The Rachel Cruze Show - How to Take Control of Your Money in the Midst of Rising Inflation

Episode Date: July 18, 2022

Inflation stinks, but it doesn’t have to push you into debt. I’ll show you how to buy a house (yep, in this market), make a little more room in your grocery budget, and save for emergencies—all while living within your means.                                                       Here’s what on deck: ·      How to Buy a Home Right Now With Zero Regret ·      Why Are Groceries So Expensive? ·      Will This Much Cover an Emergency?   Helpful Resources: Christian Healthcare Ministries Real Estate Reality Check Financial Peace University EveryDollar Meal Planner and Grocery Savings Guide                                                  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

Over 80% of U.S. workers are now making at least $15 an hour, which is up from 60% in 2014. So grocery stores are not just eating those extra costs. Nope, they are showing up in your grocery bills. Hey guys, welcome to this episode of the Rachel Cruise Show podcast. I'm so glad that you are here. So in this episode, we're going to talk about how to take control of your money in the midst of the rising inflation. I'll go over the question that I hear all the time is $1,000 really enough for a starter emergency fund.

Then we're going to talk about why groceries are so expensive right now and what you can do to save more when grocery shopping. But first, let's talk about the housing markets. We hear all sorts of things out there, and I often hear, is it okay to buy a house right now? Should I wait? Should I buy? Well, let's talk about it. All right, with inflation, global unrest,

talking about a recession. There is a lot of fear and what feels like a lot of panic right now. I was talking to a friend the other day and she was like, oh yeah, the housing market. I mean, it's gonna be worse

than the Great Depression. And I was like, wait, how do you know? She's like, well, this guy on TikTok was talking about it and like all this stuff and I was like, oh no. So listen, there's a lot of talk out there, a lot of emotion, but I would encourage you

when it comes to these kind of situations, do your research, but listen to facts. Okay, facts are, your friends. And this is why I wanted to do this segment so that you can get information, you can get facts, learn, and make your own opinion. I want you guys to learn this stuff. Don't just take everything I say and just run with it. Actually look into this and so you can form a really great opinion, again, based on facts, not feelings. So again, it makes sense that a lot people are freaking out about the housing markets because interest rates are up and it just feels like,

oh my gosh, what's going to happen? People are asking, you know, should I avoid buying right now? So let's talk about it. Let's talk about the housing market. So housing prices are based completely on supply and demand, which means there is a supply. Are there a lot of houses for sale? Are there not a lot of houses? Are there new houses being built? Are there not? Where are we here? And how many buyers are in the market? Are there a lot of buyers trying to buy? Or are there not a lot of buyers out there? Well, right now, I think everyone would vote, yes, there's a lot of buyers. It feels like people everywhere are trying to sell, or they're looking to buy. they're moving states. There's lots of buyers right now in the market. And supply is low, low, low, low, low. Low on new home builds and even for existing homes. So right now there is still a big gap, which is different than 2008. 2008, for people going out to buy a home that shot way down, and the people that were in homes were in terrible mortgages. They had nothing down. They had no equity. And it was a disaster. So 2008 is much different than what we're feeling right now. So listen, the housing market has slowed down because of interest rates.

So you're going to feel like, okay, it's slowing down a little bit. But what home values are showing is that they are not necessarily going down. In fact, when you look at the statistics, it's fascinating, they went up 32%. 32% house prices went up in 2020. That's insane. 18% in 2021. And so far, 7% now. Okay?

So it is slowing down on what their value is each year. But the value is still going up, right? So we're at 7% now. We're not at a negative right now. And people are like, well, what goes up must come down? That's gravity. That's not necessarily the housing market. So real estate prices are expected to keep going up in the next five years.

Now, we don't have a crystal ball. So yes, could something out of left field just crazy happen that no one sees? Yes, that could happen. That's more based on emotion, not facts. So we're looking at facts here. Okay, so what does all of us mean? Well, it means that if you're waiting for housing prices to go down and for there to be this huge bubble that bursts

and it's going to go back to 2018 of what housing prices were, it's probably not going to happen, you guys. Now, I do not want you to feel pressured or rushed into buying a home if you're not ready. But if you are financially ready to buy and you're in a situation where you can buy, I would still encourage you to still buy. Go ahead, look at your options.

and we'll talk about if you're ready to buy here in a second. But remember, don't feel pressured in this. Because I think there's some people on the other end of the spectrum where everyone's talking about housing. And it's like, oh my gosh, what did you do? And it makes you feel like you've got to get in the game and you're looking and all this. If you don't have to buy, if you're never planning on buying,

you don't have to buy right now. It's okay. So how do you know if you are ready? Well, you're ready to buy a house when you're completely debt-free. Yep, that's right. You have a fully funded emergency fund of three to six months of expenses and you have a good down payment save.

So 20% down is ideal because then you avoid PMI, which is private mortgage insurance, which will make your monthly payment less, which is great. But you can put 5% down. You can put 10% down if you're a first-time home buyer. But again, be prepared to make those PMI payments. Now, no matter the size of your down payment, you always want a 15-year fixed rate

with no more than 25% to 30% of your take-home pay going to your mortgage, which includes your principal, taxes, insurance, PMI, HOA fees, all of it. So steer clear of any VA loans or FHA loans or adjustable rate, all of those. A fixed rate is what you want to do. Now, if you buy now, your interest rate is going to be higher than it was six months ago. But if interest rates go back down, you can always refinance later.

So just take a deep breath. Stay calm. Don't freak out and panic. Don't listen to all the feelings out there. look at the facts and do your own research again. Don't just take my word for it, okay? I want you to actually look into this stuff because it's really important to have knowledge in this.

Facts are your friends, and I can't stress that enough. And as we're going into a season that probably more than likely it's going to be a recession. I mean, there's stuff happening, you guys. And again, it's not to freak you out because what we teach works in good times and bad times. So continue to work the baby steps and don't let words and all this language out there

just panic you, look at your. facts and make decisions on what's best for you and your family. If you have a friend who's thinking, like, should I buy a house? Should I sell my house right now? Send this to them. Now, for a deeper dive on this entire subject to the housing market, you can check out the Ramsey event that we did recently called the Real Estate Reality Check. So you can find that at Ramsey Solutions.com slash reality check.

So remember, no matter what, continue to control your money. You are the one in charge of it. You're the one making your decisions. and you're going to be wise about it. You got this. You got this. All right, everyone is worried about the high grocery prices right now. We are all feeling it since January 2020,

prices on groceries have gone up 7%. And the USDA expects all few prices to rise between 4.5 and 5.5% this year. So, they keep going up. So let's talk about why this is happening. And then we'll talk about some ways for you to protect your bank accounts from high grocery costs. So there are a few different things in play that makes grocery prices go up, up, up, like we're seeing.

One is supply and demand. So this is a huge issue. So think about all the things associated with a grocery store, okay? Transportation, labor, the people actually checking you out and stocking the shelves. Food supply. I mean, there is so much. So just think about transportation for a second.

Trucking is the main way that food products get transported. And gas prices. Ha, this plays into effect, you guys. Obviously, gas prices have been skyrocketing. Well, that affects the groceries that have to be transported from where they are to the store that you're buying. Plus, the trucking industry already has a shortage of drivers before the pandemic.

For example, in Florida alone, the turnover rate for truck drivers last year was 100%. And then another factor in grocery prices is the high labor. costs. So wages and benefits have continued to rise. Over 80% of U.S. workers are now making at least $15 an hour, which is up from 60% in 2014. So grocery stores are not just eating those extra costs. Nope, they are showing up in your grocery bills. And then there's shortages on some food items as well. Just take Russia and Ukraine's conflict, for example. In that area alone, almost 30% of the world's wheat supply comes from there. And it's not being exported as fast, obviously, because there's global unrest in that part of the world.

Plus, there's been a lot of recalls, if you haven't noticed, and scares. Things like avian flu have affected chicken and egg supply. So these are just a couple of examples at a basic level, high level of why grocery prices are more, more, more. There's so much that goes into play here, but it makes sense why prices are high with all of these factors coming together. So there's some things you can start doing today to help. help you not feel the grocery prices rise as much as you could.

First up, redefine dinner. Your family does not need a huge, big, gourmet meal, okay? You can go simple and you can go cheap. Also, crunch the numbers while you shop. If you're doing it online, this is great because it's going to just show you as you go. But if you're in the store, take out your phone, get the calculator out, and honestly,

just start rounding up the costs to help you not overspend. Also, raid your pantry and your fridge. What do you already have? What can you already use? And try to challenge yourself to use up all the food that you have before it expires, so nothing goes to waste. You can also use an app like SuperCook or all recipes, and you can actually put in the ingredients that you have,

and they will show you recipes that you can make. Don't buy in bulk unless you can use it all, because we don't want stuff to go to waste. Also, still research discounts and deals. I mean, there are plenty of stores. that run weekly ads, coupons online. So again, don't be afraid to do all this research because it will save you money.

Actually, plan your meals. Winston and I do this every Sunday night. We look at our week ahead. We figure out, okay, what nights are we cooking, and I plan on exactly what I'm going to cook. And my meal planner and grocery savings guide can help you with this. I'll put a link in the description.

Also, stick to your plan and only buy what's on your grocery list. It can be easy to throw in some extra snacks here and there, but that can really add up. Also, while you're making food, see if you can make another meal and put it in the freezer. So you actually have a spare meal there that won't cost you anything

because you've already made it. Also, try gardening. So this can be a little bit of an investment up front, but it can produce so much. Yes, we have been gardening at my house. I shouldn't say we, Winston, I get from all the credit. But it's okra, it's squash,

it's zucchini, cucumbers, tomatoes. I mean, there's so much stuff that I'm like, oh, I can use this stuff and it's free. It feels free because there's so much of it. It's amazing. Also, buy generic versus brand name. This will save you some money as well. Eat leftovers if you have them in your refrigerator, shop by yourself.

If your kids or your spouse also try to grab for extra stuff, just go to the store alone. Also, just a little pro tip. It's old school, but it's true. Don't grocery shop while you're hungry. You're going to buy more. I'm telling you, you're going to over buy. Don't need to do that. Now, for extra help with budgeting and save you.

money in all areas of your life, including your groceries, download the every dollar app. All right, share this with someone who wants to save on their grocery bills and comment below on your grocery saving tips because I want to know. I love hearing, you guys are so creative, I love hearing how you save money. Okay, today we're going to answer the question that I get all the time, is $1,000 enough for an emergency fund? So we're going to break that down, and then I'm going to give you some tips on how you can save $1,000 fast. So the question, is it enough? Well, the truth is, not always.

You're going to have emergencies that cost more than $1,000 for sure, but not always. So that's why $1,000 is your starter emergency fund. It's not your final emergency fund. It's your starter. And so with this, there's a part of me that's like, it doesn't feel like a lot, but I want that kind of urgency to motivate you to pay off debt that much faster. Like, it's there to be like, yeah, is that enough to cover if you lose a job or whatever it may be? So it's like, yeah, I mean, you want that to be bulked up, but you're going to do that after you pay off debt.

So if you're not familiar with the baby steps, our plan, our seven-step plan to help you get control of your money. The very first one is to save $1,000. That is number one. Then number two is to pay off all of your debt except for your mortgage. And then baby step three is to use that $1,000 emergency fund to, have a fully funded emergency fund of three to six months of expenses. So that baby step one of $1,000, it feels very lean because it kind of is, honestly. So again, let that motivation to get out of debt that much faster so you can bulk it up. But also, though, a part of this is so that you get a

quick win. Okay, if you are someone that has been living paycheck to paycheck, maybe even you're behind on a bill or two, and it's like, man, I just work, I get a paycheck, it just goes right back out. We have no money, no margin to save or to give. It's just like, oh, it just feels like it's just once the money comes in, it goes right back out, and we have nothing left. When you have had that defeat for a long period of time, it almost can feel like you can't win. So by making it $1,000, making that one of the first things that you do to get on this plan, honestly, is a huge motivator that you can do it. Like, you can do it. Yes, $1,000 is a lot of money. But guess what? You can do it. you can get $1,000.

So if the very first step to getting control of your money was to save up three to six months of expenses, it would take you forever to save that while you still have your income going right back out to payments. So getting that quick win honestly is so important. And we talk about it all the time on the show, how personal finances 80% behavior. It's only 20% head knowledge. So it's so much of that behavior change. When you complete that first step and then go on to pay off debt, it does something to know that you can do this, that you can.

control your money. Anyone out there can do this. And then also, you guys, while you are paying off debt, if you have an emergency, come up. Pause your debt snowball. Pause it. We talk to so many people who have become debt free, but they say it. They're like, oh, you know, our car started lincoln oil, and we realized, gosh, we're going to have to replace it and all of this. And so we had to posit all the money that was going at debt, oh, was going to save up to get another car because we got the insurance policy and to put some money with it or, you know, something in the house broke. and so we had a pause and all the money that was going to be paying off debt that month

went to help fix this problem. So sometimes you're going to have to pause the debt snowball, which, again, is so defeating, it feels like you're going backwards. But that may be the case. And again, I don't want you to live in that $1,000 range forever because once you're out of debt, which on average, people do it in 18 to 24 months,

then you can bulk up that emergency fund. So it's not like you're having $1,000 for the rest of your life. And that's your only savings. You're going to have a whole lot more, okay? And another reason to pause your debt snowball is not just if an emergency comes up. But if you are pregnant, so if you're expecting a baby

and you're like, okay, and nine months we're having a baby, pause and stockpile cash because you know something big is coming, change is happening, and so not just to the family, but you want to make sure that baby's okay, mom's okay,

when you guys come home from the hospital, everything's good, you press play, take all that money you were saving over those nine months and throw it at the debt. Another thing is if you know, again, a big change is happening,

so you know, I'm going to be laid off. Maybe your company's told you, yeah, we're going to be doing layoffs in six weeks and your position is probably going to be eliminated. Like you know something like that is coming. Then pause and save up cash. Okay. So those are some reasons to do it. But again, so much of winning with money is actually winning and getting these quick wins. So that start an emergency fund is really a hope to people out there that feel like they can never win with money.

You realize, well, I can. I can do this. So $1,000. Some people say it's a big number. Some people say it's a small number. but regardless of what that is in your world, here are some ways to get it quickly. Number one, start budgeting, okay?

Always this. If you don't know where every single dollar is going in your paycheck, that means it's probably leaving in things that you don't realize it is. So once you actually do an audit of your money and say here's exactly where our money's going every month, you can see in that, hmm, I could probably cut this here or cut that there. I didn't realize we were spending that much there. Let's cut that back.

and you actually start to have a game plan and you're proactive with where your money's going versus reactive. Also, pause any other savings. That includes investing, okay? Pausing it because we're going to press play later. I want you to invest. But it's amazing when you're not putting money

in your 401k or your Roth IRA and you pause that, that is cashback that you can get in your paycheck to save that $1,000. Also, cut expenses where you can, anything from subscriptions and entertainment, clothes, going out to eat, things that can cost a lot that you don't realize, cut them out for a short period of time. Remember that.

Because later you can press play on all these things and go back to that. But for now to get $1,000 quickly, it's going to be cutting expenses. Also, look at all of your bills. Okay, so this is insurance, cell phone, cable. Anything that you just pay consistently, shop arounds. Because sometimes you've been paying the same thing or they keep charging you an upcharge or an extra fee or the rate goes up and you don't realize it. and it's been three or four years, go back and see, okay, what are cheaper options?

Because you can save a lot, a lot of money in just your monthly bills. Also, take a side hustle, get a side hustle, take some extra hours, work overtime, make the money coming in greater than what it is now, and you can save that $1,000 even quicker. Also, declutter your house. Oh, sell stuff, you guys. It's amazing what you can get for things. Things are laying around your house that you haven't used, that you're not using. Sell them and get money.

Also, start meal planning. This is a big one. If you are intentional with what you do at the grocery store and what you buy, you can save a lot of money by just that. Yes, groceries are high. Inflation's killing us with groceries, I know. But when you actually have a plan and you go in and buy just what you need, you can save money. You can also check out my grocery savings guide because it's amazing and it will help you work all of this as well. All right, there's some ways you guys to save $1,000 quickly.

So share this with a friend who's working baby step one right now and give them some motivation. And if you have any other tips of how to save $1,000 quickly, make sure to leave a comment. All right. So hopefully that helped you figure out that $1,000 emergency fund. Yep, it's restarted emergency fund, keep you motivated, and it's going to work out, you guys. Again, I say it all the time, but the baby steps, this plan of that $1,000 emergency fund, and getting out of debt and getting your fully funded emergency fund, retirement, kids college, paying off the house.

All of it. It is a proven plan in good times and in bad. All right. So one thing that I am loving right now, I'm not going to lie. I kind of made fun of Winston. I mean, you know, it's funny how opposite spouses can be. So one thing I learned about Winston early on is he is the most low maintenance man when it comes to clothes. You all know me. I love clothes. Love new clothes. So clothes that, you know, have been around since you're a freshman in high school. just make me giggle to myself. And Winston had a pair of Birkenstocks as he's had literally since he was a freshman in high school, in high school.

But they keep lasting. So I kind of always just, back when they weren't in style, you know, all of it. Well, anyways, I went to Target's and they had a pair of major knockoff Birkenstocks. But I was like, these kind of like look cute. And I feel like I can wear them to the pool and they can be my summer shoe. Anyways, I'm obsessed. I'm obsessed. I wish I had Birkenstocks from freshman year.

I don't because I had the clogs. The clogged Birken socks, I remember those. Yeah, that's what I rocked in high school, not like the sandal type. But they're my favorite. They're at Target. I don't know if they're still at Target, but that's what I'm loving. And one thing I'm learning right now, I'm learning just how to be a sports mom. My oldest is seven.

So we're just in it, you guys, and even the summer, she did cheerleading camp, so she's obsessed with cheerleading. She got second place in the toe touch competition out of like 40 girls, not to brag, but it's true. So I'm like, oh my gosh, are you going to, are you going to be a professional cheerleader? and then she's on the swim team. And I'm like, are you going to be a professional swimmer? And then she does gymnastics.

I mean, all of it. So I kind of like was not into the whole kids sports thing until my kids are the age so they can play sports. And when you watch your kid do something that they love and they're really good at. I'm like, oh, man, I'm that mom. I am that mom. I get it.

I get it. So I'm eating some humble pie. And I'm all about it. Whatever she wants to do, I am there. Front and center. In fact, I'm about to leave this taping. to go sit in the hot, hot sun for about three and a half hours for the final swim team competition for the summer.

That's right. Yep. I'm in it, you guys. I'm in it. All right. Thanks so much, you guys, for listening to this episode. I really hope that it gave you some peace and some hope in our crazy world right now. If you have not subscribed to this podcast, make sure hit the 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. You know,