Investor Column | The cost of everything is rising. Watch your spending — and budget

My wife, Jeannine, and I vacationed in the Florida Panhandle last month. She wasn’t happy with our accommodations.

I’ve always been frugal when it comes to paying for hotel and motel rooms. Usually, I try to obtain a decent three-star Hampton or LaQuinta-type hotel room for about $75 a night. I’ve never been a JW Marriott, Ritz Carlton or Four Seasons-type of guy. I feel that staying two nights at a Hampton Inn rather than a JW Marriot might save $600 for retirement or yield something practical like a king mattress or a new 60” TV.

Hotel prices are getting super crazy. I was shocked to have paid over $250 a night for non-beach front city hotels, miles away from Panhandle beaches, for basic Quality Inn -type two and three-star type hotel rooms. And it gets worse because many hotels charge an additional $30-per-night pet fees, resort fees, and sales tax. Now, I’m up to almost $300 a night in Pensacola for a God-awful motel. The motel was probably once an old Ramada Inn from the ‘70s that needs painting and carpeting. Under the law of supply and demand, some hotels wanted $500 to $600 a night.

It’s simplistic to say, “Well, that’s what things cost — get over it!” Sorry, I’m cheap, and inflation is getting scary. In the last year, gasoline has gone from $2.18 in August 2020 to about $3 recently. Rents for many of us have increased up to 25% since April. Now something basic, like milk, goes from $3.54 to about $3.69 per gallon for conventional whole milk,

I try to avoid politics in this column. Still, I need to rant because it appears hyperinflation and other inflation challenges are going from annoying to threatening. Next year, I’ll bet my gym shorts that we’ll see legions of Americans struggling with credit card debt, rent, and mortgage payments and considering food banks. So, hotel costs, I believe, are a harbinger for crazy price increases elsewhere, especially for food, shelter, and clothing.

My point? I think it is time to start budgeting; seriously, again. And I fear many people will drown in financial quicksand about a year from now. Not enough cash causes stress and affects family issues.

My concern is that I think the expenses are now increasing at crazy amounts above family income. So, if you wait a year to budget or adjust your budget, it may be too late. So now is the time to consider:

▪ Revisiting budgets — Pay cash, debit card, or checks for everything. Fund monthly credit card balances before they snowball. Postpone oversized ticket items like a new car with a loan.

▪ Planning spending — Your goal is to live within your means. Threats as significant cost increases in housing, taxes, insurance, and now gas and food need considering. No matter how aggravating—prioritize spending.

▪ Figure essentials — Think about what you can do to avoid or postpone unnecessary spending. Start with a list of your gross income, after taxes on take-home pay, for you and a spouse or partner. Next, calculate your expenses for monthly items such as mortgage or rent payments, utilities, and food. Then adjust for habits and other costs. So, if you have a $10,000 deficit, start planning where to economize. Reevaluate monthly to come up with a formula that works, and allows you to pay your bills comfortably

▪ Little things help — Take the bus or drive a used car longer than spending 30 grand on a new vehicle, order less takeout, cook your food. I’ve always been amazed at spending $15 or more dollars for an omelet at an outdoor café downtown. Eat on a blanket in your backyard. Subscribe to HBO and Netflix rather than going to the theater dates four times a month. Now subtract your expenses from what you brought home, but not below zero. Divide surplus amounts into charity, savings, luxuries, and, if available, fun stuff, like rock concerts and sporting events.

▪ Enjoy free stuff — Hit the beach. Ride a bike trail. Attend free public lectures.

▪ Reducing food costs — Food prices, for example, are increasing rapidly. Throwing stuff in the cart can’t be on autopilot. It’s easy for a family to spend $500 a month on food. Motivate, if necessary, to cut down on grocery costs. Plan menus and create realistic menus at the beginning of a week.

My wife does a fair amount of cooking on the weekend. That way, we have meals for dinners and can take our lunches to work rather than eating out. Buying in quantity at Costco or Sam’s often yields savings. Also, look for the buy-one-get-one-free specials at Publix or Winn Dixie.

I’m not sure if I can get Mrs. Germer to camp in a pup tent for next year’s vacation. But I think I can motivate her to hit some books for free at the Manatee County Library rather than all-new Amazon hardcovers. That’s if she wants to stay at a decent hotel for next year’s summer vacation

So, I believe it’s time to use this respite to create a budget to battle inflation and get your financial house in order. Being lackadaisical will cost you.

Jim Germer is a Bradenton CPA and financial adviser at 3655 Cortez Road W, Suite 110, Bradenton, FL 34210. Call (941) 746-5600 or email jim.germer@ceterafs.com. Securities are offered through Cetera Financial Specialists LLC (doing insurance business in CA as CFGFS Insurance Agency) member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Cetera entities are under separate ownership from any other named entity.

(This article is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.)

This story was originally published September 10, 2021 at 11:08 AM.