#190 How Inflation Has Shaped our Spending, Saving, and Investing

Hey everyone, hope you've had another great week. We've all been talking about this topic for the last several years. That's the topic of inflation. How did it impact your family, your spending, your investments? And today I'm going to talk about how it impacted me and our family, our spending, our saving, how we're trying to stay ahead and talk about how we can be resilient in times of inflation, hyperinflation, potentially deflation, and all of these times. So stay tuned. Welcome to the Passive Income MD Podcast where we talk about creating your ideal life through multiple streams of income. If you enjoy hearing about this stuff, make sure to hit subscribe. Now, let's get on with the show. Now, inflation isn't just an economic term, it's a reality. Right? It touches all of us on a daily basis, whether we notice it or not. From the price of bread or eggs, all that grocery stuff, to the cost of education, to rents. All of that shapes our spending, our saving, our financial planning. And sometimes we hear about it on the news. But how does it affect us? It's not just numbers on a chart. How's it going to impact the way we live our lifestyles, plan for the and navigate through all of this uncertainty? So I want to begin today with a little bit of a personal confession. I've never been great at traditional budgeting. You know what I'm talking about, the kind where you account for every dollar, meaning that you know where it's going to go, the amount that you're going to make, and be really strict about the ins and outs. I mean, that's never been me. It's not enjoyable by any means. And in terms of that kind of detail, that's just not what I've really wanted to spend my time on. I don't know if you're like that, but if you are good at it, kudos to you. But I also want to let you know that doesn't mean I navigate our finances blindly. I don't just spend however much I want and not be cognizant of where the money is. Because of course I don't want to be paycheck to paycheck. We talked about it on this podcast. Many doctors end up in a paycheck to paycheck situation, which can be scary. So in times like these, where inflation was sky high, it's come down quite a bit, but where the cost of goods and services have gone up, but our wages and how much we make in our salaries hasn't really kept up with that. If we're not smart about how we spend our money and at least think about where it's going. That can be a scary thing. Hey everyone have a quick question for you. Are you looking for a secure and reliable long term investment strategy? Meet Eckerd Enterprises. It's a family owned and operated firm with over 35 years of experience specializing in US energy and alternative investments. Here at Passive Income MD, you often hear me talk about the need to diversify. One of the safest investment strategies available today are mineral rights. And with Eckerd Enterprises, you can diversify your portfolio. 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I make sure that also I have money set aside to continue to invest, to reach my goals. And then we spend modestly outside of that. We know where we're spending money. Part of our spending plan is we love spending money on experiences, on travel. We just don't spend very much on goods. I mean, I like to buy a nice TV here and there, but maybe I buy one and keep it for as long as possible. I don't try to follow all of the latest trends. When I bought a car also, I made sure it was tax deductible in many ways through my business. We'll talk about that in a future episode. But the key here in all of this stuff is figuring out what portion of your income ultimately goes into savings and investments. I at least have some discipline there. So in times of inflation where this cost of certain things have seemingly skyrocketed, it hasn't really impacted me. I haven't seen it. And because I don't watch every single dollar, it hasn't caused a lot of Fear in my mind. Now, just to back up a little bit, the US Inflation rate as of the time I'm recording This is about 3.1%. That's according to the CPI or the consumer price index. The CPI, just so you know, it's a tool that helps us see how much the prices of everyday goods and services like food, clothing, housing, how it fluctuates over time. And that's what the Fed has, in addition to some core metrics, that's what they've used to decide their federal funds rate. They've gone up and down. You've heard about it, the Federal Reserve increasing or lowering interest rates. We've seen it in our house, in our lifestyle, when you go out to eat and people talk about how Chipotle is now 20 bucks a McDonald's meal might be $15. Whatever it might be, we definitely have seen it. When we go out as a family and we eat, we have noticed that it has gone up in price significantly. Again, I don't know if you've noticed that, but we have. And whatever. Spending on groceries has definitely gone up over time. But whenever I talk to physicians, it's not like your salary or wage or your yearly increase has kept in line with a lot of this inflation. So my thought has always been, how do we not just stay afloat during these times, but actually figure out how to thrive? How do we take advantage of what's about to happen? We're always looking ahead as a community to make sure that we can take advantage of opportunities where everyone else might be fearful or have worry. That's usually when opportunity is created. Hey, everyone, wanted to pop in here real quick to let you know that the annual Leverage and Growth Summit, I think it's our fifth one this year. It's happening on February 26th through March 1st, 2024. This is a virtual summit. It's for physicians. It is definitely one of my favorite events of the year. And the reason I love it is that it's all about stories. It's about stories of physicians doing some really amazing things outside of medicine, leveraging their medical degrees and all of that ambition and skills that they've grown and cultivated throughout their medical training and then using it for some other venture. These are doctors that are creating their ideal lives, that are living life by design. We've had tens of thousands of physicians who have participated in this in the past, and it's such a cool experience. I know you're gonna have a great time. So mark out that time, put it in your calendars. Look out for it. And the best part is that it's completely free. It's a free summit. So plan to join us on February 26th through March 1st. Look out for that and see you there. So here are three quick strategies that I focus on during this time. Especially with the inflation talk. Whether it's up or down, this has kept true and this has helped me and set me up for the future. Number one, it's about how do I funnel my professional income, whether that's from my businesses, my medical income, whatever that might be for you, how do you funnel that quickly into appreciating assets? And what I mean by that is that you take the money that you have to work for, the hourly work, the type of income we have to put your time in, and it's dependent on you showing up. How do you get that income to not only cover your cost of your daily life, but also quickly funnel as much of that possible into assets that grow separately from your own, that grow passively. Maybe you have to put a little bit active work, but it grows outside of your day job. I've talked about the cycle where in the beginning this might feel a little slow, it's not like doing much for you, but over time your dependence on your active day job income can decrease. The while your assets tend to increase in value and also increase in terms of cash flow that they produce, it's about making money work for us, creating those additional streams of income so it can support us. It doesn't matter what the time is like, doesn't matter what the economy is, that no matter what our primary income is, that we can create that security for ourselves. And that's always been my first focus and priority in terms of strategy Number two, when it comes to those assets, I'm focusing on long term holds for the most part. I'm talking about real estate. And yes, I do have portfolio stocks, bonds and commodities, but it's mainly focused on real estate. I'm talking about the long term acquisition and hold. I do invest in a ton of syndications. I have also invested in terms some short, shorter term type deals and those quick wins are great, but the goal is to ultimately create the long term cash flow, that portfolio that can withstand economic fluctuations, whatever it is, and grow over time. Real estate, commodities, those are things that typically are considered a hedge against inflation. What does that mean? That in times where inflation and the rates are going up and the prices going up, those things are going up as well. So they stay in line with that. Maybe your salary isn't keeping up with inflation, your spending goes up in times like this, but your assets continue to grow. So that's the second part. Focus on long term assets like real estate, certain commodities and, and yes, a diversified portfolio of stocks and bonds. And the third part is know where the risks are right now and the realities of the current situation. Overall, I have the strategy of finding long term assets, but what those long term assets are, where they're located, the people that I invest in, how much I invest, all of that is shaped by the current environment that I'm in. I believe that there are opportunities at all parts of the cycle, but what that opportunity is isn't exactly the same every time. You have to know your risk tolerance. You have to know what's suitable for you, how much time you're willing to put in, your risk tolerance and your financial goals. I also know the risk of relying solely on someone else or my day job or one stream of income to create financial security. How many of you know people who have done that and have been completely impacted by an administrative change or private equity comes in, or leadership change or insurance change, whatever it is that completely impacts your day job income? I'm constantly trying to create my own security and keep looking forward. So what does that mean for the future? Again, I don't have a crystal ball, but it looks like inflation right now has potentially peaked, at least in the short term, which means that interest rates will remain stable for a little while at some point. And I absolutely believe in 2024 that the Fed is going to cut interest rates. Interest rates are going to start to go down. What does that do? It stimulates the economy, it stimulates spending, especially in terms of buying assets. Cash will flow back in the market. Institutional players like the big money out there will feel comfortable flowing back into the system. And I believe that commercial real estate, which has had some issues over the last year, will still continue to have some issues in 2024. But when that pivot happens, what they call the Fed pivot, when they start dropping interest rates, I believe that money will start flowing back in the market and these asset values and these commercial products will start to rise again in value. I believe that we'll be prepared to ride that next wave. You only get a couple of these in your lifetime. I absolutely believe that where you hit the downturn of an economic cycle and you can't time it perfectly, but if you can invest through that, you can ride a nice wave for three to five to seven years that can impact the rest of your entire life. Make sure you're part of a community that is talking about these issues, that is exploring opportunities, that has the same mindset when it comes to risk realities and what you want to do in terms of creating and designing your own life. I hope you've learned something today about how I think about, you know, my family's future and how to do well in these times. Stay informed, stay connected, and stay proactive. Have an awesome week and let's talk again soon. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us at. And if you haven't already, make sure to hit subscribe. Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. Learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.