CW 793 - FBF - How To Profit From Borrowing & A Discussion on Inflation and Rising Food Prices

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Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multimillionaire who's actually been there and done it. He he's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Good day and welcome to another edition of Creating Wealth. This is your host, Jason Hartman. Glad to have you here. Today we're going to talk about a couple of my very favorite subjects. And for all of you regular listeners, I'm sure you know what my favorite subjects are. Well, of course my favorite subject is creating wealth, but especially creating wealth and having all things on my side and all things on your side. Doing it the right way, the conservative way and the prudent way, the that really works in real life and the way that has worked, of course, for tens of millions of people throughout America and many, many more around the world. We are going to talk about inflation again, but not in the same way we've talked about in the past. How would you like to get paid to borrow money? Yes, really and truly paid to borrow money. In fact, you can get paid more than 1% every year to borrow. And I will show you a specific example on this show over the last 30 years, well over a 30 year period actually, where you can get paid to borrow money. Now this example comes from a friend of the show who's been on a couple times before, Dan Ammerman, who by the way has an excellent seminar coming up here in Newport Beach. It is at the end of the month, the end of June, I should say, here in Newport Beach, California. And we have information about that on our website in the blog section and there's A whole bunch of details about it. I'm really looking forward to his workshop myself. And on a recent conference call, we talked about a calculation that really is quite interesting on getting paid to borrow. And here's what it doesn't account for in Dan's equation that makes it even better and better and better. It does not account for rental property benefits in terms of depreciation, tax benefits. And the big one it doesn't account for is it doesn't account for the issue you have when you get paid to borrow because the renter, the tenant, makes the payment for you. This is just an example of a typical homeowner. So this is someone who lived in their home, paid the payments and over the years basically got paid to borrow money. Now, the other thing it doesn't account for is the fact that inflation is much higher than the numbers quoted by the government. And these numbers are just based on the government's version or the government's story of inflation. So we'll get into that. And we'll also have an interview with our caterer, one of the caterers, well, we have two of them, but one of them that caters our events and our seminars. So if you ever come out or you have come out to one of our live events here in Costa Mesa, California, at our office, you will hear from the person who provides some excellent food for us. And he's going to talk about how inflation has impacted his business and the prices of food and some real world examples that I think will be of interest to you. But before we get into either of these things, let's talk about some of the Ask Jason questions. Thank you so much for going and posting these questions on our website@jasonhartman.com in the Ask Jason Jason section. Remember, you're listening to Flashback Friday. Our new episodes are published every Monday and Wednesday. So let's first hear from Mark. And I believe Mark, by his area code is from Memphis, Tennessee, although I'm not positive, maybe a cell phone number. So, Mark, we appreciate your question and it is very applicable to me, actually, and it looks like it's applicable to you as well. You said, Jason, you're big on borrowing as much money as possible to leverage your dollars and let inflation work for you or for your tenants and pay back your mortgages. I would like to know your thoughts on buying a car and the best way to use the money for that purchase for personal use. I know the car depreciates in value every year, so to me, getting a new car loan is kind of silly. Because you owe more money than the car is worth in a few years. Should I pay cash up front for the car or not? Well, Mark, that's a great question. And you know what, I just was faced with that myself. I had a Range Rover and I tell you, that was not a great experience. By the way, if any of you are buying Land Rover products out there, they are very stylish, luxurious cars, but I don't think they're engineered that well. Frankly, I had a lot of problems with mine. Anyway, I was glad to get rid of it. I traded it in and I got myself a brand new BMW. And when I did this, I decided to lease my BMW. Now I gotta tell you, a big mistake I made, unfortunately. Experience is a great teacher, but it's an expensive teacher. So what I did in my story, and I'll kind of get around back to your question here, Mark, in just a moment, is I purchased my Range Rover. And I purchased it because I could get this big tax credit because it was classified as an over 6,000 pound commercial vehicle. And of course a huge gas guzzler. Gas was a lot cheaper then, but gas was getting expensive. And I did the math and I don't drive that much based on the discount you get on these gas guzzling cars. It was actually a better deal to buy a gas guzzling car because they were really inexpensive and they were making a lot of deals on them at the time. And the deals are even getting better now. But what I didn't realize when buying over leasing, because I usually lease my cars, is that when you buy, you take 100% of the depreciation risk. And during the time I owned that clunky Range Rover that broke a lot but was a very stylish car, it depreciated a whole bunch on me. It was really pretty severe actually. And when you lease, you allocate this depreciation risk to the leasing company where you lease the car. So I go to trade it in, it's worth much less, much, much, much less than any normal car would be. And because I was the owner rather than the lessee, I took all of the depreciation risk. So then the next question I was faced with is here, I'm leasing the new BMW. Do I want to just pay for the big, huge and huge, let me tell you, deficit on that Range Rover and just write a check for it or do I want to try and bury that depreciation or as much as the dealer would let me into the new lease on the BMW? Well, I chose to bury the maximum amount into the lease on the BMW because the effective interest rate on my lease. Now, car leases go by what they call a money factor rate rather than an interest rate, but works out to be the same thing you're paying to borrow money, of course. And there are websites you can find on the Internet that will calculate what the money factor rate is equivalent to in an interest rate. Turns out, on the BMW, it was equivalent to about 5.9%. Now, I know that I can do a lot better on my money investing it at 5.9%. So I buried as much as possible of that Range Rover depreciation into the BMW's new lease and took a very high payment on the BMW at 5.9%, approximately interest rate. And that was a good deal for me because through the time value of money, I first of all believe that inflation is much higher than 5.9%, number one. So there I'm getting paid to borrow money. And that's really the subject of today's show. We'll get into that as time goes on here. But number two, I can invest that money in rental properties, and I'm pretty darn confident that I can make 3, 30% every single year, pretty prudently and pretty conservatively on an average. Now, I may not make that the first year I own the property, but I will make that over time, I think. So I feel that it's a good deal to finance your automobiles, especially if you can take like I can in my business, a business write off on them. That makes it even more attractive. I do not want to pay cash for cars. I know they're depreciating assets and we will end up owing more than it is worth. But that's why we lease, because we can just turn it back in at the end of the lease and then the next issue is you pay an extra mileage fee on the lease if you go over the miles. But you know what, it's a little bit of a premium. But if you own the car and you put more miles on it, it depreciates more in value. So it's worth less at the end of it when you sell the car anyway. Okay, so thank you very much for that question mark. Appreciate it. Hope I answered it for you. David from Tennessee asked the next question. He said, why is Tennessee not on your list of states where you sell properties? I live outside of Nashville and believe middle and East Tennessee meets most of your criteria. I have admired your work and the philosophy of your company. If you ever decide to franchise into Tennessee, I would be very interested in getting involved and keep up the fine work, respectively. David. David, thank you so much for the nice words. First of all, Tennessee is pretty good and we do like Tennessee as an investment. We have not really opened that area. There are other areas around the country that we like. We have done a little bit of business in Knoxville and also in Memphis, and those just aren't big markets for us. But most of them are pretty darn good. I have no objection to Tennessee. Most of our activity right now is in Goza oriented markets. And of course, many of those go zone areas end at the end of this year. And that's just where our focus is. It's where most of our investors want to be right now. And we have many other good markets around the country, but by no means is every market we're in the only market in which to invest. I definitely know where you should stay away from, and I've mentioned those on many shows. That's a dynamic, fluid thing as well. So we will probably be in Tennessee real soon. And if you are interested in a franchise, we're just getting our franchise reapproved right now, and it's pretty easy to be approved in Tennessee. So you know what, David, why don't you give us a call and we'll talk about that and talk about some possibilities for the future. Thank you for the question. Okay, Gary asked the next question. Gary says, I currently have the opportunity to borrow against my 401 at 6% fixed for 10 years. I have about $40,000 available. Does it make sense to borrow this money and reinvest it in rental properties? My wife and I make under 150,000 adjusted gross income. Why you're saying that, I'm sure is because that does entitle you to some of the depreciation tax benefits under 150,000 AGI. We've had several experts talk on taxation and you can go back and listen to those podcasts for more detail. I would have to pay the loan back in monthly installments from my paycheck. Thanks for your time. Well, you know, Gary, I think this is a really good opportunity for you. $40,000 could be much better deployed in rental properties than it can in a 401k or any sort of qualified plan. And when you borrow, you're really just borrowing from yourself and you're paying yourself back anyway. So the interest isn't real because you're only paying it to yourself. So this seems like a very good deal. And I would definitely recommend borrowing from your plan and buying income properties with it. Sensible, prudent, conservative income properties in the markets we recommend. So contact us for that and I think that's a great idea and it's a really good question. One more thing I want to say about qualified plans, 401s, IRAs, etc. Wall street has a huge multi billion dollar machine promoting the concept of putting money into these plans. And at first glance I thought many years ago when I opened my plan, I was about 20 years old. I did it real early. I thought this was a really good idea to just sock money away into a qualified plan. Because what it allowed you to do is put in pre tax dollars and let them grow and compound in various investments on a tax deferred basis. Just a reminder, you're listening to Flashback Friday. Our new episodes are published every Monday and every Wednesday. But here's the problem. Investments inside of your plan usually aren't that good. You can invest on Wall street and I think that's a pretty mediocre deal at best. You can buy mutual funds. You can invest in notes and trust deeds. I believe you can even buy tax lien certificates inside a plan. You can buy rental properties inside a plan. But unfortunately the terms at which you can buy the rental properties inside a plan aren't that good. It's not as good as what you can do outside of a plan. So I really don't think these plans are a very good deal. And the other thing that the Wall street people and the financial services firms like the Merrill Lynches of the world and the Ameriprises and all the rest won't tell you is that of course these dollars are progressively devalued through inflation. And when you take them out and you start taking distributions, I believe you can do this at 59 and a half years old. You have to pay taxes at that time. So I ask you the question, do you think taxes will be higher or lower in the future? Well, they're probably going to be a lot higher than they are today. So I don't think these plans are a very good deal at all. You can do a heck of a lot better buying rental properties. Even though you are investing post tax dollars in the properties, you get all of the other benefits. Tax benefits, most tax favored asset in America, renters who pay the cost of borrowing. And then of course you get paid to borrow through inflation. We're going to talk about that in just a moment and just a whole bunch of other benefits. So we've talked about that on prior shows. I won't, I won't delve into it today, but thank you for all the questions. Let's get on with our show. Now. I am going to be going over a lot of numbers, and I addressed this on a recent conference call that we have. So we just cut out this little portion of the conference call where I explain the concept that Dan Ammerman explains about getting paid to borrow money. And there is a chart where it goes over this in detail. And if you want to refer to it, just go to jasonhartman.com click on education, then click on Resources and you'll see this chart there. You can print it off. And it is very, very enlightening. So take advantage of that and listen to this. It is really, really cool how we can get paid to borrow money. It's really true. So let's listen in and then we will go to our caterer for a Man on the street story about inflation. And we will look forward to talking with you in about a week on our next show. Let's listen in.

As I see it now, we are really in the kind of market that is an incredible opportunity for people who are qualified. Unfortunately, a lot of people who were the less qualified borrowers have been sort of knocked out of this market. But that leaves an even greater opportunity for those qualified borrowers. And you know, all of us have looked at, at one time or another in our life, a balance sheet. And on one side of a balance sheet will have assets and the other side will have liabilities. And when it comes to financing, most people consider money that they owe to be a liability. They consider any mortgages, any debts to be a liability. And one of the things we really want to talk about on this call is the concept of actually being paid to borrow money. And I also call this negative interest rates because as we will illustrate on this call, it is really incredible how much of an asset your ability to borrow is. So when you're looking at your own financial life and you look at your liabilities, all of the money you owe in the traditional sense, they're called liabilities. And you look at all of your assets, all the things you own, and then you subtract liabilities from your assets, and that number is your net worth. But one of the things I want you to add to the asset column is I want you to add your ability to borrow, your credit worthiness, your credit score, and your ability to borrow. I want to talk about getting paid to borrow money. So if any of you are at your computers now, please connect to the Internet. And I want to show you something visually. And if you don't have it up handy visually, you can either refer to it later or you can just listen along. I'll try to make it as clear as possible for those who don't have the Internet right at their disposal. Now, just go to jasonhartman.com that's J-A-S O N H-A-R-T-M-A-N.com. and once you're at the jasonhartman.com website, click on Education on the nav bar and then Resources below that. And right at the upper left of that page, it says for conference call listeners. And then you'll see a link to something called 30 years of inflation, which is a PDF file. Please open that file and follow along with me. Now, this is really an amazing thing, this 30 years of inflation PDF file. This was put out by a gentleman named Dan Ammerman, who I have interviewed on my podcast two separate times. And you can go back and listen to those at your convenience@jasonhartman.com, but we did not cover this subject specifically. Now, what this shows you is how you can actually get paid to borrow money and how when you borrow, you might be thinking that you're paying an interest rate, but you're really not. So that may sound like a pretty extraordinary claim. But let's just take a look at this, and let's look at this period from 1972 on up to 2001. And what we want to talk about here is how a dollar is not worth a dollar as you go into the future. So you see here, if you're looking at the chart, in 1972, the government quoted inflation at 4, 3.2% annually. And in 1972, if you had $1, that dollar was worth the dollar that year. But then the next year, because of inflation diminishing the purchasing power of that dollar, it became worth a little bit less the following year. And over the subsequent years, as we got later into the 70s, we really saw rampant, rampant inflation that really detracted from the value of those dollars. And over the course of time on up to 2001. Think about it, if you got a 30 year fixed rate mortgage in 1972, which you could have done, and maybe some of you did do, and you were made wealthy by this because you really were getting paid to borrow money, as we'll illustrate. So that dollar from 1972 on up to 2001, that dollar was only worth 24 cents. So that dollar today worth a lot less than it was then. So if you follow up on to 2008, it even gets worse than that. But for purposes of this example, we just want to take what would be a 30 year mortgage time frame. So let's look at this. This person who borrowed money on a mortgage in 1972 had a mortgage payment of $101. You'll see in column seven, annual payments in column six that are adjusted for inflation of $1,211. Now you'll see how the next year this annualized payment actually gets lower. But it really, it does and it doesn't because this person got a fixed rate loan. So their mortgage payments did not change, they just became reduced through the beneficial effects of inflation over time. And if you follow this, let's just pull out a couple of years here. We won't go through the whole chart, that would be too tedious. But if we look up to 1975, for example, the inflation in 1974 was very high. It was 11%. And a dollar by 1975 was only worth 78 cents. That same dollar became worth less and less money. And the payments were the same in column five, every single year, this person paid $1,211 in mortgage payments. But if you see in column six, as those payments are adjusted for inflation, they actually decline in value. So I'm sure you've had this happen in your perception of borrowing. You know, I remember when my mother bought her first house in 1976 and she was very, very stressed at the high mortgage payment of $416. But over time, and she still owns that property, she rented that property out for several decades and made a lot of money renting the property out. And over time, that mortgage payment of $416 felt like nothing. Nowadays people have car payments that are easily double that amount, right? And that was for a nice house in West Los Angeles. So the value of those payments, as your income is higher and the value of a dollar declines, the value of those payments actually goes down. This is one time we really, really like to see inflation because not only do the payments get reduced in value, so we're paying in cheaper future dollars, but also the balance of the loan is reduced by inflation too. Now, we all know that as we have an amortized fixed rate loan, every month we're paying, part of the payment goes toward principal, while a little bit goes toward principal, and most of it goes toward interest, right? So the principal payment is very, very low. So we're barely paying down any of our mortgage. And if we have an interest only loan, for example, for the first 10 years, we're paying off no principal at all. But the value of that principal declines because the value of the dollar declines because inflation reduces the value of that loan. So let's just look forward here again and let's look at 1984 on this chart. Now if we go across and we look at all of the different numbers for 1984, remember, we started in 1972 and a dollar was worth a dollar, but by 1984, the value of a dollar was only 40 cents. And the payments being a fixed rate loan, were still $1,211 annually and, you know, $101 per month. But the inflation adjusted amount of those payments, but because the value of the dollar declined was really only $487 in 1984, just 12 years later, and the inflation adjusted payments every month were only $40 a month. Isn't that nice? And then you can take, and you can look at column eight for the after tax amount of a payment. So let's go forward now all the way up to, to 2001. This is the year that the loan will be completely paid off 30 years later. So in 2001, we've seen inflation go over the years up to a high of 13.5%, according to the government's numbers in the Consumer Price Index, and down to a low of probably 1.6%, I think was the lowest year along this chart, and that was in 1998. But at the end of this period, we're still writing a check every year for 12 different payments of $101 per month, $1,210 per year. But in 2001, when we've paid the loan off, we're making the last year of payments here $1210 annually to pay for a property. Seems like nothing, right? I mean, it's just, it's a nominal amount of money. And the monthly payment, instead of being $101 when you adjust for inflation, is only $23.81. Really, really amazing how beneficial this is. Inflation is paying off our loans for us. But then you might say, well, yes, Jason, I am being paid to borrow money because I understand that the value of the mortgage payments goes down with inflation and the value of the loan balance, which we haven't even examined yet, also goes down with inflation. That is all true, but the question you might have is what about the payments? Don't I have to pay interest rate payments along the way. Well, of course you do. But if the inflation and the tax benefits exceed the the interest you are paying, you are actually being paid to borrow money. This is a beautiful equation. Now, that's pretty darn good right there. If I could borrow money all day long at 7% and invest it at 7.1%, I would do that because that's called arbitrage. And that's how many of the richest billionaires on earth have made their billions through what they call arbitrage, exploiting the differences in something. If I could invest just a little higher, ever so slightly higher than I could borrow, that would be a very good deal. But what if we could make this equation even better? We can, because when we buy a rental property rather than with our own home, we can turn around and we can have the tenant pay the mortgage for us. So if you look at this chart, for those of you who are looking at this PDF file@jasonhartman.com and you've clicked on Education, then resources, and you opened up a little PDF there. Let's look at the summary of what really happened here. Over the course of this loan, you have paid $36,318 in payment, and the original loan amount that you borrowed was $14,614. That's at the top of the sheet. So this was to buy an $18,000 house in 1972, your interest rate on the mortgage was 7.37%. And so you got an 80% loan at the time. Well, that would seem like a bad deal. You borrowed only $14,000, but you had to pay back $36,000. But upon closer inspection, we see in column 6, the total of the annual inflation adjusted payments is $16,393. Rather than the payments we thought we paid the amount of all the checks of $36,318. Very good deal so far. But it gets even better than this. See, in $1972, we paid the $36,000 for that loan amount because we had to pay so much interest on it. The loan amount of $14,614. But the real dollars we really repaid in inflation adjusted terms was only $16,393. I'm at the bottom of the sheet if you're looking at this. And of course, any of you who don't have Internet access right now, you can just go and get this off our website at your convenience anytime tonight, just go to jasonhartman.com education then resources, and it's Right there for you. So we see that the cost of borrowing there in inflation adjusted dollars was about $2,000, about $2,300, right? But. But after taxes, we got a tax benefit here. We really only paid real dollars after tax benefits of $12,655. Wow. That means we actually paid back less than we borrowed. We actually paid back less than we borrowed. Now it gets even better in two ways, not one. I told you one already. One way it gets better is that we didn't pay the interest. We put a tenant in the property and the tenant paid the interest. But it gets even better than that. You know why? Because the government's numbers on inflation are underestimated. Inflation is far higher. And if you want to listen to our podcast@the Jasonarbon.com website, you can see on all of the ways that we explain and prove that the inflation rate is much higher than the government would have us believe. So this is just based on the government's numbers. So it's really quite a bit better than this in many ways. Our effective interest rate that we were quoted when we took out this loan in 1972 was 7.37%, 7.37%. But the effective interest rate in real dollars, inflation adjusted, the four tax benefits, was 1.06%. Okay, because remember, we only paid about $2,300 over the course of 30 years in this example. Now, it gets even better, though, because after tax benefits, the real dollars we paid, where it's only 1200 or $12,655, meaning our effective interest rate was negative, negative 1.16%. We got paid 1.16% to borrow this money for 30 years, assuming the government's inflation numbers are correct, which they are understated. And number two, assuming we did not put a tenant in the property, so we were paying our own debts here. Now, I don't have a calculation for this, but just imagine how desirable this investment becomes when someone else pays the 7.37% interest rate for you and you get all of this benefit accruing to you as the property owner. And the property is appreciating historically at a rate of about 3% above the consumer Price Index. For more information and backup material on that, it's on our podcast. It's one of the early ones, I believe it might be number six or seven. @JasonHartman.com you can listen to an interview of Dr. Christopher Kagan on that subject.

I'm here with Ben Lyons, who is our caterer for many of our seminars and events. And he owns a company called Saltwater Events and Catering. And I wanted you to just get a perspective as to what is going on out there in terms of inflation, because Ben is in the food business. And the food inflation and the transportation or energy costs, fuel costs, gasoline specifically, here is something that is impacting his business quite a bit. Ben, welcome. Thank you for coming in.

Yeah, it's a pleasure. Glad to be here.

Glad to have you on. And we just wanted to hear a little bit about what is going on for the man on the street, the businessman out there, in terms of how inflation is affecting your business.

Well, we have a catering business, so it's the price of food that is our main concern. In the last year, the price of eggs has gone from wholesale price, approximately 10 cents to 20 cents. That's 100% increase.

That's per egg, per egg. So one egg has doubled in price in a year.

Doubled in price.

Wow. It's no longer a good egg. That's an expensive egg.

It's getting there, that's for sure. And most dairy products have gone up somewhere between 50% and 100%. They say it's because of transport costs and all that kind of stuff.

Transport costs. And also the ethanol issue is impacting a bit because the farmers are converting their crops to some extent.

That's correct. I think that's a real boondoggle. It's probably the least inefficient way to.

To produce energy.

It doesn't work to challenge the price of fuel. That's crazy.

All of these environmental things out there, everybody gets on these big excited trips about it, and then you see all the law of unintended consequences. It's making people starve around the world, frankly.

Right. I mean, there are some environmental things that this biodiesel thing has potential, but they have to look at it carefully so that the price of food worldwide doesn't increase any more than it is.

Yeah, you have to look at the whole equation, the whole ecosystem of the problem, rather than just attacking one symptom. But back really to your business, Ben. So you're seeing the price of eggs have doubled in a year. The price of pretty much every dairy product has gone up 50 to 100% in a year.

That's correct.

Wow, that is something else. How about meat products? How are they doing?

Actually, beef and pork have increased slightly. I'd say somewhere between 5%, 10% over the last year.

Okay, so that's not as bad. But, you know, the government would have us Believe inflation is only about 4%. So it's. Everything's higher than that.

Right. The price of chicken has gone up a lot.

How much has chicken gone up? If you had to say, we used.

To be able to buy Chicken Wholesale for $2.50 to $3 a pound. That's $5 a pound.

In a year.

In a year.

So that's almost double in a year.

And that's directly related to that. The corn thing that we were talking about earlier, because that's what they feed them on is 100% corn.

Yeah. So that corn's gotten more expensive because it's being used, diverted to ethanol production. So. Yeah. So what's the reaction, you know, in your business? Are you in this very unenviable situation, which I know a lot of businesses are in right now, where they're trying to pass off these inflated costs to their customers, which is okay. If your cost goes up and you can pass it right along to the customer, that's the same to you. It's the same profit margin. But are you able to get the customers to accept the higher cost?

Well, it's difficult because everybody's being squeezed. And so you try to raise your prices to cover your costs. And the client is either looking to alternate sources of catering. You know, a lot of them, we don't do their catering more. They go to Costco and. And they do it themselves to save money. And so we've had to switch to businesses that are doing quite well. A lot of the tech businesses are still doing quite well.

Yeah, There are certain segments of the economy that are still working, and we're.

Trying to tap into those to offset the ones that we're losing.

Yeah.

Ben, any other comments you would have about what's going on out there in terms of inflation, in terms of your business? Maybe you want to talk about the fuel cost, too, because you drive all this stuff around.

Well, I think the fuel cost is directly related to the value of the dollar. I mean, in the last five, six years, the dollar has gone. It's half the value that it used to be. Nobody can afford to go to vacation to Europe anymore because it's twice as expensive. And everybody buys oil on the international markets in dollars, so they charge double what they were before because it's the dollar's worth.

That's the weakness of the dollar.

Exactly. So it's real. You go to the gas station now a year ago, to fill our big diesel truck up, would cost 60, $70. It's $150 today.

And that's a direct cost right to you because you. You're driving the food around to the events that you're catering.

Exactly. It's something you probably even didn't notice before with your fuel costs. Yeah. It's just a small amount, but when it gets to $150 per tank and you're filling up two or three vehicles once a week, Thousands of dollars a month now.

Absolutely. It's amazing to me, Ben, that people still occasionally, although not nearly as much as before, debate the subject of the real rate of inflation. The government tells us it's around 4%. I think most people in their right mind now know that that is completely bogus. Any overall comments on that in closing?

Oh, I can't believe they're saying it's only 4%.

What do you think the rate of inflation is in your life, in your business?

I think the overall rate of inflation is somewhere in the region of 15%.

15% CE. I say 10 to 12 personally. But here's the thing, maybe some of our listeners want to notice is that the rate of inflation is different for everybody because everybody spends money a little differently. Of course, we all have some basic things that we all buy, and inflation affects us the same there. But I might go buy electronics and you might buy more clothing. You know, those things are different in the way they've inflated.

Right. I think electronics have a much smaller.

Inflation rate because of technology.

Because of technology. You know, you can get a DVD player now for 30 bucks.

Right, right. Whereas it used to be 1500 when they first came out.

So that offsets other inflationary parts of the electronics business. But the real costs of inflation are to do with commodities that you use every day, and you use food every day and you use fuel every day and housing every day. We all know the price of housing went through the roof.

Food, clothing, and shelter. Yeah, exactly. So those we love packaged commodities investing, as I always say in my seminars, because you're buying all those commodities that are the ingredients to these houses, and they include a lot of energy costs. It takes a lot of energy to manufacture a house.

Yeah, it does.

And so that's how we invest. And then the debt goes down in value as the dollar depreciates. So it's a pretty good equation, huh?

It is, exactly. And the price of energy has gone up for us. Apart from gas. We use gasoline. We use gas in the kitchen and electricity to cool down the building.

How significant is that part of it? I mean, you know, I never even used to pay attention to my utility Bill. And now I'm noticing, you know, my utilities on my house that I live in are, they're getting kind of expensive. Everything's just more expensive than it used to be, for sure.

Well, on a personal level, I've seen my gas bill go from 20, $25 a month to $85 a month.

Wow, amazing.

And in your business commercially, we're paying 6, $700 a month for gas.

And what kind of facility are you talking about here? Put it in perspective for us.

How Many square feet, 5,000 square foot facility with a couple of walk ins, couple of freezers, all the equipment that you need to prepare your food.

How about electricity?

Electricity has gone up. It doesn't seem to have gone up as much as gas. I don't know why that is either.

Yeah, I think we need, I think what this country really needs is to follow the example of France is nuclear power. Because it is the safest and cleanest and cheapest thing going and it's so sustainable. You know, I don't know if you agree with that, but that's my opinion.

You know, I actually wrote a paper, a marketing paper when I was at college about nuclear facilities and the risk factor compared to gas fired electricity places or coal. Yeah, coal. And coal produces so much more byproducts that are detrimental to the environment than radiation because the radiation is contained and it's a controllable factor.

It really is. And you know, we've really only had one real nuclear accident in the world and that was over in Russia or, well, Ukraine in Chernobyl, Three Mile island. Really wasn't. Nothing really happened out of it. That was very significant.

Yeah, it was a, it was a warning.

Yeah, it was a warning. Yeah. And it's good to have a warning. Keeps people more careful. Right.

Get you on your toes.

Absolutely. Well, Ben Lyons, Saltwater Catering and Events, thank you so much for being with us. We appreciate you sharing your insights from a person who this is really affecting and it's really affecting our listeners. But it's good to hear from some other people and some other perspectives and we wish you the best. It's a tough time out there.

Well, thanks for having me. And I think things are going to get better.

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