Reduce Debt Increase Wealth

Inflation Proof Budget

September 04, 2022 MIsterchuck Season 3 Episode 129
Reduce Debt Increase Wealth
Inflation Proof Budget
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Show Notes Transcript

With inflation on the rise with no end in sight now the time to start reducing debt, and spending. It sounds easy to do but many struggle to grow savings and reduce debt. Here are some ideas to do to make sure the needs taken care of, and savings can increase in a time of inflation. 

 Article Link: By Elaine King

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Charles McDonald:

Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time. debt reduction to achieve financial freedom takes commitment, confidence, determination inflation proof budget. With inflation on the rise with no end in sight, now's the time to start reducing debt and spending. It sounds easy to do. But many struggle to grow savings and reduce debt. Here are some ideas to do to make sure the needs taken care of. And savings can increase in a time of inflation. I have a link in my show notes from the sound Seven Steps to inflation proof your budget. And here's some quick bites, I'm not going to really cover the article, he may have some hidden money in savings on your monthly bills for services, like your cell phone or internet connection. Check your bills to see where you can save, assign a fixed amount for available expenses like clothing and don't go over it. So you're once in need to set a fixed amount and don't go over your budget. People who track their budgets are often the ones who get ahead with their finances. These are things you can do today to deal with inflation. But planning ahead is key for weathering unexpected ups and downs. So not only do you need a budget in the in an emergency fund, and the larger the emergency fund is, the better off you're going to be in the future. Because the price of everything is going up. It generally does go up every year, but a 2% rate or maybe a 3% rate. But now we're in about an eight to 10%, right depending on how you want to figure it and who you talk to. So I'm not going to get into that part of it. But these are some of the things you can do. If you want to make sure you don't get out of your budget. I'm going to start with some simple stuff, I'm going to start with housing, then go to transportation, then go to food, and then clothing. And those are your needs. How do you save money on those areas that you have to pay for. And then you are once you just got to limit your spending. It sounds easy, but it's basically hard to do. Let's start with your mortgage. If you have a mortgage, that's anything other than a fixed rate mortgage, meaning your interest rate is fixed at a certain rate. And if that certain rate is below the current financing rate, then you're set pretty good. But if you have any other type of mortgage, whether it's a balloon mortgage, or available rates mortgage, your interest rates are gonna go up and the most likely Koppert that you're going to have is your line of credit your H loc because it's kind of be a vailable rates, mortgage interest. So you want to pay that one off or down as much as possible, because the interest rate is going to be going up so you can save some money there. On your real estate taxes. There's not a whole lot you can do but if you're in an older home, I live in Ohio and it's the houses are appraised by the county auditor's office. And once they appraise them every three years, you can then appeal what they did to the I forget the name of it. Court of Appeals. I don't know but they have a program for that. So if you're in an older home what they are doing is comparable sales. So if you live in a three bedroom ranch, they're comparing your home to other homes similar to yours that has sold in the recent 12 months. Which means that if the houses are selling for more than what you paid for it, your house is gonna go up in value, which means your real estate taxes will go up in value. But if you live in in a home that was built in the say in the 1960s you have modern remodeled the kitchen or the bathrooms, then all the new homes that are the homes are selling around you. Their kitchens and bathrooms are most likely been remodeled because they're selling for say 150,000 more than what you paid for years or maybe even more. So you want to do is take pictures of the inside of your kitchen, and your bathrooms, to prove to them that your house is not as much valued as much because the kitchen and bathrooms have not been remodeled. And same thing with the basement. If you have an unfinished basement, take pictures of it. Maybe some of those homes had a finished basement in them, which then have more living area because it's finished, you need to talk to the county auditor's office to find out how they treat, blow grow grade level as far as their appraisal. So that's something you can do there, it's little more time consuming video, you can keep your real estate taxes a little bit lower, maybe save a few 100 or $500 a year, it all adds up over time. Another thing to do, which you probably have heard is in the summer time, keep your thermostat rates higher if you have central air, and in the winter time, keep it set lower. So that you don't pay as much for energy. Energy is going up because of what is happening with the oil industry. So your natural gas bill is going up your electric bill will be going up. If you use propane, that's going to be a lot more expensive. So you need to start saving money on how much you use, you need to start using less period. So in the summertime, if you raise your thermostat up so you use less electricity, your house will be a little bit warmer, but this is what I do. In the morning, I let the thermostat go up to 78 degrees, but it takes it to about two or three in the afternoon. Before the inside of the home is 78 degrees. I have a four level full multi level home. So the upstairs is going to be warmer than the downstairs family rooms can be nice and cool. Because it's partly below grade. I have fans and in the ceilings that I run to circulate the air so it's not as bad. I also run my main fan off the furnace to pump the old air out of the basement and push it up stairs to keep it a little bit cooler. It's a lot cheaper to run a fan than it is to run the air conditioning. And then after it gets dark around mine 930 at night by lower drops down by two degrees. So there starts cooling the house. And as it gets cooler outside at night is easier for the AC to catch up and cool the house down. So doesn't run as long. I eventually get it cooled down to 74 degrees, where a den maintains until the morning worried then again goes back up. I save a bundle of money on my util on my electric bill just by doing that. I get emails from the utility company that compares my homes to other homes and most likely I'm always using less electric than everybody else, and significantly less. And their winter time I have a fireplace so I use that to help get some supplemental heat when I'm home. Also, you need to have good windows. If you have older windows that are leaky and drafty, you need to go to the the box store and buy yourself some window seals and seal up those leaks put a plastic over your windows to cut down the drafts. That's gonna help you a lot. I invested in new windows and it really makes a difference. Not only is it a lot more quieter inside, but it's sealed up a whole lot better. I have no more drafts, my utility bills are a lot less expensive. Also, when I first moved in the house, I put additional insulation in the attic to keep the heat from escaping up through the roof cost you some money to do all that. But do what you can afford and you got to do it to cut down on your energy usage. And as far as other things in your home, try to reduce your water usage by making sure your toilets are not running constantly to make sure you have no drippy faucets or any leaks anywhere, because that's going to drive up the cost of your water bill and your sewer bill, try to limit how often you do your laundry, and do your laundry once a week, I can do one load a week. So I can reduce my water usage because my snow water is cheap. But my sewer bill is so expensive. So I tried to limit that type of usage. On my home, I have a meter for the inside of the house and for the outside of the house. So if I use water on the outside of the house, I'm not paying the sewer. So when I water my grass or my garden, which I hardly ever do, I get a little bit cheaper bill because I do that anywhere, you can see something that's wasting money, you know, light bulbs, use LED light bulbs, and put them on timers. So you can buy them now where you can just set up a schedule where they click on at a certain time and they go off at a certain time. So it makes it look like you're home when you're not. But it's also an LED light bomb has gotten us a whole lot less electricity. And then a fluorescent is that it's a lot less more than incandescent. So by the a cost more money, they last a longer time. And they're going to save you on your electricity bill, if you're due to buy a new refrigerator, get an energy efficient and refrigerator. And that goes for about every appliance that you buy. Now let's move on to auto price of gasoline has gone up a lot. So to make the most out of what you're putting in your car, the first thing you need to do is to make sure you have the proper air pressure and all your tires because the proper air pressure lets the car roll easier there for it use less energy. So you'll get a little bit better gas mileage on your vehicle, do the proper maintenance on oil changes. If you use a synthetic oil, can an oil change every 7500 miles if you use natural oil, then it's got to be around every 1500 miles, you can stretch that out a little bit. But I wouldn't go too far, check your oil. If your oil is starting to get low or down a quart, then maybe it's time for an oil change. And make sure you still have good tires and brakes on your car. And another way to save money is not really saving money. But it's more like not spending money is figure out how many gallons of gasoline you need to buy every week. So if you use your car to go back and forth to work, and maybe to the grocery store, and then you can't reduce the number of times you want to work. But you can try to reduce the number of times you're going to the grocery store or taking your children to practice or whatever carpool with somebody else. And you can save some money reduce the number of trips you go on to the grocery store to maybe once a week or twice a week. Try to reduce the usage of your car, figure out how many miles you drive figure out how what's your miles per gallon and then figure out the number of gallons you need per week and then only buy that many gallons when the price of gasoline was a much lower than needless to say, and I was coming short up on my budget for money and I was stretching it I would just put like $10 of gas in my car and then I would try to stretch that out as long as possible. Because if I would fill up the car it might have been $25 So I tried to cut that down that at least half or less so I can stretch out my budget and you got to do the same thing. Now was the price of gas going up? You need to stretch it out and make your car the most efficient it can be by proper air pressure proper maintenance and limited to where you go try carpool with other people as much as possible. And this reduced overall miles you're putting on your car because want cars are expensive. Maintenance is expensive and gasoline is expensive. Okay food, you gonna have to reduce the number of times you go out to eat You may one reward yourself once a month by going out and eating because you made a milestone like paying off a credit card, or reducing your debt overall, watch where and how you're spending all your money. When you go to the grocery store, if you like to eat beef, but the price of beef is one of $3 a pound, you got to do one either not buy beef or reduce the amount that you're buying, eat it less often switch to a something that is less expensive to buy chicken or pork, make all your meals at home as much as possible. And we just looking for ways to save money on clothing, set yourself$1 amount and don't ever go over it. You know in the fall Navy, if you have children, they go back to school, they buy some new clothes, tried to limit what you buy, don't buy designer clothes, try to get the more generic brands as possible. Your children may not like that, let them to back. Same way with shoes, and everything you buy, even food if you can buy the store brand. And if you like it, then just buy the store brand for that particular product. If you buy a store, buy and you don't like it, then go back to the main product that you use to buy. There are a lot of ways to save money, and you just got to look into it now is talk about your internet service. If you're not streaming your TV in your store paying for cable TV, you can save a big chunk of money there. By doing away with cable TV and setting yourself up with two streaming channels. Try to get something that you're watching on a regular basis and only stream two different channels. What I used to do is switch from Netflix to my other one was was Philo I would watch Netflix for three or six months. And then I would cancel it because these are all month to month services. And then I'll go to Philo and watch it for six or nine months. And then when I thought well, maybe something new was on Netflix, I would go back to Netflix but only would one or the other never both at the same time. That's how I save some money. And your cable TV is you're paying way too much front most likely is going to be way over$100 Say I know if you have children they want to Disney, they want this they want that. You can probably find a streaming service that can provide most of that but maybe not 100% Your children need to learn they have to cut back also start teaching them financial lessons at a younger age and you'll set them up for success later in life. Cell phone, you can reduce your cell phone bill and have the same service. Despite call on your same provider. Call your provider tell him you think you're paying way too much. And ask him how if there's anything out here he can do are you going to switch me I can go to another provider, get the same exact servers and pay$30 less a month. And I can do that. And they will come up with something where you maybe even get a better plan with more options like 100% voice and data and texting. And you might be paying $20 less a month. I don't know until you call your provider and ask him. He needs to do that with all your service providers. And then if you have things that you're no longer using subscriptions, then you need to cancel them. If you have a subscription to the gym, and it's summertime, maybe you can do your workout and running or whatever you do outside. If you use a neural equipment, maybe not. That's going to be up to you. So try to go back to nature as much as possible and do your activity outside and then do away with your gym membership. Remember, we're trying to reduce our spending while still trying to keep the same things going on that telling you you need to cut back. That's your decision that you have to make on your own. But with the price of everything going up. The price of everything you do is going to cost you more So we might as well get ready for it early, be ahead of the curve, and you'll be much better off for it. I'll be back in one moments with my final thoughts. If you want to contact me to request my spreadsheet for the budget, or leave a comment or ask your question, he can send it. Here's my email, reduce debt, increase reduce debt, increase wealth is all together no spaces. If you'd like to ask a question, quick question in the subject, if you'd like to request my monthly budget, put bit spreadsheet in the subject matter if you want to leave a response of any kind is put a comment in the subject matter. I will get back to you as soon as possible. Inflation is hard on everybody. So now is the time to plan ahead. Get ahead, reduce your debt as much as possible, reduce your spending, increase your savings, I know that the savings doesn't pay much in interest, but the interest rates are going up a little bit. But you need to increase your savings. Because if you have an emergency in the future, it's gonna cost you more period. So you need more savings to cover that expense. And why do you want savings? Well, because well, as you have an emergency, or in case you get laid off, as inflation kicks in, and continues on, companies are gonna look for ways to reduce their spending, just like you're looking for ways to reduce your spending, maybe their sales are dropping off, maybe the cost of the product, they're manufacturing is going up really quickly. And they were afraid that people won't be able to afford to buy their product, or then less people can afford it. So their sales are gonna drop with Serato raised the price. The easiest thing for any company to do is lay off the workers. That's the first thing they do in a time of economic downturn is they lay people off, which then that accelerates the economic downturn, and things will get much worse. I lived through the 1980s inflation was rapid 12% a year, it was unbearable. I thought I got a deal when I bought my first home and got a 30 year mortgage for 12 and a quarter percent interest. That was a deal at the time. And I thought I was doing great when I refinanced and got it to 8%. And then what everybody's complaining about mortgage rates going up to 5%. What happens when these things happen, the higher the rate of interest, the prices of homes are gonna get cheaper, because people can't afford to pay as much for them. So if you want to sell a home, you have to sell it for less money. So the value homes are gonna drop. So if you just bought a home, and your home drops, you're gonna be stuck there for a while, because you're not going to be able to sell it for what you paid for it. And if you have a big mortgage, you might even value of the home might be less than what you owe on the mortgage, you'll be upside down. And that's what happened in 2008. People bought homes or kept refinancing and borrowed more money on their equity, and then the value of the homes dropped down and they owed more on their homes, then let the value of the homes and they couldn't get out from under them. And they got stuck. And a lot of people had to file bankruptcy, and you don't want that to happen. So if you have a line of credit, and most likely has a variable rate interest, you should work on getting rid of that. If you have credit cards you carry a balance on, it's gotta have high rates of interest, and they're gonna get higher. So you need to get those paid off and pay down if you don't know how to do it. Like I have episodes on this podcast, where I have a debt reduction plan. I talk about tracking your spending. I talk about setting up a budget and how to do it the easy way. I talked about a debt reduction plan. It's all covered in this podcast. I'm just worn in yet It's time to plan today for the future, or you're gonna be in dire straits and big problems are coming your way. So beat it out. Get your debt under control, keep your spending down, increase your savings, and if something bad happens to you, you might have enough money to cover it.