FREE NEWSLETTER

Inflation Nation

Michael Flack

IT SEEMS EVERYONE in the personal finance world is flipping out about inflation. Some are lamenting the cost to fill up their F-150—with the optional 7.2kw onboard generator for tailgate parties no doubt. Others are decrying the $6.39 it takes to buy two liters of ginger ale or the $198 million required for a Rembrandt.

Hey, I don’t like higher prices for bourbon, vermouth, bitters and maraschino cherries any more than the next guy shaking a Manhattan, but let’s get a hold of ourselves. This isn’t the beginning of World War II—or even the end, at which time inflation was more than 18%.

It reminds me of the scene in The Godfather where Johnny Fontaine is complaining to the Godfather about the tough times he’s facing. He pleads, “I don’t know what to do,” to which the Godfather yells, “You can act like a man,” and then slaps him across the face.

Well, if inflation is becoming an issue for you like it is for me, then we can all act like men and take action. I realize none of these ideas is revolutionary, but sometimes we all need to review the fundamentals.

Consumers have been complaining about gas prices since the Saudis initiated their first oil embargo back in 1973. Trust me, I know. I used to work for an oil company and that’s all anyone wanted to talk to me about.

If high gas prices are a concern, get ahead of the problem by purchasing a car that gets more than the 25 mpg that the 2022 bestselling vehicle in the U.S. gets. Note I said car. Do you really need an F-150 to haul that mulch once every spring?

Crude oil is located in some of the most dangerous and unfriendly places on the face of the earth. I used to be involved with shipping crude oil out of Nigeria, where—on more than one occasion—we had to deal with pirates.

While crude oil is generally refined in much safer countries, oil is still a nasty and dangerous business. I don’t understand why people complain about $4 gas, yet pay $20 a gallon for something that’s free—water. That reminds me: Stop buying bottled water.

When you do drive your car, improve your gas mileage by slowing down. Back in 2005, right after Hurricane Katrina when everyone was flipping out over $4 gas, I thought I noticed that cars and trucks were going a little slower.

This time around, I do not. The engineer in me knows that there should be an inflection point where higher gas prices equal lower speeds, but apparently $4 or $5 isn’t it.

Start shopping at Aldi. Everyone always talks about how great Costco is and, for the 26 gallons of the 91-octane gas that Ford recommends for your F-150, it is. But for most everything else, I’d rather go to Aldi.

Our Free Newsletter

While they both give you the same Hobson’s choice when it comes to selection, Aldi’s package sizes are a little more digestible. I also think its prices are a little bit better.

May I recommend the 10 ounces of Park Street Classic Hummus for $2.45 or 10 Millville Chewy Granola Bars for $1.79? There’s a reason most of its stores are located in poor neighborhoods. Bonus: Some of these locations even sell wine and beer.

Turn up the thermostat. Until I was 15 years old, I didn’t realize that private homes could be air-conditioned. I thought it was only for movie theaters and department stores. A friend of mine who moved out of his condo months ago still keeps it at 76 degrees, all day every day. Turn the thermostat way up when you leave home. It may be a little warmer than you’d like for the first 10 minutes after you return home, but you aren’t going to melt.

Still freaking out about that 18% increase in the price of veal? Well, if a switch to pork is just plain frightening, I recommend taking up financial institutions on their bonus offers:

  • Fidelity Investments will give you $100 for opening a $50 account. Already have a Fidelity account? It doesn’t matter.
  • Tastyworks will give you $200 for opening up a $2,000 brokerage account.
  • Voyager will give you $100 for opening an account and making a cryptocurrency trade. Hmmm. On second thought, you might want to skip this one.

Inflation was 8.5% in 1980, and back then we had an 8.9% unemployment rate. Many thought it could be the end of days, with some city folk buying fishing rods and camping gear, just in case. It wasn’t, and this too shall pass.

Everybody needs to relax. Listen to a little classical music on non-satellite radio, crack open a Busch Light tallboy and breathe. We got this.

Michael Flack blogs at AfterActionReport.info. He’s a former naval officer and 20-year veteran of the oil and gas industry. Now retired, Mike enjoys traveling, blogging and spreadsheets. Check out his earlier articles.

Do you enjoy HumbleDollar? Please support our work with a donation. Want to receive daily email alerts about new articles? Click here. How about getting our newsletter? Sign up now.

Browse Articles

Subscribe
Notify of
27 Comments
Inline Feedbacks
View all comments
Mike Wyant
Mike Wyant
1 month ago

We are 3 months into a 4 month road trip, towing a camper and staying mainly in State and National Parks. By trips end we will have traveled probably 12,000 miles. Am I complaining about the price of gas? Nope, (well, maybe a little. We’re currently in California). Our 13 mpg is offset by averaging less than $30 a night for a camping site, usually cooking our own meals and being able to sleep in our own bed every night. It is all about choices. Fortunately, we are able to do this on our retirement income without having to touch our investments. As long as we can do that we’ll be fine. Already planning East Coast and Canada next year and Alaska the following.

mjflack
mjflack
1 month ago
Reply to  Mike Wyant

Mike Wyant, please keep me updated on your progress.

SCao
SCao
1 month ago

I enjoy your writing style, and agree with points you make. Inflation impacts everyone differently, depending on each personal situation. As humans, many people do like and enjoy to complain, while not doing anything about it, such as making different choices, etc.

mjflack
mjflack
1 month ago
Reply to  SCao

SCao, I really do believe that those most effected by inflation do the least to combat it. Thanks for reading and for your comments.

Randy Starks
Randy Starks
1 month ago

To gain perspective about where we’ve come from and where we “might” be going in terms of the Federal Debt and Spending, you can read up, at the link below, the “6 charts that will help you to understand the national debt and its importance”.

The Charts: 1) The Federal Debt is on an Unsustainable Path, 2) The Federal Revenues and Spending, 3) Taxes and Social Security, 4) Non-Defense Discretionary Outlays, 5) Projected Federal Debt, and 6) Waiting to Act, Raises the Cost Stabilizing of Debt.

https://www.itsuptous.org/blog/charts-national-debt-pandemic-update?gclid=Cj0KCQjwjIKYBhC6ARIsAGEds-JPnF-z4Q4Oc-zU1FNSquoHwboRusQQEHM5STSiAd3qJOOC9Ns_M3caAuztEALw_wcB

Philip Stein
Philip Stein
1 month ago

It seems that every time gas prices rise, many people complain about “those greedy oil companies.”

But when gas prices decline, nobody says, “Oh, those benevolent oil companies.”

As you point out, people don’t often realize that the price of gas is largely determined by the global oil market. Rising gas prices aren’t the result of oil company execs arbitrarily raising prices to pad their wallets.

Last edited 1 month ago by Philip Stein
mjflack
mjflack
1 month ago
Reply to  Philip Stein

Philip Stein, agree with you on oil prices being set by global markets. Thanks for your comments.

Curtis Ryan
Curtis Ryan
1 month ago

Couldn’t agree more, my discretionary spending (hello Amazon!) is several times more than the monthly gas bill, there are several expenditures that could be eliminated if needed. Gas prices are like the weather, everyone wants to complain about it, though it’s totally out of their control. One last comment…no elected official can ever control gas prices, but many people like to assign blame based on their political beliefs ignoring the fact that oil is a global commodity.

The Godfather reference is apt, stop complaining about the weather, inflation, politics, expecting the next elected savior to fix your life.

Chazooo
Chazooo
1 month ago

For the amount of driving I now do as a retiree, I would be so much money ahead by getting rid of both cars and all the related expense, and adjust to using Uber, the free elder bus for medical visits, Hertz for a weekend getaway, and the grocery and food delivery services…but I don’t. Too inconvenient, right?

mjflack
mjflack
1 month ago
Reply to  Chazooo

Chazooo, part of it depends on where you live. My wife and I get by with only one car. Thanks for your comments.

Dennis Williams
Dennis Williams
1 month ago

The inflation rate in 1980 was 13.5%.

jollymon

Rick Connor
Rick Connor
1 month ago

Nice article Michael. Great use of “this too shall pass”. I think the combination of inflation and a down market are a recipe for angst, at least to this new retiree. But I try to keep it rational. My wife and I are in the middle of a two week, 2400 mile road trip. People fly on the interstates. On the other hand, we just paid $3.19 for gas in Tennessee. We will defintely underspend my projected gas budget, and we are doing well on the dining budget. I was able to use lots of hotel points for hotel stays, so it should be a reasonable trip.

I love the Godfather reference. I’m still trying to figure out how to work in “leave the gun, take the cannolis” into a financial article.

mjflack
mjflack
1 month ago
Reply to  Rick Connor

Rick Connor, thanks for the kind words. I’m hopeful the hotel points were obtained from business travel, as they make sleeping that much more restful. You work on that quote and I’ll work on “it’s not personal–it’s strictly business”. Ciao!

Last edited 1 month ago by mjflack
Charlie Warner Jr
Charlie Warner Jr
1 month ago

Cheers to the Bush Light. Well written blog.

In my opinion it’s the working poor who are really suffering…..they are working multiple jobs to make ends meet and inflation adds a tougher dynamic.

mjflack
mjflack
1 month ago

Charlie Warner Jr, agreed. Thanks for your comments.

parkslope
parkslope
1 month ago

For the most part, I agree with this article and the other commenters. However, it does seem that we are ignoring the impact of inflation on those who were just barely able to make ends meet before inflation hit. There were obviously many people who were shopping at Aldi and only purchasing generics when inflation was low who are now making sacrifices such as leaving their prescriptions unfilled.

Last edited 1 month ago by parkslope
Ronald Wayne
Ronald Wayne
1 month ago
Reply to  parkslope

I retired early because I hated my job, Covid was a threat, and my employer was offering a modest early retirement incentive to qualifying employees. I also did it because my SS and state pension would equal my take-home income (it was a poorly paid job), and I figured I was already getting by OK financially. That was the fall of 2020. Today, my fixed income seems far less adequate despite my prudent fiscal lifestyle.

Jerry Pinkard
Jerry Pinkard
1 month ago

I agree, “we got this”. I am 77 and painfully remember the Arab oil embargo in 70s where we had to wait in line for hours to get gas, and the many other economic crisis we have faced since. There are many ways to cope and we have to be creative sometimes to manage our costs. A lot of things we spend money on today are discretionary, and we can learn to do without or find a cheaper alternative. Let’s put our big boy pants on and figure this out!

mjflack
mjflack
1 month ago
Reply to  Jerry Pinkard

Jerry Pinkard, I agree. We do have to be creative. Don’t worry I’m on it – working on a follow up article with more specifics.

Nate Allen
Nate Allen
1 month ago

It reminds me of the scene in The Godfather where Johnny Fontaine is complaining to the Godfather about the tough times he’s facing. He pleads, “I don’t know what to do,” to which the Godfather yells, “You can act like a man,” and then slaps him across the face.

Unfortunately a great scene like this would likely be cut from a movie nowadays. (or never shot at all) The language would unfortunately likely be considered sexist for today’s sensibilities.

Ronald Wayne
Ronald Wayne
1 month ago

Regardless of gas prices and the size of the vehicle, every interstate or city street seems like a raceway. On a recent long trip, everyone was going at least the 70 mph limit or more, and yet big SUVs were zig-zagging between the lanes and tailgating others. I guess they can afford the gas. Global warming be damned.

mjflack
mjflack
1 month ago
Reply to  Ronald Wayne

Ronald Wayne, I agree with you 100%. I am constantly passed while driving in the right lane by semis and cars. I have to believe some of those cars contain people that make much less money than I do.

Kevin Thompson
Kevin Thompson
1 month ago

I grew up in the 80s and understand what you are referring too, however, we also need to stop the comparison. The market value for stocks at that time was 2.5 trillion in 1980, and Jerry Jones bought the cowboys for 60M in ‘89. Inflation may have been higher and unemployment higher as well, but everything in life is RELATIVE. We are in a 100 Trillion market economy now and heavily automated. Cost have actually decreased over time with automation, and values of companies have increased dramatically due to that cost savings.

Perfect example, Men At Work. I know it was actually released in 1990, but the point remains relevant. There used to be two or three guys working on a dump truck. Now, because if automation, you see a single driver. Cost down and efficiencies up. So inflation remains relative.

Last edited 1 month ago by Kevin Thompson
Kevin Thompson
Kevin Thompson
1 month ago

The reality is there is no real panic. All panic is media driven to attract your attention for advertisers. It’s human nature. Negativity bias is in our dna, good things are nice but bad things may kill you which is why we tend to focus on negative outcomes.

R Quinn
R Quinn
1 month ago

I agree, we have short memories or are not old enough to have any memories.

Why are pickup trucks the largest selling vehicle in the US? Why does anyone need a massive Cadillac suv? I drive a Mercedes and I get whoo a luxury car. Guess what, it cost less than a Grand Cherokee SRT.

I bought three houses in my life each one carried a mortgage interest rate from 9-9 3/4%

I also recall when the GIC in our 401k was earning 16%

If current inflation is life changing in retirement then someone didn’t think their plans through.

Seems like everything is a crisis these days in part the result of a toxic political environment.

Thomas Taylor
Thomas Taylor
1 month ago
Reply to  R Quinn

I live on the east coast and the sizes of boats have become ridiculous as well. When I was a teenager in the mid to late 70’s, a 16-to 20 foot boat with an 85 to 110 HP motor was considered average or typical. Now, it seems the average is 30+ and if you don’t have at least 3 motors, they feel sorry for you. And don’t get me started on the vehicles needed to pull these boats and trailers.

mytimetotravel
mytimetotravel
1 month ago
Reply to  R Quinn

When I bought my present house the mortgage rate was 10.5%. After the builder buy-down expired I refinanced for fifteen years, but it was still 7 3/4%. I have been driving a hybrid for over a decade, but I am sharing suburban roads with massive SUVs, it makes no sense.

Free Newsletter

SHARE