E415 | Inflation And What You Can Do About It

In this installment of The P.T. Entrepreneur Podcast, we are talking inflation.  Whether you like it or not, it is here.  I wanted to give you three things I would do to control your own destiny.  Thank you so much for listening and enjoy!

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Danny: Hey, I've got a question for you. Do you know if you're tracking the right data, the right metrics to the right key performance indicators in your practice? This is something that's huge for us and really helps us make solid decisions within our business, but the prior software that we're using to run our practice made it really, really challenging.

To actually get that data out and use it in reports. Since we've switched to PPG everywhere, this has actually become way, way easier for us to be able to have the right data. We have a dashboard of all the things that we actually want to see, the metrics that we want to pull, and it makes our life a lot easier to pull the information that we need to make the right decisions within our business.

So if you're running blind and you're not tracking the right things, or you're. Hard time actually pulling everything together. I highly recommend you check out our friends at PT Everywhere and see what they've got going on with their software platform. It's what we use for our practice. It's been a game changer for us.

You can check 'em [email protected]. I think you really like it. So here's the question. How do physical therapists like us who don't wanna see 30 patients a day, who don't want to work home health and have real student loans create a career and life for ourselves that we've always dreamed about?

This is the question, and this podcast is the answer. My name's Danny Matt Mate, and welcome to the PT Entrepreneur Podcast.

What's going on guys? Doc Danny here with the PT Entrepreneur Podcast, and today we're talking about inflation. Inflation is here whether we like it or not. Inflation is here. Inflation is essentially where, uh, the value of your. Goes down, and it comes from a number of different factors, but primarily, uh, what we're seeing now economically at least, is the fact that we have put a lot more money into circulation, uh, in the United States, really around the world.

And every time that you have, uh, more money that gets put into circulation, that means that there's more available money, which means that money is essentially worth less and you have to pay more. Things that you need in life. And that's basically what we're dealing with. We haven't really seen a massive amount of inflation, um, since really the eighties.

Uh, there was, there was very high inflation that occurred and, uh, you know, it's, it's, it hasn't been a ton. Normally it paces about two to 3% per year. Uh, it's why. You know, a hundred years ago you could, uh, you could have bought a nice suit with a dollar, you know, and now it, it's, you know, 800 bucks, a thousand dollars.

I don't know. I don't actually, uh, even own a, a nice suit. I should know this, but things get more expensive over time because of. Inflation. And I want to tell you, you know, an example of seeing this, um, firsthand as well as some other things that we're seeing. And, and, and more than anything, what I want you to, this isn't an economics lesson, uh, by, by any means, I'm definitely not qualified to teach you this.

Uh, but what I'm qualified to talk about is how you can hedge against this and decrease the negative implications of how this might affect you and your family, which is really the only thing that you probably need to care about. You know, personally, as far as inflation goes, cause this isn't something that you really are probably bringing up at the dinner table, uh, or talking to your buddies about, but it doesn't mean they can't be a problem for you.

And, uh, I wanna talk to you a little bit about how you can, you know, mitigate this somewhat and, um, things that I'm doing as well that I'll share with you that, uh, that hopefully help you out as well. So, Let's get into it. Inflation. How can you, uh, mitigate this a little bit, but also what are we seeing in real life?

So, a couple things. Number one, you know, commodities prices essentially, you know, things like lumber, uh, are, are up a significant amount. Uh, the cost of lumber, the cost of building things, um, has gone up a lot. Part of that is supply chain. Uh, also, excuse me. Part of that is also the. The fact that people are building, uh, you know, a a lot more.

And, uh, as well as we're seeing, you know, population migration into southeastern states, states that have less, uh, or, or no state income tax, um, that have lower property tax. We're seeing a lot of that that is occurring, uh, across. The, the country and probably will so, uh, for quite some time. So, you know, there's building that's going on all over the place.

We're seeing certain things go up, um, even at the grocery store, you know, food, the cost of food has gone up. You haven't noticed this. It's, it's happening and it, it has nothing necessarily to do with, um, You know, like political circumstances so much as it does have to do with the fact that we have put a bunch of money into circulation both this year and last year, um, because of Covid, because of people, you know, not being able to work and, um, stimulus money and, and all that.

But the challenge is, I think what happened is we put all this money as Simis money out expecting people to spend it and people were apprehensive so they saved it, which is a good thing, but that is also gonna drive inflation because you're not actually spending the money that the government is putting out.

So it, uh, in some ways is somewhat backfired. Um, but when we look at inflation, Inflation basically erodes your ability to buy necessary things for life, um, or things that you want. And as your dollars become less valuable, it's not like it's gonna go up by like 50%, you know, by the way, in a year. It's not like your dollar's worth 50% less next year as it is this year, but it's gonna be more than.

Definitely two or 3%. So you have to keep that in mind as you're thinking about this. And the things you can do that are gonna really help you hedge against this are, there's a couple of 'em. So number one, uh, having debt right now is not a bad thing and many of you have a lot of debt. So this is gonna be a good, uh, a good piece of news for you.

So you want debt that is at a. Uh, percentage of interest, uh, that is what you want in terms of being able to hold debt, that's going to, uh, essentially get eroded by inflation. And let me see if I can explain this, uh, in a way that, that is just, you know, makes, makes sense to both of us. So let's assume you have a hundred thousand dollars in debt and you have a 5% fixed interest rate on your student loans.

Well, 20 years from. That a hundred thousand dollars is actually. Not, doesn't have the same buying power that it does today. You know, let's say that there's inflation that occurs at a 5% rate, right? Over those 20 years is a hundred percent inflation. Meaning that that buying power of that a hundred thousand dollars is actually half of what it would be it in today's dollars.

So basically your debt is cut in half because of inflation. This is actually something that is not a bad thing for the government because. If they are able to have inflation occur, their debt goes down as well as in terms of the overall burden everybody's does. Um, so by having debt, you can kind of ride the coattails of what's happening.

And have a decrease in, uh, what you owe, assuming that you're still able to increase your, you know, take home pay, uh, as inflation goes up. Um, which is not a bad thing. So if you have a, if you have debt, make sure it's at a fixed interest rate and the terms are as long as you can get them. That's probably the, the simplest thing you can start with, right?

So if you can get 20, 30 years, if you can refinance your, your house, you know, and, and, and, Long-term fixed debt at low interest rates, it's gonna be better for you, um, as inflation kicks in because the, the, the dollar amount, uh, buying power will go down, meaning the burden on you will go down as well. So hopefully that makes sense.

Um, assets are the other thing a really a, there's a third thing as well, but assets are a big one. So, hard assets, you know, thinking about things like real estate, uh, owning a house, um, these are things. Pace inflation typically, uh, sometimes they're faster than that, depending on the area. Um, but normally they hold pace with inflation.

So if you have a house, and you're probably seeing this right now, house, uh, housing, uh, prices. Have gone up significantly across the board. Not, not in every market, but in many markets. Um, we've seen home prices go up dramatically and it's not normal to see home prices go up like 10% in a year when you do nothing.

Right? If you just live there and they go up 10%, um, It's pretty rare unless we're coming out of a recession, which we saw, you know, uh, a little over 10 years ago with the housing bubble. So, you know, that's not necessarily normal. Uh, it's not sustainable, but it's happening right now. Part of it is because there's not that much supply.

There's not as many houses available. People are buying them up faster and that's driving prices up across the board. So if you have a house, um, it's a good thing for you, right? Cuz that's gonna go up. Fixed assets, uh, hard assets go up, pacing inflation. Um, so that's one way to kind of be able to ride the coattails of this in inflation effect as well, which is, you know, a positive thing.

And if you're trying to buy a house right now, you know, it's a tough market. Um, if you can, if you can get into one without you. Paying, uh, a ton, um, and not getting into a bidding war with people, then I say, go for it. Right? But, uh, and then it's because interest rates are low. It's a good time to do that as long as you're getting fixed debt for long periods of time because the debt can actually be an asset over a long period of time with inflation, um, cuz it will decrease or erode that debt over a period of time.

The other thing is you have to increase your take home pay. If your employer's not gonna, you know, be able to do that with you and they're not able to increase what they're making, then you're gonna have to do it yourself. Um, whether that be a side hustle or. I, I, ultimately, it may be starting your own business or if you have your own business, it's gonna be adjusting your prices based on the effects of inflation that are occurring.

This is actually one of the best parts of owning a business is that let's say, you know, inflation is happening, things are becoming more expensive, and you can say, cool, I need to do a price raise to meet, uh, you know, the challenges that are running the business, which has gotten more expensive. So, for me to be able to effectively run the business, I have to raise my prices to maintain my profitability.

This happened with us and many businesses during, uh, uh, last year when we had to buy a lot more p e Um, you know, cleaning equipment was a lot more expensive. Uh, many things that were just drove up the cost of running the business, right? So going through a price raise for us, um, is, was because of inflation, you know, and, and being able to put ourself in a place where we still had.

And we're able to pay our employees, uh, we know what, what they, what they should make. So owning a business allows you to adjust your, your pay, adjust your revenue, uh, according to some of the changes that that are happening in, in the economy. So if things are becoming more expensive, you raise your prices just like everything else.

If the cost of, you know, wood goes up, the, the cost of a PT visit goes up, right? You can do that because you're independently setting what you charge. If you are an employee, this is where it becomes challenging because you can't really dictate those terms. And if your employer isn't necessarily able to, uh, adjust that and they're just running a thinner margins, then you are just able to.

Afford less in life. You're, you have a harder time, you know, paying for necessities of things in your day-to-day life. So a side hustle is a great thing to look at. Uh, now, you know, if you can bolster your income by one to $5,000 a month, like, that's life changing for a lot of people, especially as we sort of see this adjustment occur.

And, and the reality is we have like $6 trillion more money in circulation than we did, um, you know, a year and a half. That's a, an astounding amount of money. If you wanna see what that looks like visually, just go to Google and Google search, like how much is a trillion dollars? And there's an image where you can see like a person sitting next to you or would be equivalent to like a million dollars, a billion dollars and a trillion dollars.

And a trillion dollars is like a huge warehouse full of cash. A million dollars is uh, basically like a little stack next to your foot. So it's an astronomical amount of money that we've put into, into circula. And because of that, we're gonna see inflation. It's, I don't see any way that we, we can't, and we're already seeing some of the ramifications of it.

So the big things that you can think about, cause this is gonna happen. There's nothing you can do about it, so don't stress about it. Uh, you know, and, and go down the rabbit hole of, you know, learning about inflation and debt crisis or whatever. Like, it's not worth it. Here's what you need to know, number one.

Debt in an infl, an inflationary period is not bad. So make sure you have your debt locked up at the lowest interest rate you can for the longest period of time you possibly can, because it's actually gonna benefit you to do that Now, refinance your house. You know, make sure that your student loans are at a fixed interest rate percentage, and make sure that the terms are as, as long as you can, um, you know, you can have them.

From there, you know, make sure that you, if you don't have hard assets, that you try to acquire hard assets, primarily a house. Um, if you have a business, it could be a commercial property, uh, that's a hard asset. Something that's gonna actually, like, basically pace the, the changes in inflation. Um, and then if you don't have a business, c hustle's not a bad idea.

Think about, start a full on business. Be able to, uh, dictate what you charge versus, you know, rely on somebody else to feed you. Um, And you don't have any say over what you can do as far as adjustments in income goes. Um, as a, with a business, you can do that and it's in your own hands. Pros and cons to that.

But as far as adjusting your price points for inflation, you can do that. So you can pace it and your, your livelihood doesn't really change for a lot of people. It's gonna change a lot. People that are on fixed incomes, it's gonna really, you know, it's gonna change. They're gonna not gonna be able to afford as much.

Um, you know, they're gonna notice that. And even if. If they adjust some to stuff with inflation, you know, like my dad has a government pension, you know, he's, he spent 25 years in the army. They adjust that at, I think it's 2% per year for inflation. Like, it's not gonna be anywhere near that over the next, you know, couple years.

I think it's already past 2% this year. Whenever they're looking at, uh, inflation for the, for the year. So somebody like him, that's just gonna mean that he's not gonna be able to buy as much with his pension. Right? So people with fixed. That's where it gets really hard. People that are on salary that have no way of really adjusting that or controlling that.

It's where it gets challenging to you. So if that's you and you work for somebody else, keep that in mind. You know, you're gonna need to increase your take home somehow to make your, your. Quality of life be the same. Uh, that's what inflation is. That's a negative part of it. And, um, so that might be getting a second job.

Uh, ideally you do something even cooler than that. Start a business, start a side hustle, um, grow your business. You know, you can, you can take a lot of control in that, um, because this isn't something that's gonna happen overnight, but it's something that over the next few years, I think is gonna be very noticeable for people in terms of everything's getting more and more expensive, which is already happening.

I took my family out to, uh, Uh, to dinner the other night to a barbecue place, and we dropped a hundred bucks on dinner and we just, literally, it was, it wouldn't even get that much. Like, I was shocked whenever I got the, uh, the bill. And, and what they did is they actually added a 20% service fee onto it.

Um, I don't even know what the hell that meant. It was just an additional 20% service fee on top of whatever we bought. Um, and it wasn't even like, it wasn't a tip. It wasn't like, Hey, I'm gonna give you 20%. It was this, you don't have a choice. If you wanna buy his barbecue, there's a 20% service fee. So I, I sat down and I was like, holy shit.

A hundred bucks for barbecue. Uh, is, uh, that's where we're at now. Uh, so inflation's definitely here, just so you're aware of it. These are the three things you can do hard. Lock up cheap debt, uh, with, uh, long terms and the lowest amount of, uh, interest that you can. And, um, you know, business, uh, control your own destiny, destiny through that you can be like this barbecued place.

You can just charge everybody more money. The barbecue is good. I'm, I'm not gonna hate on 'em. They're just trying to stay in business, you know, uh, so just a good relevant example. So anyway, hope that makes sense. Hope you guys have a great weekend. Thanks so much for listening to the podcast. We'll catch you next time.

Hey, real quick before you go, I just wanna say thank you so much for listening to this podcast, and I would love it if you got involved in the conversation. So this is a one way channel. I'd love to hear back from you. I'd love to get you into the group that we have formed on Facebook. Our PT Entrepreneurs Facebook group has about 4,000 clinicians in there.

That are literally changing the face of our profession. I'd love for you to join the conversation, get connect with other clinicians all over the country. I do live trainings in there with Eve Gigi every single week. And we share resources that we don't share anywhere else outside that group.

So if you're serious about being a PT entrepreneur, a clinical rainmaker, head to that group. Get signed up. Go to facebook.com/groups/ptentrepreneur, or go to Facebook and just search for PT Entrepreneur. And we're gonna be the only group that pops up under that.