145. Cost of Living is F&*$#d! How can we survive?

This month alone, my expenses were over $10,000, which was incredibly shocking to me. It's so crazy where prices have increased, wages haven't gone up in step, all of your rent, petrol, food, everything you touch and use during the day costs you more. Your purchasing power has not gone up. People are starting to lose hope.

Welcome back to another episode of the Bennebergs Podcast. I'm Ben, your favorite high school dropout and founder of collective shift alongside Ms. Burgs, your favorite MBA and CEO of Collective Shift. Join us as we bring you world class crypto research and strategies to help you dominate this crypto bull market as well as behind the scenes view of us scaling a fully remote subscription research business here in Australia. If you like the podcast, we'd absolutely appreciate a follow. If you're on a podcasting app or subscribe on YouTube, it really does help us grow the podcast. Because fam, no one can afford living in Australia anymore. The cost of living is out of control. Cost of rent, cost of food, mortgage, interest rates, inflation, everything is just going bananas. The only thing that's not going up bergs is apparently our wages. So what? What are people doing, man? Because things are getting out of control.

It's insane, man. Like I told you how much my monthly bills were and it was just ridiculous to live in Australia. I don't know how the average person is affording this and man, let alone the amount of tax we pay. Like a lot of my mates are high income earners and they end up paying like 47 cents in the dollar and it's like there's a lot to pay within tax. But let's just look at one basic thing, Ben. This is people's main cost. You need somewhere to live. Let's look at rents. Jesus. Let's look at Sydney. Median house rent, this is from December 23rd and it's actually gone up since then and least another 50 to 100 bucks. $750 for rent per week, that's $3,000 per month, right? That is the median house. So that means it's right bang in the middle. There's 50% that cost more and 50% that cost less. So this is like bang average. The annual change was 13.6%. Melbourne $550. Median house rent. This is house rent. You know, you got apartments and everything else as well, which is still pretty expensive. Annual change 14.6%. Brisbane 620. Adelaide 560. Perth, 620. Perth's now overtaken Brisbane and Perth have like a 15% change. Hobart 550. Darwin 660. Canberra 680. All capital cities. General average 620.

So let's do some math on that because what's the average medium house income in Australia? It's like $80,000, isn't it? Yeah, not how not house? Individual.

Yeah, income.

So if you're on $80,000 a year, you're taking home after tax, $1,200. Right. After tax, weekly. Now if you're spending in, if you're living in melbourne, you're spending 550 of that on rent. Right. So 1200 a week, minus 550 of rent.

Right.

You've got 650 left over. Now you add in, that's just. Okay, now what do you. Let's talk about food. What do you need? What do you need? $300 food. Is that realistic?

Yeah. So like cheap groceries, I think for a family is like $300 per week. That's, that's pretty cheap.

Okay, so you got $350 left. Then you need to take out things like subscriptions like, you know, you might, whether it's Netflix, maybe you've got, you.

Know, mate, that's not even the cost. The real costs are like I copped a water bill that this was for, for two months, 500 bucks. Power bill, 500 bucks. You've got things like different rates, household expenses. So schooling, clothes, uniforms, mate, just petrol. Insurance. I spent like over. Well, I think it was like 6% of my income on insurance. Like private health insurance is very, very expensive. You know, home insurance, car insurance for both cars, life insurance, if you have it. It is absolutely ridiculous.

Okay, well at the moment, I mean about my calculations are negative about $800 a week at this point.

That's exactly right. And think about this, like even just like little activities like going to a movie or eating out or doing just basic kind of things, life stuff.

Now quick caveat. This is house rent prices. And assuming you're not going to be owning a house on 80k a year. So even if we took out like the costs of mortgage and whatever sort of owner, owner occupy sort of ownership costs are, you are still literally running on fumes at 80k. If you're living in Melbourne, actually anywhere.

No. So you'd be negative. And even if you have dual income, let's say you're on 160 to $80,000 incomes after tax, you're probably what, 110, something like that.

After tax you to 2100 a week.

For both of those. So that's 2,100. Yes, about 110. 105, 110. So 110,000. And how are you going to pay all of these bills? And there's so many things that just pop up, man. It is, it is unbelievable. Like I don't understand how the average person is surviving. And you have to understand that is the average income, right? So generally over that it can be skewed high because they're extreme income earners. But half the people earn less, half earn more. Let's just imagine it's median how the people under that surviving, how it is just, it is so crazy to me. And let's look at home ownership, right? Like I really feel for my friends over east where, you know, home ownership starts way over a million, right? Like when I bought my home it was about 450,000. It was like 10 years ago.

And now it costs significantly more than that to live in my area, which I just can't believe. Like how are people first of all. Oh, I don't. Ben, I saw the craziest thing. So first of all, how are people saving up for deposits on a million bucks with paying all this rent and all of these expenses? And now I just saw one. Labor MP wants to have zero percent home deposits to get a house. That's how the GFC happened in the States. So, so this is pretty crazy. The challenge we have is that inflation is outpacing wage increases, right? So all the cost of living prices, you know, petrol, food, every single business has increased their prices. Wages has not, have not increased in step. And that's a huge challenge. So now you have to start making decisions on what you actually buy. And things that weren't a luxury two years ago or a year ago are now becoming luxury items.

Okay, so let's, let's talk about that for a quick second. So the average inflation, well what's reported is like what, 7, 8% the real cost of living. Sorry, the real inflation rate is probably somewhere between, I mean even if you just look at rent prices and home ownership, Homeownership average increase over the last 12 months, 9% for home, average home price. And then yeah, just on, just on rent prices, you're talking about 12 or 13% average wage growth over the last year. 3.9%.

Yeah, and you look at things like petrol has pretty much doubled. Some things like even like coffee prices have gone up heaps. Like anything that you buy is significantly more expensive. Like for a McDonald's meal, like Macca's mate for a medium maximum it was like 15 bucks. Now it is so crazy.

Coffee this morning. $6.50 for a coffee.

So crazy. And let's, let's talk about having a household and I'll go through some of my bills. So just this month, 500 water bill, 500 power bill. Our groceries are down to about 300ish per week. Mortgage is about 2,500. If you're doing P and I, then.

You'Ve got all your 2500amonth. Yeah, yeah.

If you're doing P, my, my mortgage is relatively small because I bought a while ago. And then think about any other debt you have for your cars. The amount of money you spend on petrol, the amount of like, if you just need some like clothes or stuff, your dog, you go to the doctor. You have to pay to go to the doctor. Now there are so many expensive this. This month alone.

My expenses were over $10,000, which was incredibly shocking to me. Right? And like, I don't have tons and tons of money. I have enough to service that, but God damn. And $10,000 is an extreme amount. Like, I feel weird saying it, but then I go through the bills that I have and they're very, very normal. Like we haven't gone on a massive holiday, we haven't done, you know, had huge, huge expenses. But those bills fly in and you have to service them and you have to pay them. Like, does the average person have that amount of money? Or if three or four bills hit at the same time, how are people servicing that debt?

Well, there was a stat recently about like the percentage of people in the US that have money that can pay. I don't know if it was you telling me this.

Yeah, it's $400. So over half the people in the United States cannot afford a $400 bill. That wiped them out.

It's fucking crazy. Absolutely crazy. And back to the home ownership. The average. And this is, you know, you've got a mortgage, but people that are looking to get a house. The average median property price as of 1st of March this year in Melbourne is nearly $800,000. It's 1.1 million in Sydney. Right. So at minimum you need what, what do they got? The government, 5% or 10% deposit. Like you're still talking like.

Yeah. Then you have lenders, mortgage insurance on top of that, plus a high interest rate of roughly 7%.

And if you can only pay off the minimum of that, I mean, you've just, you're going to pay like an absorbent amount of money to the bank over 30 years and barely dent the actual paying off the principles like, and then this is even worse, it's all denominated in the Australian pesos. So you've got all of your assets, all of the property, everything valued in AUD, which if you look at the AUD to BTC chart it is down 94% against Bitcoin over the last five years. So don't worry about if you missed the boat on bitcoin. Be more worried about how, like how, how the value of your AUD is plummeting every day.

It is so crazy where.

Things have, prices have increased, wages haven't gone up in step, so you've got all of your rent, petrol, food, everything you touch and use during the day costs you more. And your money, your purchasing power has not gone up.

The other challenge is that all of these prices have gone up because the majority of things that we use are bought from overseas. They'll come in their imports. You've got tariffs, you've got taxes and our dollar is weaker if things are priced in things like the USD. So our purchasing power is weaker, so things are getting more expensive there as well. We're holding our wealth in AUD which is weakening against stronger currencies like the USD and weakening against harder assets like Bitcoin.

Now burgs, you want to go on a holiday, mate? Where do you want to go? You want to go to Europe? Okay, great. How's that going to go for you, mate? Basically can't afford Europe.

What are you talking about?

Bitcoin? Is it a merely for us to even think about even getting economy seeds to Europe? Like the, it's, it's, it's, it's crazy. Like I think we're so fast, like so fixated on, you know, locally like getting property, getting into debt, getting a home. And by the way, I'm, I'm all for that. Like I want to get a property and I want to build up my property portfolio. But doing it at a point where you are leveraging, leveraging yourself to the absolute tits to try and get a property which then you're enslaved to a mortgage where you're basically paying off the interest, maybe just and hoping for capital growth. And by the time the capital growth comes, you've barely, barely inflation anyway and you're living in the home so you're paying all your salary to pay off the mortgage which is just paying the bank. It's just like, it is just this wheel of death.

People are starting to lose hope. So people that are already in the Game that have property, but also younger people like yourself, Ben, where they're like, well, what's the fucking point? Like, I'll never be able to own this. I remember talking to some of my European friends 10, 15 years ago, and they're like, yeah, we're just never going to own a house because it's so expensive. I want to ask you, like, you're in a very different position to a lot of people. You're a business owner, but how do you feel coming into this world, being 25 and looking at property, looking at the prices, looking at where things are going? Do you have that sense of kind of like, what the fuck?

Really fucked. But also like, I feel as though I'm a little bit different. I'm detached in a sense, because I'm like, it's all, in my opinion, just all a Ponzi. And I'm like, I just want to buy more bitcoin. So, like, I don't have this real urge to go and buy a property or live in a place. Like, I feel as though, like, I've kind of been indoctrinated by the bitcoin ecosystem to know that that's just not important to me. I want to invest in property because I think it's a good investment if you have the money. But ultimately I have zero interest of going out and buying a property to live in. I will rent vest for probably a long time and look at property as an investment vehicle, but not as a sort of like the Australian dream perspective, which I feel is a lot of people get caught up in.

And this is the thing, like rent vesting is great as well. Like, if you're going to buy a house, do your sums versus renting and all the hidden costs with. Associated with home ownership. And what if you just invested the rest? Would you be better off? Definitely. Do your summers before you buy a house. And this is a key thing as well. Like, you have money left over at the end of the week to actually invest. A lot of people don't. And if you don't invest, you will get left behind. And I want to read this. Go on, mate.

No, that's the crazy. Sorry to interrupt. That's the crazy thing. Like, I feel as though I've. I am different because, I mean, people and my mates my age, like, aren't investing for. Oh, yeah, not many. Yeah, probably. Yeah, probably none. Maybe a couple that I know in their mid-20s are investing. Like, I've been investing in crypto for seven, eight years now. And, like, I mean, I remember Even you and I sat down bergs and you know even the first thing you taught me about even figuring out your finances, remember that? The net wealth calculator.

Oh yeah, that you have.

You got me through that and just sort of to, just to just to do the numbers and like obviously running my own business and like I'm in a much different position to so many other people and I feel sorry for people that aren't in the same boat because I'm like how on God's green earth are you going to ever get out of this rat race?

Exactly. And for you to be able to do that, to get out of the rat race is you need to move somewhere cheaper or move another hack is like move to another country, cost of living is cheaper, get paid in AUD or USD or you need to upskill, get a higher paying job. On and on it goes. If you want those very, very expensive things which are getting more and more expensive. And look mate, that was a cracking, cracking tweet by Biology yesterday. Suppose there were 10 shares and you had one. They print 90 more shares and give you one, you have more shares, you've gone from one share to two shares. Brilliant. But you have less ownership. You've gone from one of ten shares to now two of a hundred shares. And that's how inflation works. People are misled by into thinking they're getting richer while they're actually getting poorer.

Oh my goodness me, that is ridiculous. That tweet encompasses so many different things. Right? You've got inflation, you've got a small wage increase, but the fact that life's more expensive and it encapsulates crypto in so many different realms. People like going and staking these coins and oh, you might earn another like 5% a year on your, on your coins but they've pumped the supply so you just own less and less. Less percent. The value of the token is worth less but you're, you, you, you're led to believe that you're richer because you have more of the thing that's less valuable. Oh my goodness, that's a such a sick tweet, mate.

How good is it? And like me, so I'm a homeowner, I do have a mortgage, I own some, some shares, I own some crypto and a few other assets here and there through know superannuation things you collect when you get old and all of those numbers gone up so you know, I'm getting wealthier. My assets are increasing over time in step with inflation. But what I actually own, Denominated in AUD is worth significantly less.

And while you see the number go up, you're like, this is great, but all the shit you own is actually not that valuable because of inflation, but because it's denominated in audio.

All right. Yeah.

Now the interesting thing is my bitcoin is actually, well, depending on how you look at it, denominated in USD.

Yeah.

So I actually get that hedge of a stronger currency, USD against aud. And I also get to own Bitcoin and that is me pricing not Bitcoin as Bitcoin, but bitcoin in USD. So you get that as well. And I've been able to benefit from that, from that harder asset that's priced in a stronger currency and eventually will just be priced in bitcoin.

Such a good point. I mean, you know, bitcoin all time high hit in Australia like a couple of weeks before Bitcoin and USD term did because of, because of how much it's plummeted against BTC and USD.

So Balaji posted this and what did you notice? He posted currencies that were all the weakest currencies. You know, it was all the countries that have been absolutely slaughtered. And then you start seeing ones like Japan and then you see Australia, then you see the next one, then the next one and I was like, oof. Like you really start to see the devaluation and debasement of currencies in the world and you're like, shit. Because remember you had that million dollar bet and everyone's like, you're mental. Long term, he's actually correct. Like I just saw another bank is about to go under.

It is really.

Yeah, it was absolutely crazy. This was like two days ago. And man, we just have to question the systems we believe in and prepare. I haven't, I even zoom right out. This has been weird, but I'm going to go there. Like, you know when you have we talked in a couple episodes ago about how big the universe is and if aliens exist and like when you zoom out how big the planet is, how big the universe is and think about the universe and we're so concerned with how much money we have and do I own this plot of land and how dumb does that seem in like the grand scheme of things? We give up the short time we have on earth to work really hard, slave away 40, 50 hours a week for 40, 50 years of your life to have a property.

Like, doesn't that just seem so weird and not the purpose of life yet? That is what we've been Fed. And I appreciate that you need somewhere to live, but God, God damn. Like, I, I really understand and feel like the helplessness that people that are just starting out are feeling.

Yeah, like what is, if you go deeper on that, like what is that? It's like it's security, it's, it's ownership.

It'S like traditions, like values.

Tradition, values. That is like the goal of life. But then you sit back and you're like, well why? Like, and, and if you buy a million dollar property over 30 years, you're, I think you're paying somewhere close to 7 or $800,000 in interest on top of that.

Oh, like you pay heaps. That's if you pay it off quickly. It's actually more than double the price if you pay it off.

Now. Burgs. I wanted to mention something because I obviously do strategy calls with our members and the public and I, and I hear everyone's goals and what they're trying to achieve and what they're trying to get out of crypto. And it's so fascinating to hear people tell me what their goals are because I see that for so many people, crypto is the only way that they're going to reach a point in their life when they're not completely stressed about money.

Yeah.

You know, I'm talking to people with $200,000 in crypto that need to get to 4.5 million to pay off their home, to pay off their car, to get out of debt, to pay for insurance, to like basically just get to break even.

My God.

And, and, and to think that like 1,200k as an example to 4 million is, is pretty, pretty, that's up there.

That's, that's pretty stretch goal.

That's a pretty stretch goal.

Yeah.

That puts a lot of pressure on you to get to that number.

That people most likely will never get there because they won't sell until it gets to that point. And if it doesn't, they're going to round trip and wait again and then what? You're going to be in this completely sickening position. And that's what happens all the time. People have these crazy goals. They're thinking they're going to make all this money and they get close and either don't sell or they get to that point and don't sell because they think they're going to make more. And that's the psychology of crypto.

I talked to a lot of people in 2021 at a couple of meetups and that's exactly what happened. Where they, they had like a, the goal was like $2 million on paper, reach 1.8, didn't sell. And it's like crypto.

Yeah.

Yeah, I agree. Crypto doesn't have to be the be all and end all. It's a vehicle to get you toward your goal. You don't have to achieve that goal and then sell like as things are getting frothy and as you're making money, just sell a little bit like just to stay sane and take profits. Like there's never a bad time to take profits. Do not feel guilty for doing that.

And people, I feel as though, and me included, get too caught up in the short term. I have to make this money in this cycle. Okay, great. What about the next cycle? What about in 10 years? What about in 20 years? This market is not going to end at the top of this market. Markets go on forever. Crypto is not going to die. It's going to be here for all of our lifetimes. So why are we so fixated on trying to make obscene amounts of money in two years? Betting the farm, risking everything, versus having a slightly less risk portfolio strategy which is holding for a longer period of time and achieving it way more comfortably.

You know what's wild? Like whenever you see these movies where like you've got a spy or an assassin, they want to hit a certain target, like $50 million. This is like Jason Statham films, all that kind of stuff. And it's like I've got to hit 50 million and they're at like 45.7 million. And they take that one job and it all goes wrong. And it's like first of all, do the calculation on how much money you really need and do you need it all right now or do you need some of it now? And then the money you have.

Like the, from your wages and everything, you actually have a lot more money because you're not servicing all that debt. Some of it is paid down. What does that look like? It doesn't have to be. I pay off my million dollar home. What if I have $300,000 to put towards it? What is my mortgage now look like? How much more freedom do I have, you know, and that's a really important thing. So let's say you have a million dollar mortgage and you're paying tons of money. Let's Keep round numbers, $2,000 per week for it. If you then paid off, like I don't know, let's say half, keep it simple. 500,000. You didn't reach a million dollar Goal. You paid off 500,000. Those mortgage repayments are halved. You now have extra cash flow. You can pay off your mortgage twice as fast. You haven't paid off the entire thing. Like, in life, decisions are not always off or on. There's a huge spectrum. And look along that spectrum. 10%, 20%, 30%, 40%. And think about how your life actually changes as you get those incremental improvements. Because you'll find a lot of the time you don't need the whole thing.

You hit the nail on the head there, man. And like, and, and I seriously think about this a lot. Like, coming into this bull market, like, you know, reality is we're all going to make a shitload of money.

Yeah.

You don't need to continue to bet the farm on going even bigger. Like, it is okay to take profits. It is okay to bank some of that money. You don't need to be highly, highly strung on one asset class anymore. Like, you can take chips off the table. You know, this is the ultimate thing. Like, this is where entrepreneurs get themselves into trouble because they keep betting the farm on the next and the next and the next until it blows up. It's the gambler's mentality.

I've come to the conclusion that don't listen to outliers. Be exceptional at being average. Right. And what I mean by that is you see outliers in entrepreneurship where you see these guys that like, like Gary Vee or whoever, that have millions and millions of dollars, maybe even billions. This is what an entrepreneur is. This is what an entrepreneur does. And I remember, Ben, your goals are like, I want to get collective shift to a billion dollars. And then the reality is, collective shift probably isn't that business. We'd have to change fundamentally the business model and what we do to get to a billion dollars. How much do you actually need? Okay, this is what we need. This is where my target is. And I'm going to be amazing at hitting that target. And that's going to achieve all your life goals. It's not that super extreme outcome, but it achieves your goals. And it's the same thing for investing. Be like reasonable, even generous with what you want, but be exceptional at sticking to it and capturing it. Don't follow that guy on Twitter and listen to them about the $2 million they made from $5,000 investment. Like, don't look at those outliers.

Such an outlier.

Yeah, exactly. And just think reasonably with reasonable comparisons. What are you getting for investing in the stock market or superannuation? Whether that's investor housing, 8 to 10% a year. If you cop 50% a year in crypto, that is exceptional. Like worry about the hundred X, the 500X, whatever it may be, because you are risking a lot of capital. Just keep it reasonable, keep it average and be great at taking profit and live your good life. The other equivalent of this is the huge entrepreneur that talks and talks and talks online that's made millions and millions of dollars. Or the guy that runs a plumbing business down the road that has a lot of automation that's printing 5 mil per year and you don't hear a peep out of them.

Yeah, you hit the nail on the head. There's so many things, you know, you can go down the path and talk about. But like, honestly, I just think to hear people say that they're not getting out for a minimum of 7x, it's like, let's just actually have a think about that for a second. You're saying that you will not sell until you reach a 700% return, which is okay to have, but what other asset class on the planet are you getting? 100% returns, 200% returns, and you're telling me that you'll be disappointed with anything less than a 700% return. And then you're disappointed that you don't sell or you don't sell enough. Like you give me a break. Like take this opportunity because it's only going to happen once in our lifetime. And for goodness sake, do not this up. Like that's, that's the, you know, that's R.A. parsley. Just do not it up. Because you can make it a lot of money in this market, but you've got to keep your head on straight and your psychology right, because there's always going to be someone earning more money than you. There's always going to be someone that's made more return. There's always that. The comparison. Just don't tune into that shit.

Yeah, so. So don't feel like you're getting left behind. Well, you can feel like this, you're getting left behind. Things cost so much. I have to make all this money. I have to make it quickly. That's cool. That's a good mentality to have. I love it, I love it. But then realize that you have to do exceptional things and be exceptional to get that money in a relatively short period of time. You can do those things in crypto, but the further you go out and if you want those 7 x's, 10 x's, 100 xs be aware of how much money you're placing in those and how high the risk is that that is going to zero. So Ben and I, like, we've talked about our portfolios before. A lot of BTC and eth, some altcoins and there's some moonshots. The moonshots are like 1 or 2% of your portfolio. Things that you won't miss. If it goes to zero, that's fine. Don't bet the farm and put that pressure on yourself because it's more likely than not you will not get that 710-100X on that moonshot.

Yeah.

Give yourself time, compound over years and honestly just realize where currency is going, where bitcoin is going and position yourself accordingly.

Yeah, bang on, bergs. I think we should wrap it there. That was a good conversation.

That was good. And look, I've come around to the idea. Bitcoin is the exit strategy, right? Like it literally is. So a lot of currency companies are now putting their money into bitcoin. A lot of individuals are coming in through the etf. Individuals are now owning it. Soon we're going to see currencies backed by bitcoin. I do believe that currencies are not going away.

People just won't use bitcoin as a currency. I don't believe that it is a store of value. It is property. Once you flip your mind to that mindset, then you really understand where bitcoin is going.

So yeah, just realize how you're earning your money, which currency it's in, and think 10 years ahead and position yourself accordingly and keep it simple. Absolutely, mate.

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Thanks so much champions.