The Rachel Cruze Show - How Inflation Has Changed the Middle Class

Episode Date: August 29, 2022

How much money do you need to be “financially comfortable”? Inflation has reshaped the middle class, but there’s plenty you can do to keep your financial peace. From groceries and utilities to your everyday choices and “fun money”—we’ve got tips to help you save money and create a life you love! Here’s what’s coming up: Does America Still Have a Middle Class? The Four Keys to Financial Security Sneaky Ways Movie Theatres Rip You Off Helpful Resources: Christian Healthcare Ministries EveryDollar Financial Peace University Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing: Christian Healthcare Ministries. Learn more about your ad choices. Visit megaphone.fm/adchoices

You don't have to have a net worth of $1.7 million to be financially comfortable if you have margin, if you're following the baby steps, and you're doing the things that you have to do for yourself in the present and the future. You actually can start achieving those things right now. Hey guys, welcome to this episode of the Rachel Cruz Show podcast. I'm so glad that you're here. So in this episode, we're going to talk about how inflation has affected the middle class. and I'm going to go over what it means to be quote unquote financially comfortable. Some people think it means having over a million dollars in the bank, but is that true? So let's talk about it.

And we all love going to the movie theater, but doesn't make sense financially. So we're going to talk through a few sneaky ways that movie theaters try to get you to spend more money. And I'll give you some insider tips of how to get around those tactics. But first, let's go over some ways on how to budget on a couple of course. change of income due to inflation. So take a listen. So the middle class today, the income range is considered middle class for a single American is about $30,000 to $90,000. For a three-person family, it's about $52,000 to $156,000. That range is considered a middle class again for a three-person family. Now, think back to 2010, and the median income for middle class was a little under $8,000.

$80,000 for a family of three. So 80,000, now it's 156,000 on the high end. So it's just crazy. You can see how much it's changed. But yes, it still exists. But with inflation, it can be so hard right now to adjust, especially if you find yourself on the lower income of that range. And so a lot of people are saying, you know, it's hard to make ends meet. We're living paycheck to paycheck, all of this. And again, groceries, gas, even just these simple expenses. everyday expenses that are needed have just gone up so dramatically, and everyone is feeling it, everyone. And again, it's really hard. It is really, really hard when you used to be able to have margin and things were going okay, even just two, three years ago, and now it's just a different

time and a different world. And so, yes, the middle class has changed over the years, but the principles that we teach here at Ramsey's Solutions, especially when it comes to budgeting, have not changed. So if you find yourself in a pinch and you're saying, gosh, this is so hard to budget right now. Here are a few tips to help you out. Number one, create a budget. This is so important. I talk about it all the time, but honestly, this is your roadmap. Your budget is your plan. It helps you be intentional. And so your income minus your expenses should equal zero. So you look at next month and you say, here's what I'm going to make next month. Write that on a sheet of paper, get an Excel file out. I love the app.

Every dollar, use that, whatever it is. But put your income for next month at the top. Then you list out all of your categories that you spend money on, including giving and saving, and the goal is your income minus your expenses equals zero. So every dollar coming in from your paycheck is assigned to a category. Now, what can come up that a lot of people are feeling is actually it ends up being a negative number where you're spending more on paper than you have coming in. So if that's the case, here's what I want you to do. First, cover your four walls. This is food, shelter, utilities, and transportation. Before, anything else. This has to be covered, okay, to keep you alive, keep your family safe, all of that.

Then you want to look at other expenses that are really essential. That's childcare, paying on your debts so you don't get behind, insurance, all that. And then you want to look at things that you can just cut out. Cut out anything extra. You know, you don't need five streaming services on your TV, okay? Get rid of them. Cut them out. Don't go out to eat. Look at your food budget and see, okay, what can I cut there? Don't go shopping if you don't need new clothes. Again, just cutting those expenses is so, so key. And then I want you to go through every category in your budget and see what you can lower.

Again, I mentioned food, but this is a big one. Can you meal plan? Can you buy cheaper products like generic versus name brand? Can you shop at a different store that's less expensive? Can you use coupons? Can you download apps? I even did a video with Frugal Fit Mom on how to save money at the grocery store during inflation,

so I'll put that link below as well. But again, look at that category and say, where can I cut? where can I save some extra money. Look at your utilities. You can replace your air filters. I would say only run your appliances when they're full. Wash all your clothes in cold water.

That'll save versus hot water. You can adjust the temperature of your air conditioner. These are just ways, again, to find some margin because when all those bills get back, hopefully they will be lower than last month. Look at your transportation as well. Combine your errands if you can. Join gas reward programs.

Get an app to help. you see where the cheapest gas is. There's an App Cloud Gas Buddy. They're great at this. Also, look at all of your insurances. This is going to be huge. This is where you actually can save a lot of money. Insurance is one thing that people just pay for,

whether it's quarterly, yearly, go and actually shop rates. Also look around for better policies when it comes to your cell phone. George Camel and I actually did an entire video on how to save money on your cell phone plan. So I'll put that in the description as well. And look at your entertainment budget.

You know, we all want to have fun in life. to enjoy life, even though things are stressful. It's like you want to enjoy. But listen, there are so many creative things that you can do that are for free. So be on the lookout for free events and activities in your neighborhood or your city. And then you can look at the income side of your budget. So that was all the expenses. Look at your income and see, okay, where can I increase this? Can you get a side hustle, work overtime, freelance, even ask for a raise. Maybe you end up switching jobs, sell stuff. I mean, selling stuff and decluttering your house, you know, obviously, if you do that, you'll get extra cash and then it's gone versus having a side gig that's going to be paying you every time

you work. But this is a great thing to do just to get a boost of money in. So look around your house. What are stuff that you're not using, clothes you're not wearing, TVs you're not watching, sell them, extra furniture that's around. They're like, oh, I'm meant to get rid of it. Sell it. You can make hundreds, even thousands of dollars by doing that. Next, I would say save up for an emergency funds. So things are, again, can be very tight, but a goal for you to have is to have $1,000 in the bank. And this is really your safety nets. This will give you some security in life.

And it will help you when things come up. So that's your starter emergency fund. Also, I would encourage you do not go into debt for this. This is a big temptation where people think, oh, everything's so tight. And if we're, you know, if we're behind on a few things, we'll just charge it and all that. what fixes it, yeah, for that moment, but then next month you're going to have another bigger problem when it comes to your money

because you're going to owe money and still have your bills from last month. So being able to look to see, okay, what can I cut now and create my lifestyle to be lower and tighter than trying just to fix it with going into debt? That is not a good plan. And then also look at your budget and be realistic about it too because so much has changed because of the pandemic and inflation,

all of this. And so looking to see, okay, I really am, I'm going to focus on this budget. That is going to be your game plan. It's going to be a roadmap. It's going to help you so much. And when you get extra income, higher income coming in and your lowering expenses, make sure you take all of that money you're saving and applying it somewhere, whether it's paying off debt or saving up your starter emergency fund of $1,000, being very specific. Because you can get extra money and be like, oh, wow, you know, I sold that and I worked extra. This is fun. Let's go out to do it. dinner. No, use that money to help you, you know, create margin in your budget by saving up that

emergency fund and then start paying off your debt. Now, budgeting, it can be not necessarily confusing because the math is very simple, but letting it be part of your rhythm can be hard to get into the habit. So I love the app every dollar. I mentioned it earlier, but I have it on my phone. My husband has it on his phone. We use the same login information, and we can drag and drop transactions that come into the app to keep up with the categories, know what's in every category, gory, know our plan, are we sick into it? And it is so, so helpful. So make sure to download that. So it will help you on this budgeting process. Okay, I know that was a lot about increasing your income, saving money, cutting back. And if you have a friend or someone that you love that

feels like that they are struggling and don't have the margin in their money that they used to, make sure to send them this. I hope this helps you guys. Again, I know it can be a really tough time right now. And you're thinking, oh my gosh, like, is this reality? Is this real but listen honestly looking at your numbers and figuring out what you can control is the best thing that you can do with you and your money having a level of a plan and control is going to help you get so so far so i read an article recently that talked about how much money people feel like they need to have in order to be financially comfortable so this was fascinating the survey found that that most americans consider themselves financially comfortable if they have a net worth of

$774,000. Now, in more expensive cities, obviously that number goes way up, like in San Francisco. The respondent said to be financially comfortable, you need a net worth of $1.7 million. So what I think is so interesting, though, is that financially comfortable, that term, it's so subjective. So you shouldn't have to feel like that you can't be comfortable and secure in your finances until you're a millionaire. So let's talk through some other meanings and other ways that you can be financially comfortable. So for some people, financially comfortable means having no debt payments. If you don't owe anyone anything for a lot of people, that is like a breath of fresh air. And it's like, oh, if I have no money just leaving and going out to a bank and credit cards and student loans, that feels so much better to me.

So the quickest way to do that is to pay off your smallest debt first, list out, all of your debts, smallest to largest, regardless of the interest rate, pay minimum payments on everything, and pay off that smallest debt first. And once that's paid off, take everything you're focused on that smallest, roll it over to the second smallest. Keep going and going and going. We call this the debt snowball, and people on average are getting out of debt in 18 to 24 months doing this. Now, others say that they are financially comfortable when they're not living paycheck to paycheck. And they have enough cushion in case something happens. So this is another great spot to be. So if you are someone that's living paycheck-to-paycheck,

you have to figure out how to get ahead of that. So that's either bringing in more income or cutting expenses. So you actually have margin going month to month, and you start to save up for an emergency fund. Start with $1,000, then when all your debt is paid off, you can bump that up to three to six months of expenses. Now, for me, this is like, this is the game changer. Like when you have no debt and you have three to six months of expenses saved in the bank

that you're not going to touch, it's just there. Oh, that is like, That's breathing room. That is comfortable. It's like, okay, that feels so much better. It gives you so much peace when you're at that point. All right, for other people, being financially comfortable means that they are able to fund retirements

and then have some money left over every month. So this is another big part of saying, okay, I'm going to save for my future. A lot of people that are very future-focused and goal-oriented are thinking, as long as money is going in retirement, that feels good. So I recommend 15% of your income going into retirement when you're debt-free and you have that fully funded emergency fund.

And you put your money in things like a Roth IRA, a 401K, if your workplace offers that, 403B. So these retirement options are great. And there is something about being comfortable when you know you're taking care of your future self. Like I always think that when we put money away, I'll be honest. I'm such a spender that when money goes into retirement, I'm like, oh, buy money. It's like I'll never see you again when I could be using you. to do things right now in the moment.

So I had to tell myself, 65-year-old Rachel is, like, going to love 34-year-old Rachel so much because I put money away for her. And it's just that long-term thinking, y'all, it is because the worst thought of being uncomfortable financially is getting to the point of retirement and not having anything. And you're stuck working and thinking, gosh, I could have lived my retirement dreams, but I can't because I didn't do it in the first place. So a future thing is very, very important. Now, for others, financially comfortable just means that they have disposable income.

And it's like, yeah, I just have the ability to spend money where I want to and not be stressed out about it. And in order to get to that place, you guys, having no debts, again, not having payments go out, taking care of your emergency fund and retirement, all of that, there's a great place to be. And even once you pay off your house, then to think, gosh, I have no payments going out except what I'm choosing. And that is a powerful thing. And yes, that would be very comfortable, very, very comfortable. So those are just four factors that I want you to think about about being financially secure. You don't have to have a net worth of $1.7 million to be financially comfortable. You actually can start achieving those things right now.

If you have margin, if you're following the baby steps, and you're doing the things that you have to do for yourself in the present and the future. Because, again, building wealth long term is going to help not just you, but change your family tree and help others when you can be very, very generous. So make sure to share this with a friend. who wants to also be financially comfortable. So we're about to enter in to fall, which means we're going to be spending more time indoors, and we all love going to the movie theater, but doesn't make sense financially.

So we're going to talk through a few sneaky ways that movie theaters try to get you to spend more money, and I'll give you some insider tips of how to get around those tactics. Then we're going to compare the cost of streaming services versus the cost of movie rewards, programs, and if either are worth your money, I love going to the movie theater. It's like my favorite thing. In Nashville, we have one that you can like order food to your seat. You can just go

all out, all out. And we don't do it very often, but it's my favorite thing. I love seeing movies. And then if I get the perk of eating dinner while I'm watching a movie, it's like, it's the best thing ever. Love it so much. But you got to be careful because the movie theaters, they're going to try to get your money. So here are a few ways that they do this. ticket prices. Yet, we all know how the ticket prices have just gone up, up, up over the years. So get this. For example, a movie ticket has gone from $7.50 in 2009 to now $13 on average in 2022. So if you want to go actually go see a higher quality format like IMAX, it's going to be closer to $20. Now, this isn't completely the movie theater's fault because they have to give a big portion

of ticket sales to the film distributor in order to show the movie, but it doesn't make the price tag any less annoying. So here are some ways around that. Look into rewards programs like AMC Stubbs. With their A-List program, you can see unlimited movies for about $20 a month, and sometimes they'll do other discounts and promos. Now, if you go to a smaller theater, a more local theater versus a big chain, usually they'll have better prices.

Also check to see if your work, offers discount movie ticket vouchers as a benefit we do here at Ramsey Solutions. And you can go to the movies in the afternoon or on weekdays. Usually those are cheaper tickets versus the weekends or evenings, or evenings, especially on the weekends. Also look to buy your tickets at Costco or Sam's Club. They sell packs of movie tickets or movie theater gift cards that you can use instead of buying full-price tickets.

You can also work at the movie theater. This isn't for everyone. but if you're looking for a second job or a part-time job and you love seeing movies, this could be your place because movie theater workers usually get free tickets, and you usually can give those tickets to friends and family if you go see the movie with them. So it's a win-win. They can also get you with those stinking high prices at the expensive concessions. This is actually where most movie theaters make a lot of their money and stay in business,

because they make way more from the profits of the concession sales versus ticket sales. So it's understandable that they're going to overcharge and get you to try to buy, you know, all this kind of stuff. So they do this by the smell of the popcorn. Yes, whenever you think about going to the movies, you think about the popcorn. So they actually will, you know, bring the smell of buttered popcorn right when you walk in so you can't resist. And what's crazy is it's not real butter, usually.

especially if you're in a big movie theater chain. It's fake butter flavoring, but it smells great. And they make the concession stands bright and colorful right there in the front when you walk in, so you have to go past it to go to the movies. You're like, whoa, but I need this popcorn over here. They also make the movie theater candy. They make the boxes look huge, but in reality,

it's pretty much the same amount that you get in a regular box of candy. They also try to get you to think that you're saving money by getting food combos, but usually it's not more than just a few cents difference, and you're paying for larger buckets or trays. If you're buying alcohol or a meal at the movie theater, obviously those prices are going to be way up

versus if you just bought it at the store. So some tips around all of this. Pay attention to the price of individual items compared to the combo prices. It might make more sense actually to buy everything separately. Also, eat before you go. If you want to save money, Just eat ahead of time and resist the popcorn and the concessions.

Also, bringing your own snacks, it's not technically illegal to put food in your purse, but most theaters, they won't check it, but they may have rules around it. So we don't even be rule breakers around here. My mom was infamous for this growing up. She would buy an extra large popcorn bag and you'd get free refills. And we used that popcorn bag for years. So we got free popcorn at the movies for years. basically stole popcorn from the movie theater.

Sharon doesn't think she stole. She thinks she was just being economical. Technically, they said free refills. So she kept her word and kept that dang bag around for a long time, a long time. And I've been known to slip a few snacks or a bottle or two of water in my purse too. I'm not going to lie. Not going to lie. Also, you want to look at what they do with false start time.

So movie theaters will put. the start of the movie up to 20 minutes before the actual movie starts playing. Because you know the commercials, the trailers for new movies coming up, and they drag and on and on because they know you're more likely to finish your concessions during that time and you've got to go back and buy more when the actual movie starts. So remember that. Get your seat ahead of time, but then don't just dive right into the popcorn. You can actually have a competition with who you're going with. And be like, okay, who can eat the least amount until the actual movie starts so that it goes through the whole movie versus

just the trailers. Also, look for the technology traps as well. So movie theaters will actually bump up their prices for Extreme Digital, 3D, IMAX, all of that. And you can go to these showings, but it also can be really loud. And actually, the volume can be the same amount of decibels as a plane taking off.

3D also can make you sick. So be aware of this. There's actually a term for it called cyber sickness. So with some of these added technology bonuses, it actually may not make it that enjoyable. And some theaters will claim IMAX, but it's actually not considered an IMAX screen. So the official dimensions for an IMAX screen

are 72 feet wide and 52 feet tall. So if you want to save money at the theater, just go to a regular showing. Go to a normal screening and not all the additional stuff with it with the 3D and the IMAX. So you can save a lot of money by just doing that. Now, let's talk about what is.

is affordable, going to the movies with rewards programs, or using a streaming service, which is better. Well, streaming services can range from $4.99 a month with ads, like Paramount Plus and Discovery Plus, to $190 a month with no ads. So that's Disney Plus, bundle, and Netflix. And there's obviously tons of options in between those. And so these offer huge variety of movies and shows,

but of course different streaming services have different options. so people end up getting more than one service, and that's kind of how they hook you. And like I mentioned earlier, movie theaters have rewards programs like AMC A-List and Regals Crown Club that range from $18 a month to $23.50 a month for unlimited movie plans. And these also come with different perks and benefits like concession discounts, early access screening, all of that. And some of these, you can actually join reward programs with little to no cost, still get some benefits, which is awesome. So if you love seeing movies, you go a lot, and you're single, maybe it's just you and your spouse that love it, then it could be a good option to actually

get one of these programs at a movie theater because you're using it. But if you have a big family, financially, it probably makes more sense with going to just a streaming service. Because if you go and pay for a family of five, it just gets really expensive. And let's be honest, you're missing half the movie because you're taking kids in and out of the bathroom the whole time. So depending on where you are financially, what works for your family, you can look. But if it's budgeted and it makes sense for your financial situation, you can go the movie theater route for sure, but the streaming service for a large family makes more sense. But remember two, there's less expensive ways to watch a movie, like getting them from the library

or even buying them used. Yes, DVDs still exist, y'all. They still exist. So make sure you budget for all of this. obviously. Every dollar is one of my favorite budgeting app. So do it and you can have even an expense line for movies if you're one of those people that just loves going to the movie theater. So make sure to share this with a friend who enjoys going to a movie and how to save some money when you're out watching a movie at the movie theater. So yep, financially

comfortable. It's a little subjective. So I'm curious what that means for you guys. But of course, I want you out of debt with a fully funded emergency fund, funding retirement, paid off house, and living the dream on baby's step seven. All right, you guys, thank you so much for listening to this episode. I really hope that it helped you and encouraged you in this crazy time that we are living in. And if you have not subscribed to the podcast, make sure to hit that follow button. And if the spirit leads, you can leave a review. As always, make sure to take control of your money and create a life you love.