Mailbag: Inflation & Layoffs - Transcripts

November 24, 2022

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Managing higher costs and lost income.

Transcript

to the self made in the self sufficient our partner Adleman financial engines can tailor investment solutions for the wealthy your building as a her money listener you'll get a complimentary financial plan when you call eight three three three oh four P. L. A. N. or visit planned F. E. dot com slash her money everybody engine chassis thanks for joining us today on her money we are recording this episode to date new inflation numbers just dropped prices were up seven point seven percent over the last twelve months and while that's still far higher than we'd like to see also down from eight point two percent in September the stock market rallied on this news because any inflation slowdown is an indication that the fed's rate hikes and there have been six

so far this year are finally working to fight inflation but well this news may be good it's also still true that rising costs have our budget stretched thinner than ever many of us have cut back on non essential spending as much as we can and we're still feeling the pinch particularly those of us on a fixed income add to this the fact that tech companies have now eliminated more than a hundred thousand jobs in the U. S. this year and other companies like gap Nordstrom Ford Ginette Credit Suisse have also cut staff it's very easy to see why so many of us are concerned so we wanted to see if we can help we decided to tackle some of your questions and hopefully ease some of those worries so Catherine and I went through the mail bag we put together a list of your inflation and lay off related questions and we are going to dig it and said Hey Catherine

Hey gene you can all right

I'm good it is a beautiful fall day here in the northeast yesterday it was really really cold and alley it was like don't we get fall we had summer up until the weekend don't we get fall and today we have a beautiful fall day so I'm happy for that and you

yes same here amazing and honestly ready for winter I feel my guiding your light your tenure in August was really impressive this year I have a new coach I'm ready I found twenty dollars at last year's code and they have a new one and I'm like I'm ready I'm so ready

I'm just laughing because what our listeners need to now is that you and your husband decided to escape the New York summer heat and the place that you decided to go with Reykjavik for a month

so

you know it they should last put it in perspective I get it it was last year but many of us enjoy the summer we want to hold on to the summer you're just a winter girl

I don't look good in the summer

I don't

like shorts and tank tops and like floppy sandals what is that I want some tights I need some long sleeve shirts I need some plaid lad

I beg to disagree you all year long the let's get to these questions

our first question today comes to us from amber she writes hi gene a friend of mine told me recently that the best and only way to quote unquote beat inflation's impact on our weekly and monthly budget is to earn more money she said that because we can't do anything about the increase in the cost of food rent healthcare and other life essentials that we simply have to try and counteract it by bringing in additional income is this true and what does it mean for seniors who are on a fixed income this worries me about my own retirement what happens if inflation comes back and I don't have enough money set aside to cover the increase I feel maybe should do an entire show on how seniors can manage inflation because I have to say I do not understand that thank you so much for keeping us empowered and informed during dark times

great question amber and I want to just emphasize the word beat inflation you put the word beat in quotation marks and when I see that I think what you're asking is is there a way to keep the increases in your disposable income up to the same level of inflation and your friend is right in that earning more money is a very powerful weapon in this fight there is a reason that we've seen so many people over the past year or so changing jobs they were changing jobs because we had wage inflation we had wage growth for the first time in it in a very

long time

and by walking across the street we cited the statistic in one of our podcast you were able to boost your salary by an average of and correct me if I'm wrong Catherine but I believe it was twenty three percent right that is a huge

amount

of money it is very hard to get your current employer unless you're getting some sort of a promotion

to

increase your salary to the same degree cell I think that

earning more

is a powerful weapon whether you do it by changing jobs whether you do it by asking for a raise and getting it whether you do it by

striking

out on some sort of a side gig or whether you do it by coming through your closet to see what you can sell in consignment or on the real real or at some other site and and doing that that's a good weapon in the fight against inflation but it's not the only weapon in the fight against inflation we can look at the other side of the equation we can look at whether we are able to trim our food budget in any way I know in one of the statistics that troubles me most year in and year out is the fact that we waste about forty percent of the food in this country if we didn't waste it if we actually ate it that would household by household probably lower our food expenses to some degree if we look at things like other life essentials there are some things that you buy that you value there some things that you buy that you don't trimming your spending is another weapon in the fight against inflation but US specifically about seniors and so what I do want to say is that social security has a cost of living increase social security which is an annuity that will pay for the rest of our lives once we start to take it in has a cost of living adjustment that does keep up with inflation and seniors this year got the biggest bomb in payments that we have seen in quite some time now social security only provides for about forty percent of the typical income of retirees and so you're not getting that sort of an inflation adjustment on the rest of your money but the way to protect yourself against it is to keep some of your money at least some of your money invested in stocks for growth and I know right now that sounds counterintuitive because the markets have just had a terrible year but when you look at the averages in order to stay ahead of inflation you have to be in stocks just putting your money in the bank even though interest rates are higher than they have been for a while is not gonna cut it I hope that that helps

yeah thank you so much gene and what do you think about the high yield savings account rates right now at three percent because those are a lot lot higher than they were just a few months ago

I think anybody who still has their money in a more traditional savings account is nuts I mean the average interest rate on a more traditional savings account the one that you're gonna generally get from the big bank is point one six percent that is you know close to two tenths of one percent it's still basically nothing even though we've had these six successive interest rate hikes the same banks that have put through increases on your credit cards immediately by the way are not putting through the increases on your savings accounts but the internet banks the credit unions like our sponsor B. C. L. they are putting them through and so by moving your money to a high interest savings account you are going to be able to get twenty times the return on your money than you would by just leaving it in that average bank savings account

gotcha gotcha yeah great perspective thank you our next question comes to us Brenan amiss listener she writes hi gene in team I have officially come to terms with my stress over the stock market I'm still ten years away from retirement and I feel that I have time to make up for any losses I anchor over the next few years but that only holds true as long as I stay employed I work for a large household name tech company and I'm high enough up the food chain that I no layoffs are coming to the tune of as much as twenty percent of my team beyond having an emergency fund which I do three months worth is there anything I can do to get ahead of what might be coming I consider looking for other jobs but not sure if it's wise to be the new kid on the block at any corporation if a recession is coming please note I do not have the bandwidth to take on a side how so right now as I'm stretched then with work and family obligations as it is thank you so much for your informative podcast

thank you so much for your letter and I'm sorry that this is happening in your industry it's going to be happening more and more I think as the economy just comes back to a level that is able to support itself I would think carefully about jumping to another tech company another company that you think is going to have the sort of laughs that you are experiencing right now what I might look at is where you can employ your skills in companies in industries that are still thriving I mean maybe look at healthcare maybe look at other sorts of consumer products that are not is subject to the ups and downs the volatility in the economy and think about are there places that you could slap yourself

in there

now that may mean taking yourself out of your comfort zone it may mean going in a direction that you haven't thought about before but as you start casting a net and looking for another job that something that I would think about and I would be looking for another job I would be looking for another job both in and outside of the tech industry and as you do it think about trying to negotiate severance in advance if you expect that layoffs are coming think about whether it's possible to negotiate a signing bonus that you could bank and that could set you up with some sort of a cushion if you're out of the work force for a little while L. and the other thing to understand is that look for a job in my mind and I I kind of think that there are certain people who are always looking and that's not so bad because always looking if you're doing it in a sort of low key way is really just synonymous with maintaining your network and keeping your connections up and keeping your name on the front of people's

minds

for when they have an opening one thing that I remember really stuck with me from the recession in two thousand eight is that even in those times companies were hiring and they weren't hiring as much but they were still replacing those key members of their teams that decided to retire or decided to leave and go elsewhere hiring doesn't

stop

just because we're in a recession and so I'd get out there and I'd start talking to people and I'd see if perhaps you like the look and sound and feel of an industry that you hadn't considered but maybe doesn't feel quite so tenuous one last thing just because you get an offer doesn't mean you have to take it

that's such a great point yeah don't let your nerves over what might happen inspire you to take a job that's less than ideal

exactly exactly and I think by the time I mean look the interviewing process has gotten in my humble opinion out of control there is and this is particularly true in some tech companies I mean there's no reason that you should be sitting three ten or twelve interviews to figure out if they should hire you that is another podcast right but it does allow you to by the time the offer makes its way to you know if you actually want to do this job

yeah yeah that's fair that's how I've always looked at sample projects if I'm interviewing for a job and they give me a sample project I'm like well do I like this project you know it's not about my ability it's about is this something I want to be doing every day

and when you do that project do you like the way that your work is evaluated do you like the people that you are interfacing with as you go through it it gives you a real taste for the company

yeah yeah definitely

and before we move on to additional questions just remind everybody that our partner Adleman financial engines can tailor a really customized investment solutions for you for the wealthy you're building the what you're growing and protecting their investment management approach is based on Nobel Prize winning research and their planners do not sell products to earn commissions ever so no matter where you're going next see how they can help you get there with a plan crafted specifically for you go to plan EFT dot com we are in the middle of our bonus mailbag on inflation what's up next Katharine

our next question comes to us from member of our private her many Facebook group

she writes

on one of the morning shows today I heard an offhand remark that inflation would die down if we all just stop shop thanks so much and stopped buying goods at these inflated prices

but

is it really that simple

I wish it was that simple I mean look if you're going to go with the simplest econ one L. one answer then I guess it would be yes because if people stop buying a product the price will fall because demand will go away and supply and demand where they intersect that's where you get the price but like all things in a global economy nothing is that simple there's prioritize spending that people can't stop for example people have to have shelter if rents or mortgages go up we still need a place to live many if not most people need cars to get around and we have to buy gas same with food we need food we need our staples we also need our Cheetos and while we can choose to say skip the summer road trip or avoid the high priced lamb chops in the meat I we do have to continue purchasing the basics every day the key factor here is that when prices for things go up people tend to simply read balance their spending because it's virtually impossible to stop buying necessities if inflation was being solely driven by a lot of excess cash and demand like during the pandemic when there was that run on toilet paper and increased demand for kitchen gadgets then slowing our purchasing would actually help fight inflation but there are a lot of other factors at work here on the supply chain with those supply chain issues that still haven't gone away including the week from Ukraine Russia's oil OPEC's production cuts and so much more and then there are also different sectors of the economy that a shopping slow down a fax differently so for example if people choose not to buy a gas guzzling car and that car just sits on the lot costing the dealer money eventually the dealer lowers the price again supply and demand so they can bring in a model that is much more likely to sell milk eggs apples they don't work that way as long as the cost of the feed and the fertilizer and the transportation needed for that food remains high the price isn't magically going to come down even if people stop buying it let's take another example hotels verses

potatoes

stay with me for a second eight people stop going to hotels the room rates will come down because there is a cost to that business for having an empty room but if you've got a potato crop that was impacted by bad weather not buying those potatoes is not gonna change the high price and there are so many different examples that I could throw at you here you can probably even think of a few yourself one other factor since we have made the point that the economy is a give and take if people stop shopping or if prices are forced down while the cost of production remains high then profit margins are going to shrink and manufacturers distributors stores there then forced to lay off workers and that's not good the Q. or a longer deeper recession or a depression may be worse than the disease that we're currently fighting high inflation because in part the inflation is being driven by our low unemployment rates and the fact that more people with more jobs have more money to spend I know I throw a lot at you and I hope that it makes sense but thank you so much for a really great question that let me go back to my econ one no one days it

is a really thought provoking question and like you said yes but it's not that simple there's so many moving parts in our economy and some are bigger than others and weighted differently than others

yeah exactly exactly but tell me if you didn't just see the supply demand graph like in your head right where it where it intersects there's the P.

yes totally

before we go into our last question I want to remind everyone that her money is supported by D. C. U. B. C. U. as a credit union a great credit union providing a wide array of financial products and services for its members if you're currently exploring the auto market you should now be seen you offers financing and refinancing options as well as an exclusive auto buying service they can save you both time and money you can learn more at DC you dot org we've got one more right Catherine

we do our last question today comes from memory she writes hi gene I'm writing to you for the first time today because I just took over all of my elderly mother's finances and I think I need some advice or at least some reassurance I was overall unprepared for the stress and burden of taking on the responsibility for someone else's financial life it's been a few months now and I finally got the full picture of things but I am struggling with how to prepare for the long term unknowns with my mother on a very tight fixed income for example she recently changed heart medicines and the new drug was briefly six hundred dollars a month and tell her doctor and Medicare were able to establish that she was allergic to other comparable options also she takes a medication that is mailed to her once a month that must be refrigerated within twenty four hours only

she

often forgets to check the packages outside her door and the medication spoils the replacement cost is ninety dollars out of pocket last year this happened four times and unfortunately I don't live close enough that I can always be there to grab it and putting a health care costs aside every line item in her budget has gone up

rent food

and insurance the social security Cola is helping but it is not enough do you have any guidance on how I can reduce my stress level surrounding this new responsibility and how I might be able to get out ahead of some of these expenses the unknowns are far and away the most anxiety inducing thing for me and I guess I'm trying to decide if there's a way to stop some of them in their tracks or if I should just get used to this new normal during this last season of my mom's life she's a wonderful person and I want to make sure I'm doing right by her at the same time I'm reducing my blood pressure over this as much as I possibly can with much gratitude

oh boy Marie first of all you are doing what we all will be doing at some point in our lives I think I think for anybody who's listening to this show and listening to Marie's question and thinking this doesn't apply all I can say is wait because this is a glimpse into the future of all of us who have parents who are living a longer period of time on a fixed amount of money and who are going to need our help the first thing I would say to you Marie is if you have siblings I would really encourage you to try to bring them into the tent yes maybe you are the one who is on point but there may be ways either with time or with money that these other members

of

your family

can

and should contribute and often that won't happen unless you ask for that help so if you haven't asked for that help ask for that help secondly I want to point out is that we are currently in open enrollment period for Medicare you will want to talk to your mother's doctors and go through these medications and make sure that she is on the right Medicare plans for these prescriptions matches the ones that she's taking right now but the ones that the doctors think that she will be taking in the coming year you just want to try to get ahead of that if possible third thing that occurs to me is there is a wonderful resource called benefits checkup dot org I want you to go there and go through it and make sure that you are checking the boxes for all of the different things that your mother is eligible for some of them are as simple as rides to the doctor they can make a really big difference if you're living close by but not so close that you can say grab her medications but you also want to make sure that if there are other things that can help you defray some part of the cost burden you tap into them number four I assume that you or your mother is an AARP member but you don't even have to be a member to go online and to access a lot of the resources the incredibly valuable resources that they have put in place for their care giving community I've been a A. R. P.'s financial ambassador for the last ten years and so I'm very familiar with all of the wonderful tools and advice that they offer and I would encourage you to check that out as well and finally I can't stop thinking about this picture of the medicine on the doorstep it just sitting there and spoiling would it be possible for you to have that medicine sent to you and then you to deliver it in a timely enough manner that it doesn't spoil or would it be possible for it to be delivered to a neighbor who is much more likely to notice when it actually gets there and is responsible enough to put it in the fridge I know it's a small thing but ninety dollars is not a small expense and so think creatively about the village that your mother lives and whether there are any other people or or whether you could take control of that or even just pick that medicine up so that you don't run into what accounts for over the cost of the year at three hundred sixty dollar expense those would be my suggestions at this point although I'm gonna continue to think about this one and see if I can come up with anything else for you Catherine anything occur to you

I think to your point about just asking for help it takes a village there could very well be a neighbor he would love to be in charge of that medication drop you might want some company themselves so you know I I think it's very easy to feel isolated in these situations particularly when you are the sole care giver doing the lion's share of the work but I think particularly for something like this that's an easy left you know that would be fine

yeah people are willing to help they don't necessarily know what they can do to help you I remember doing a podcast with leave Woodruff hill is a care giving advocate and spent many many years helping her husband Bob Woodruff the ABC consultant and anchor recover after he added an incident in war and she said people would say can I do something for you what can I do for you be specific when you tell them it's okay to say this is really what I need right now there are people who will be grateful should be given the opportunity to do something for you because doing something for somebody else feels good select that

yeah yeah such a great point that you know there may be already be somebody helping her with her mail or packages and you know or even like a somebody helping with the lawn who could be tapped for something like this

absolutely absolutely anyway good luck Marie and don't worry that you're not doing right by her you are doing completely right by her and you should a hundred percent of that Katherine thank you so much for these great questions

thank you so much Jean

and thank all of you for joining me today and her money thanks for writing to us with these insightful questions if you like what you hear I hope you'll subscribe to our show on apple podcasts leave us a review we love hearing what you think we'd like to thank our sponsors Adleman financial engines and BC you we produce this podcast out of CDM sound studios our music is provided by BDO helper and our show comes to you to make a phone thank you so much for joining us and talks

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