee thing is one that people point to all the time. If only we just stopped drinking the expensive coffee, we would all be billionaires. Yeah, no, a lot of our lives are hard and that cup of really decent gourmet coffee that is totally not coming from a Seattle-based coffee chain because their coffee is atrocious is one of those rays of sunshine that actually keeps us going. Like for me, my life is too short to drink bad brew and so, I drink bougie-ass coffee. It is something I look forward to and it’s worth the expense. Is it more expensive than buying the crap that they sell at the grocery store? Yes. Does it also set me up to be more successful in the day, which makes me add more value into everything I do thus making me more economically viable in the market? Also yes.
[00:04:32] So, Michael, that’s where I would start. Start with the beginning with something small. And at the end of the day, even if you’re saying, “I’m not ready to look through the spending analyzer,” “I’m not ready to look at my finances,” then start with something even smaller than that, like getting out of bed without hitting the snooze button or making your bed or, as I just talked about on a recent podcast, clean your car. When I drove home from telling my principal where she could stick her fraud idea and knowing that my career as a teacher was over, it’s not like I had a perfect plan as to what to do. I didn’t. I knew what I wanted, but I didn’t know how to get there. That came later. That took a couple of months for me to put together. That took me being brave and reaching out to some of the professors at the college in town and networking with the people I knew and asking lots of questions and there was a bunch of other iterations before I settled on becoming a public accountant. But I did know that the guy who bought that house with the yard and the kids playing with the steaks in the grill who got the compliment from his wife had a clean car. Like that was just part of how that guy was conducting his life. He had a clean car, so I cleaned my car. That was literally the first step I took — was cleaning my ’97 two-door Honda Civic with the broken doors and the felt coming down off the ceiling. I detailed it. I shampooed the rugs. I cleaned it out. I put air fresheners in it. That was step one. I frequently think that that is step one for most people — something small, something to get you going.
[00:06:06] Alright. Question number two. I got actually three questions from the next submitter. This is my boy Mikey D. And Mikey D. is a good friend of mine and so, I’m not gonna use last names, but let me just say this for the listeners: Mikey D. would be what you would get if Florida man had an enlightened opposite brother. Mikey D. is a dear friend of mine who has been a huge influence on me, on the show, on all the things that I do. So, when he submitted three questions, I was gonna answer all three of them if for no other reasons than to honor his engagement. So, Mikey D. my brother, thank you so much. So, question number one: How do you explain a zero budget to family and friends? So, zero budgeting is what I teach in coaching — how to actually create a budget to be able to act with intentionality in your life. And in brief, a zero budget is really just your income minus your expenses such that it equals zero. You’re assigning every dollar a role, and that’s the phrase that I would use with family and friends: I’m acting with intentionality by assigning every dollar that comes into my hands a role in my life. ‘Cause that’s really all it is. And that income that comes in when I look at it, how it goes out in expenses, and you might say, “Well, but if I have extra leftover, I’ll save.” Well, no, no, no. I actually intentionally save. I count paying myself as an expense. And that’s what enables me to say, “Well, this is actually non-negotiable.” This is when people say “Pay yourself first.” This is how you do it. You assign those dollars the role. Now, they’re gone, so you gotta make it work with whatever’s left because you paid the most important person — yourself — first. So, Mikey D. that’s how I would explain it to friends and family is that you are acting with an intentionality in your financial life by assigning every dollar that comes into your hands a role.
[00:07:56] Mikey D. then asked me: Hey, have you ever had clients slip backwards with their budget? And if so, what do you tell them? So, because you know me, Mike, and I know that you’re going to be listening to this, I want you to just imagine that grin that I get on my face when I say no, it’s actually never happened. People go through my course and they’re perfect after that ’cause that’s just the type of coach that I am. And that would be, of course, a lie. Clients slip backwards all the time, myself included. Nobody’s perfect at this, and anyone who claims that somehow their method is going to create perfection in your life is lying to you. When clients slip backwards, the very first thing that I think is super important to get real clear on is that there has never been a time in human history in which somebody has really judged themselves really harshly and it’s gone well. And before somebody brings up David Goggins, you are not David Goggins. I’m not convinced that that man is human. He is one of God’s own prototypes. To quote Hunter S. Thompson: There he goes. One of God’s own prototypes. A high-powered mutant never considered for mass production. That’s not you. The vast majority of us and in the rest of reality. Judging ourselves harshly for slipping backwards isn’t gonna work. I would tell them that it’s okay and I would tell them that this is part of the process. I would remind them that when we started our coaching relationship, one of the things that I told them that it wasn’t gonna be easy; it was just gonna be worth it. And this is the part that isn’t easy — when you know you can do it and you slip. And brother, I got your back. This is how things go. It’s not about the individual data points on the day-to-day. It’s the overall trend those data points show. And so, we’re gonna have days we slip back. I, in my own health journey, I have days where I overeat and that’s part of the thing. I know that I emotionally eat. That’s an Achilles’ heel of mine. So, I have a choice in those moments just like, you know, my clients who slip backwards have a choice with their budgets. We can throw our hands up in the air and say, “Fuck it. I’m done. I can’t do this,” and we just sink into those dark places. Or we can look at ourselves with a great deal of love and respect for ourselves to be willing to make mistakes and say, “I love you enough to get back on the saddle.” And in my case, the next day, I go right back to my diet. And in the case of a client who slipped, I would tell them, “Okay, well, today we can do better” because it’s not the individual data points; it’s the overall trend.
[00:10:25] And lastly, Mikey D.’s last question to me is: What is the biggest resistance to changing one’s relationship with money? Okay, so in 2023, I have my recording schedule and I’m gonna be talking about resistance points to budgeting quite a bit. But essentially, resistance to budgeting basically breaks down into two distinct types of problems: the social problem and the system problem. And of the two, the social problem is the biggest, most common, and hardest one to fix. Okay, so let’s start with the system problem ’cause that’s easier and smaller. The system problem is, again, it breaks down into two flavors. It’s either technical or tactical. Technical is “I don’t know what to do” and in which case, well, you hand them a budgeting spreadsheet, that person goes, oh, that’s easy, and then they walk away. If they have a technical problem, you just have to provide them with a solution and they’ll turn the crank. That’s why I give my tools away for free at fiscallysavage.com/tools is because if you have the technical problem and you just need the tool, well, take my free tool and if it works for you, hey, great. I am super happy to have added that value into your life, so please make something great. Now, the other side of the system problem is the tactical problem. They know what to do, but they don’t know how to do it. And so, when they look at the tactical thing, you say, “Well, I know I need to save and here’s how much I need to save, but I just don’t know how to do it. Does it go on a savings account? Do I put it in cash under my mattress? Do I put it all into gold and put it in my backyard? Do I just YOLO into Bitcoin?” And that’s where we work with these people to say, “Okay, no, no, hold on. Like let’s actually figure out our goals and let’s figure out a plan as to how to get these things done.” And the same is true with spending like, oh, I overspend. Okay, well, maybe you and your wife can sit down and say, “We agree that only between the hours of three and four on Saturday evenings are we allowed to open up Amazon and we’ve made our passpord so complex we can never hope to remember it and then we put it in a safe. And so, we have to get that out and together we sit down and we do the whole Amazon order where we can function as a check for each other.” I have just recommended this to a client, so if that sounds startlingly specific, that’s why. But that’s an example of the tactical is we found a tactical solution to the one-button purchase on Amazon. So, it’s that type of thing. So, system problems and two flavors — technical and tactical.
[00:12:48] The social problem, though, is a much bigger resistance point because we’re talking about very primordial or primeval urges that come from the monkey brain, not from our sophisticated frontal lobe regions. We’re going further and further back; the lizard brain gets involved in this. And it’s because we feel the social pressures far more than we feel the ethereal like numbers on a spreadsheet. So, the social problem comes also in two flavors: personal or political. The personal is more the stories we tell ourselves. So, I don’t deserve this money. Money’s the root of all evil. It’s where people really get addicted to scarcity and knowing that that’s part of the issue, the resistance point in there is helping them rip up the current story and give them a new one that serves them better. That’s how you deal with the personal part of the social problem. This is old wounds. This is old programming. And so, this is where in the times of my practice where we have to talk about inner child, internal family systems, and I am not a psychologist and I’m not a psychiatrist, I’m a coach. So, there are times in where I have to look at somebody and say, “You know, you’re on the right track, but your biggest resistance is that you need help that is above and beyond my scope of practice.” And that’s where the networking part that I do it was really important because I have got to be able to refer these people out to somebody who can do a much better job and a much more integral job than I am capable of doing ’cause my focus is money. And that’s always hard. Some people do not handle that very well and it’s also critical to your success. So, we inside of Fiscally Savage, we spend a lot of time talking about, you know, the personal part of the social problem because it’s our day-to-day. It’s the person we go to sleep as. And it’s the person we wake up as. It’s the person who has the impulse-buy of the gummy bears that look just like berries that the candy companies purposely made and put there right at the checkout in the supermarket. That is part of the personal side of this.
[00:14:55] The other side, though, of the social problem is political, and that is the people around you. This one can be diabolical because as you change your life and you’re working on these resistance points, you will notice that the people around you will go through three predictable steps. The first one is they’re going to resist you. Let me give you an example for my own life in which I certainly saw this. When I was a teacher, like the one thing that I gave myself that just kind of got me through the day-to-day is I would Uber over to the bar and watch the football game and weasel my way into a number of free drinks so I could get a little fucked up. And when I stopped spending money, when I had to choose to be much more strict about my money because I wanted to fuel being able to go back to graduate school and get out of the poverty trap I was in, people didn’t like that. And what I suggested to the guys that I knew was like, well, let’s not go to the bar. Why don’t you come over to my place? We’ll get some Coronas. It’ll be way cheaper to get a Coronas. We’ll put them on ice. We’ll put the game up. Well, I have a projector that I can borrow from school. We’ll project it up on the side of the building I live in and we’ll have a good time. And that would’ve been a quick way to just cut a lot of costs. And they just pretended I didn’t say anything. Like they never acknowledged that those words ever left my mouth. Why? Because it wasn’t in their realm of political feasibility to even acknowledge that I had said anything about the bar. So, you know, step one is they’re always gonna resist you. Then step two is they’re gonna demand you change back, right? And this is where they go like, “Man, you’ve changed. You used to be fun. Why are you being like this? Like, don’t harsh my mellow man.” Like it’s those types of comments, right, where people try to force you back into the cardboard cutout that they’ve put you in and you don’t want to go there because you’re changing your life. In my case, getting my financial house in order so I could go back to graduate school. And the third step is you’re gonna change back or else. And this is where people say, “I can’t take this anymore” or “You think you’re better than me” or something else where they threaten to throw you out of the tribe, out of the small community. And this, again, hits right into that monkey brain and it’s really devastating to us because we start to panic because the social is everything to a human. Our tribal society, the thing that kept us alive for 3 million years, is critical. That’s why you’re able to be programmed with the personal side of the social problem in the first place because that’s how they get you ready to live in society. Everybody from the deconstructionist on one side and Jordan B. Peterson on the other side talk about socialization because it’s a real thing we do. And so, we continue to reinforce that both at an early age with what we teach our children and then what actually happens on a day-to-day basis. Out of everyone I knew when I was a teacher, I talked to exactly one. Why? Because I moved on. And I had to be willing to make that sacrifice.
[00:17:55] So, Mikey, when you ask what is the biggest resistance in changing one’s relationship with money, it’s dealing with the social and the system problems — the social problems because of it hits that monkey brain and the system problems ’cause you have to learn something new.
[00:18:07] Alright, now, the next question. This one comes from Wes and I’m not gonna use Wes’ last initial because Wes, you know who you are. And Wes, in typical Wes fashion, has asked me: Who is your biggest inspiration within the workplace? Now, I’m not gonna give Wes the satisfaction of answering the question the way that Wes wants me to, but what I will say is that I draw inspiration from almost everyone that I work with. I actually work in an environment right now that is really quite wonderful from the standpoint of everyone around me is professional and everyone that I work with has a quality that they’re better than me at and I’m very well aware of it. And so, if you haven’t figured it, I work with Wes. And so, Wes, you are an inspiration to me in the workplace because there are things you’re just simply better at than I am. And I think that that’s amazing because I enjoy learning from you. What is also true is that’s true for almost everyone we work with. And I’ve really worked hard to be in an environment like that and I’ve stayed in that environment and I’ve turned down promotions because of that environment. Now, will that continue in my life? Probably not. I will probably have to move on because I will eventually have to make a choice just like us all. But this is the one thing that I will say about taking inspiration for people in the workplace. It is really hard to take inspiration from anybody who thinks Taco Bell is a good restaurant and I’m gonna leave that question right there.
[00:19:40] Our next question comes from Aaron W. and Aaron W. actually reached out to me one on one and asked me — and this is kind of a longer one — it was more of a hypothetical question: Suppose you are a working class — in this case he means blue collar — person with delusions of grandeur and you are too proud to quietly quit. So, you took a commission job in hopes that you would be able to make it big. How would you manage that transition? Okay, Aaron. There’s a lot to unpack there. So, for starters, one of the things that is inherent here, and I’m gonna get real psychological, is there is a subtle downplay to the nobility and earning potential of working class people. There are people in the trades that make a ton more money than I do as a white-collar employee. And in the industry that I work in, that’s especially true. A lot of my, the people that are blue-collar workers in my company, they make multiples of my salary. So, if we’re really asking like who’s the smart one here and who’s actually like succeeding economically, is it me who went back to school for, you know, you decided to forgo income for two years then ended up 50 grand in debt or is it the guy who went to trade school, became a journeyman electrician, and is pulling in sometimes a middle six-figure income? I mean, come on. So, that’s part of that statement, Aaron, that I want to call out specifically, is that working class people can make a lot of good money if they’re intentional about it. And I’ve told the story before of I had a student when I was doing my student teaching who went and became a diesel tech and it was a college preparatory program but he didn’t wanna go. He didn’t wanna go to college because college isn’t for everybody and he decided to go to diesel school. And I thought that was a great idea because he had a plan. His plan was he was gonna go to diesel school, he was gonna get his diesel tech license, he was gonna get himself an RV, and he was gonna go hit the oil fields. And this was back in 2009 that he did this and he’s retired now. He has made more money between 2009 and present than I have in my entire working life so. And he doesn’t have a college degree. He went through a 18-month program then lived in an RV and saved every penny and then retired and just spends time fishing on the lakefront, the lake that he has property on. So, is it delusions of grandeur? No, I don’t think they’re delusions. They’re very real ways to think about this and good ways to think about this. But there’s a question of this intentionality.
[00:22:20] So, then, let’s get to the next part where you say, “Well, I’m too proud to quietly quit.” Well, you’re too proud to quietly quit, which there’s a couple of things. I did an entire two-part series on quiet quitting. But essentially, the TL;DR on that is if you don’t see a way out and you know you’re not going, you know, working hard isn’t actually going to translate into economic gains, then a lot of people have chosen to believe that the social contract is broken and then they just do their exact job description knowing they’re never gonna get ahead. Okay. Well, if you’re too proud for that, why would you decide that the only way out is to YOLO into a commission job, which has a very low success rate across the top, versus going to trade school in a blue-collar to be able to get from point A to point B faster? And if you’re saying, “Well, I don’t wanna be limited there, I want to have an unlimited upside potential,” okay, that’s great. If you were a journeyman electrician, and you were pulling in, say, 200 grand a year. Let’s just call it a hundred grand. Well, that’s better than where we started, right? We started off as a person with delusions of grandeur. Now, we’re a journeyman electrician with skills. I could start my own business. I could start apprenticing people. I could decide to become a lineman and just, you know, take the 40-hour week job plus the overtime whenever I wanted it. There’s lots of ways to do this. But the big shiny of the commission job where they sell you on the idea that like, oh, you can make all this money? Like I worked in commission. It’s a hard life. It is really hard. And for the people who make it, it’s incredible money. That’s what my father did for years. But that’s not all of us.
[00:23:58] And so, how would I manage that transition? I would actually get real focused on what I wanted out of the transition in the first place. Why do I wanna do this commission job? What’s at the end of it? And is this the only path I can take? Does this path give me the highest likelihood that I’m going to be successful here? Because let’s face it, yes, there’s a lot that’s in our control. Being able to get up and go through a season of grinding — that’s within our control. Attitudes and all this other stuff — that’s within our control. But what’s not in our control are all the random stuff and that gets to play in this game, too. So, you are, at the end of the day rolling the dice on luck in no matter what you do. And so, that’s how I would manage the transition. I went into public accounting ’cause it was the fastest way from what I understood and knew at the time from where I was to where I wanted to be. If I had it over to do again, I would’ve gone to trade school. I would’ve gone to line school specifically and become a lineman for a power utility. That’s what I would’ve done. Just like if I could go back to age 18, I wouldn’t have gone to college. I would’ve joined the Navy. That was a better option for me at the time. But, of course, as with so many different things, I only can really see that in hindsight and take those lessons forward so that maybe I can make different decisions in the future.
[00:25:14] Alright. My next question comes from Anya with the Venus and Mars Podcast. Link to that podcast in the description. It is a great show and 10 out of 10 would recommend you go listen to her work. But her question to me was: What’s the biggest myth that people buy into about financial security? Okay. So, I thought when I read this, I was like, whoa, man, lay it down to the easy questions here. Like this, oh my God, I thought about this for almost a week because it is a huge question and I could do an entire podcast and probably will do an entire podcast on it just on the inspiration of Anya. But let’s just get real here. What is the biggest myth that people buy into with financial security? It’s that they think that they should know how to do it and there is no reason why we should know how to do this. That’s a myth that I see over and over and over again. These people who come to the practice with this deep sense of shame around this because they think like, oh, I made bad decisions. I’m bad. I didn’t do the — like, no, no, no. We’re talking about budgets and spreadsheets. Human beings, like the logic brain developed second, okay? The emotional brain developed first. The logic brain developed second, so the logic brain’s in the passenger seat, trying to argue with the madman of the emotion brain who’s driving the car at 7,000 miles an hour down the highway. And they believe that for some reason, the logic should be able to adequately reason with the emotional brain. Now, if you’ve ever been in a fight and told the other person to just calm down, you know that it is very difficult to reason with an emotional being. And we are emotional beings, so the same thing is true here. There’s no God-given reason why we should know how to budget or how to deal with a 401(k). These are man-made structures. These are collective stories, collective delusions that we’ve all decided to and then people make their money because they’re difficult to understand. That’s called asymmetrical information. And now we all feel guilty because of it? That’s a myth. The myth is that we should know how to do this.
[00:27:20] And another myth that is kind of tangential to this is that this should be taught in schools. It absolutely should not be taught in schools. It should be taught by parents. And part of the reason I’m here is to help those parents be able to teach their kids how to do this. There’s no way that the monkeys that we co-evolved with sat down with their spreadsheets and was, well, okay, let’s see. We got five monkeys and they’re gonna eat 10 bananas a day and so, it’s 50 bananas a day. And so, to get through the winter we need — no, no. Like this never happened, right? We went on a day-by-day basis. And so, when you talk about financial planning and asking a human think 10 years into the future. Dude, we weren’t set up to think five, 10 days into the future. How many of us can’t remember what we had for breakfast? Why? Because it’s not relevant to our current survival and that entire idea is how we were programmed through 3 million years of evolution. So, for us to be able to move forward towards financial security, we have to be okay with the idea that, you know, for lack of a better term, white belt mentality. I don’t know what I’m doing. That’s okay. I’m here to learn. I’m gonna make lots of mistakes and I’m gonna make progress along the way. And I know I’m making progress when I’m making new mistakes.
[00:28:31] The second thing about this, and this one’s a much shorter answer, is the myth that money is part of your identity. People do this all the time when they start thinking things like “Money’s the root of all evil. Well, if I had money, then I’d be a bad person;” or “If I had money, I’ll just spend it all.” Like they’ve adrenalized having money and then forced it into their identity. There’s no reason for your money picture to be part of your identity. And if I’m really gonna just opine on things here for a second, most identity that’s not fact-based is pathological in nature. So, you can spend the rest of the weekend thinking about the implications of that statement. But that’s another myth that people really struggle with around financial security is the idea that it’s part of their identity. And then, of course, that identity can’t change.
[00:29:15] Alright. This one’s gonna be a little bit longer simply because I wanted to get to this question. And it’s not really a question. It is more of a sideways statement. So, this one’s coming from David. David says: Purchasing power. Seems like the most important thing to focus on now. Thoughts?” Okay. So, the thing about this question that drives me to the wall is it’s not a direct question. It is a primed invitation to exist in a space, in this case, purchasing power, and then telling me that it’s, it has to be the focus. Okay, that’s fair. You’re the person that’s — to ask questions. And then just nebulously says “Thoughts?” So, I now have to freestyle on this and I have no idea how to add the value to David that David was hoping to get from this. So, I’m gonna do my best with a lot of incomplete information. So, the first thing is that this seems to be a question about inflation. So, the way to read the question, another way it could also read to the most important thing that keeps me up at night are questions about inflation. What would you do in my situation? That would be a much more direct way of asking the question. That’s the question I want to answer. That’s the question I think David wants me to answer. So, that’s the question I’m going to answer.
[00:30:24] The first thing that I’m gonna point out here is that the media has an agenda — that is to make money. The media is not necessarily good or bad. It’s just another entity designed to create a product in order to make money with it. And nothing makes money like outrage and fear. Period. End of statement. They used to say that sex sells. Sex is bullshit. People would much rather get off to their own outrage and fear than they would to anything that is reproductive in any way, shape, or form. Why is that important to this question? Because inflation is a boogeyman, specifically for the baby boomer generation who were there for Inflation 1.0 back in the late seventies. They remember the rising interest rates. They remember the oil embargo. They remember how painful the early eighties were when the average home loan was going for 17%. And a lot of these media outlets are talking to those people and a lot of people who are writing books are writing books for those people. A lot of the people writing those books are from that generation. And so, like this kind of creates this media circle jerk where like, oh my God, this one news outlet said that it’s terrible. Oh my God, it is terrible. And here’s the deal: is inflation real? Yes. Is it a problem? Also yes. Is the house completely on fire? Oh my God. Oh my God. We’re all gonna die. No, that’s not at all how this is working.
[00:31:49] The inflation we’re seeing, and I’ve been, I’ve gone through this a couple of different times in the show, is due to a couple of things — now, one of them being supply chain issues. And it’s really hard to get away from that reality that supply chain issues have really screwed things up. But the thing that supply chain issues screwed up the most are people’s expectation. Money is emotional, which means the economy, which runs on money, is also emotional. So, if people expect there to be inflation, there will probably be inflation. If people expect there to not be inflation, there probably won’t be inflation. And if you want a real-life example of this, you can go look at Brazil and the Brazilian Real and what the Brazilian Real replaced back I think it was in the 1980s, where they quite literally said, “Here’s our currency at the time” — I think it was the Peso — and it’s hyperinflating. But we’re gonna post prices both in this Peso — We’re just gonna use that. I’m probably wrong on that, but we’re just gonna use that — on the one currency that’s hyperinflated, but the Real is gonna stay consistent. And then on one day, they just took away the Peso and that actually ended their inflation. Did the actual market conditions in Brazil change like at all? No, but everyone’s perception of it did.
[00:33:05] So, there is an argument to be made that the media selling the fear of inflation actually caused inflation, which also then reset our expectations, which allowed corporations to go, well, my prices went up 8%, so I’m gonna raise prices 20% and I’m gonna pocket the difference, which a lot of corporations did. And so, like understand that a lot of our fixation on inflation is actually being driven by a media narrative designed to keep you glued to the screen because not only do a lot of them sell you the outrage of inflation, but they also are sitting there going “And stay tuned because we’ve got this expert who’s gonna tell you exactly how to fix it.” The monkey brain wants you to be safe. This stuff? We’re suckers for this. Me, too. Like I am not at all safe from this. And so, the thing I would say is if we are still hyperfixated on inflation, the question I would have is why? We know inflation is cooling. It appears, at least at the time of this recording, that we’ve peaked and we’re starting to decline. The inflationary pressures will probably continue to decline. China has started to open up, although that’s not going exactly great for China right now. And all that’s gonna have a huge effect in supply chains. And so, what are we gonna do if suddenly we turn around and, oh my God, we have a ton of product and not a lot of demand? Well, prices are gonna drop. Now, are there headwinds? Sure. Avian flu has taken out the egg supply. If you’ve been in Denver trying to buy eggs lately, you’ve seen that. So, there’s a lot of things going on here.
[00:34:30] And I’m going to directly answer the question: So, what should you do about inflation? Should I buy gold? Should I buy ammo? Should I buy Bitcoin? What should I buy? Okay, so this is the part of the show where I have to tell you that this is not a financial advice or an offer to buy or sell a financial product and any decisions you make are entirely your own. I am emphatically not preaching that you should do one of these things. I’m giving you options and that’s where it ends. I am not responsible for your choices. You’re all big boys and big girls, so just deal. Now, the direct answer is what actually holds up to inflation? Well, gold is down, at least last time I checked. Bitcoin is completely torched. The entire crypto market, in fact, doesn’t seem to do very well in a nonpermissive monetary environment. So, I mean, that story’s still being written, so stay frosty on that. But I think we can finally put the bed the idea that gold’s gonna somehow protect us ’cause it didn’t. Now, what is the solution to inflation? Well, you buy the things that inflate. Okay, so what’s inflating? Commodities. Look at broad-based commodities like, and I’m talking like super broad. I’m not talking like just buy corn, okay? But really broad-based commodities have held up really well in this environment. Now, if you wanna put a finer point on it, you can go to treasurydirect.gov and go buy some I Bonds. You can buy $10,000 in a year. Please make sure you fully understand how those interest rates. But they’re guaranteed to keep up with inflation. Same thing with TIPS. Those are Treasury Inflation-Protected Securities. You can also buy those at treasurydirect.gov or you can just go to your broker and there’s TIPS funds. So, you know, those things are designed to protect you and your purchasing power in times of inflation. The thing I would say, though, is that like this is on some level a Faustian bargain because I could be totally wrong on this, and that’s a very fear-based strategy. One other thing to look at is, well, okay, the S&P 500 is down 30% over the year. I think that’s where we ended up, 28 maybe. Well, why are stocks the only thing you don’t wanna buy on sale? So, like there’s lots of different ways to put here, but if you’re looking for a thing that’s as close to a sure bet as you can, commodities, I Bonds, and TIPS. Okay. So, you might say, “But the US government’s about to collapse.” Okay, look. Here. Alright. And this is not David’s perspective, I don’t think, but if you’re one of those people who thinks truly that the United States government’s just on the edge of collapse and The Great Reset is coming or whatever it is that you believe, no financial strategy is going to help. Under those circumstances, whether we have a shooting civil war in the United States, it really doesn’t matter what you did because we’re all fucked. And that’s just how this goes. And so, if that’s what you actually believe is gonna go on, well, then buy metals, lead specifically — high-velocity lead. I hear it works great in Minecraft.
[00:37:18] Now, the real answer that comes off of my direct answer is that inflation is different for everybody. And so, preserving purchasing power entirely depends on what you wanna purchase. Because if you’re looking at it right now in the real estate market as how, you know, at least here in Denver, housing prices have started to cool off a little bit. Well, you can buy more house now than you could have a while ago if you’re buying for cash, right? So like, your purchasing power is actually going up. If you’re buying avocados right now, your purchasing power has gone up substantially. Why? Because there’s a bunch of them. People aren’t buying them. But if you’re looking for, you know, to buy like heating oil or eggs or margarine, those things have gone up. And so, you know, and the eggs and margarine are kind of interesting because a lot of the cattle prices, if you remember back to 2020, a lot of ranchers culled their herd because of an anticipated drop of demand due to COVID. Well, when you kill a bunch of cows, they don’t make more cows then it makes it really hard to have cows now, which is what we’re experiencing. And, of course, we have avian flu that’s killed a ton of chickens. So, those things are increasing, too. But other things are going down. So, the real answer here is that inflation is very different for everybody and it’s gonna hit different things. Like just think about gas prices for gasoline in the United States. They were going up, it was a huge issue, it was talking points. And then the election came, and then the next day, gas prices started to crater. It’s almost like they were being manipulated for the election, but I digress. The point is that the inflation is going to hit differently. And so, purchasing power to purchase what? That’s the question that you really have to get into to get real granular on this. So, if you’re asking for my thoughts on preserving purchasing power, what are we purchasing? ‘Cause it’s gonna be different for everybody.
[00:39:01] And of course, there’s the “real” real answer to this whole thing, and that is when we get into talking about purchasing power, the purchasing power, inflation strategies, all that’s in the advanced class. And we all should aspire to get into the advanced class. And I think for a lot of people that ask me questions on this are in the advanced class. But the advanced class is useless if you’re not brilliant in the basics. And so, if you’re coming to me and saying, “Hey, I want to have a strategy to be able to help me navigate an inflationary environment,” my first question is going to be, well, how’s your budget? Do you know how much money you spend? What are the things you’re spending your money on that are inflating in a way that you’re worried about? Because it’s entirely possible considering that inflation hits very differently for a lot of people. Inflation might not be hitting you on the full 8%. It might be hitting you a lot lower, which is my personal situation actually. And there are other people where inflation rate is actually closer to 20% because inflation’s hitting you differently. But that’s the advanced class. You can’t get to the advanced class if you’re not brilliant in the basics. So, you need to be able to sit down and work on a budget and know where your money is going. What are my income? What are my expenses? Does income minus expenses equal zero? If not, that’s where we need to work. Before we worry about retirement strategies, before we worry about advanced investing, before we worry about basically anything else, we need to be really brilliant in the basics.
[00:40:33] That’s it, ladies and gentlemen. Thank you so much for listening. This one’s longer than I really want them to be, almost twice this long. But hey, I really appreciate each and every single one of you tuning in, listening to my podcast, spreading the word about Fiscally Savage, sharing the show, and really engaging with me on Instagram. I cannot thank you enough. I’m so excited for 2023, everything we’re gonna be doing this year. So, ladies and gentlemen, thank you so much. Go out there, take control of your financial life, and live free.
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