#190 How Inflation Has Shaped our Spending, Saving, and Investing ft. Peter Kim, M.D - Passive Income MD

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#190 How Inflation Has Shaped our Spending, Saving, and Investing ft. Peter Kim, MD
Episode #190

#190 How Inflation Has Shaped our Spending, Saving, and Investing ft. Peter Kim, M.D

In this episode, Dr. Peter Kim shares how inflation has impacted our daily lives, from our spending habits to our saving and investing strategies. He dives into the current impact on the economy and how we as a community can navigate and adapt to its effects. Tune in to gain valuable insights into finances, investment, and the future prospects following inflation.

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11.34 Min • December 19

Episode Highlights

Now, let’s look at what we discussed in this episode:

  • Inflation as a Reality, not Just a Downturn
  • Spending Plan Instead of Budgeting
  • Current News on the US Inflation Rate
  • My 3 Quick Strategies During Inflation
  • What it All Means for the Future

Here’s a breakdown of how this episode unfolds.

 

Episode Breakdown

[00:38]

Inflation as a Reality, not Just a Downturn

Peter opens by sharing how inflation has impacted our daily lives, from the cost of groceries to education and rent, influencing our financial decisions. 

Dr. Peter admits to not adhering to traditional budgeting but emphasizes the importance of being mindful about spending, especially in times of high inflation when the cost of goods and services rises faster than our wages. He stresses that failure to manage finances wisely can lead to financial insecurity.

“If we’re not smart about how we spend our money, and at least think about where it’s going. That can be a scary thing.” — Peter Kim, MD.

[03:05]

Spending Plan Instead of Budgeting

Dr. Peter continues by talking about how he uses a “spending plan” instead of traditional budgeting, focusing on understanding their financial flow and ensuring major expenses are covered while setting aside money for investments and savings. 

He mentions that he prioritizes experiences and travel over material goods, aiming to be tax-efficient with purchases. By maintaining discipline in savings and investments, he feels less impacted by inflation and is able to avoid fear of financial instability.

“A spending plan is about understanding your financial flow, meaning you know how much is coming in and have a general idea of where it needs to go on a monthly basis. I make sure the major things are taken care of first, I have money set aside to continue to invest to reach my goals, and then we spend modestly outside of that.”  — Peter Kim, MD.

[04:14]

Current News on the US Inflation Rate

Peter discusses the current US inflation rate, citing it as about 3.1% based on the consumer price index (CPI). He highlights the impact of inflation on everyday goods and services, such as food and dining out, noting significant price increases like how Chipotle charges $20 and a McDonald’s meal might be $15. 

Dr. Kim then emphasizes the disparity between wage increases and inflation, expressing a desire to not just stay afloat but thrive during these times and take advantage of opportunities.

“My thought has always been, how do we not just stay afloat during these times but actually figure out how to thrive and how do we take advantage of what’s about to happen.’” — Peter Kim, MD.

[06:29]

My 3 Quick Strategies During Inflation

Dr. Peter Kim outlines his three key strategies for managing income and assets during times of inflation. 

Firstly, he emphasizes funneling professional income into appreciating assets to create passive income streams, reducing dependence on active job income. Secondly, he focuses on long-term holds, particularly in real estate, as a hedge against inflation and economic fluctuations. Lastly, he stresses the importance of grasping current risks and circumstances, customizing his asset selections and investment choices to the current environment and personal financial goals.

“You have to know your risk tolerance, you have to know what’s suitable for you how much time you’re willing to put in your risk tolerance and your financial goals.” — Peter Kim, MD.

[09:40]

What it All Means for the Future

Peter concludes by projecting strategies for creating financial security in the face of potential economic changes. He anticipates a potential peak in inflation, leading to stable interest rates and a subsequent market stimulus in 2024. Dr. Kim believes that commercial real estate will face challenges but expect a rise in asset values when interest rates drop. 

Lastly, he emphasizes the importance of staying informed, connected, and proactive, and stresses the value of being part of a community with a similar mindset.

“I believe that we’ll be prepared to ride that next wave, you only get a couple of these in your lifetime. I absolutely believe that we hit the downturn of an economic cycle, and you can’t time it perfectly, but if you can invest through that, you can ride a nice wave for three, five, to seven years that can impact the rest of your entire life.”  —  Peter Kim, MD.

We talk in depth about all of this and more in our course–Passive Real Estate Academy. Want to learn everything about investing in real estate with confidence? You can grab your seat right here!   

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