African man with a paper bag of groceries looks surprised and upset at a receipt from a supermarket with high prices against the background of an escalator with customers in the shopping center. The rise in the price of food.

How to Fight Inflation and Win

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April 2022 Net Worth Update:

April saw the stock market tumble and tax bills come due. And, if you were lucky enough to have any money left over (to save and invest), inflation tried to rip it out of your hands. With brokerage account balances looking more and more like they did in January and $70 no longer filling up a gas tank, it’s hard not to feel financially defeated.

But what if you could win? Yes, win!

My portfolio is down just like everyone else’s this month (down $7,000 in April). But I’m still winning! And here’s how you can win, too. 

What Inflation?

A friend agreed to pick me up from the train station for a couple of weeks in April. And gas costing what it costs, I tried to give them money and offered to fill up their gas tank. They empathetically refused my offer. They said that the price of gas is something that they hear co-workers complaining about but it’s not one of their concerns. Really? Who is this human claiming to have immunity to inflation? 

My friend later explained that they’ve been putting in no less than 10-15 hours of overtime every week and it was something they decided to start doing in January and will continue to do until September. They said they will have reached their saving and investing goals before September, but the extra cash cushion would be a head start on next year’s goals and they like to take it easy during the holidays. 

My friend went on to explain how many of the nurses (oh, by the way, my friend is a nurse) come in on Monday complaining about hangovers and by Wednesday or Friday they’re calling out or they need to leave work early. So, it’s no coincidence that these are the same nurses complaining about food and gas prices.

She said to me, “We (nurses) make great money and the opportunity to earn as much as we want, or need is limitless. So, while I recognize things are more expensive, it is of no consequence to me.”

Additional Income Can Help Overcome the Pains of Inflation

I recently went to the supermarket and to my surprise a teacher that I know was the cashier. Our conversation was brief, but she started a month ago and does three-to-four days a week and more if she’s up for it. She said it’s just nice squirreling away the extra money and knowing she has enough if something comes up, she can cover it without worry. The teacher decided to be proactive by creating an additional stream of income on her own to overcome or prevent the pains of inflation. 

Worry is Not the Answer

Did you know that the No. 1 financial worry in the United States is not having an emergency fund (57% of adults)? The No. 2 worry is not being able to cover everyday expenses (56%). Meanwhile, both an emergency fund and extra spending money can be remedied by working extra hours at your current job or by adding a part-time job. You should always be focused on increasing the distance between your income and your expenses (the gap).

Minding the Gap

Never tolerate a stagnant income. Ever! (Yes, a 3% raise is still stagnant).

It was great when I reached the coveted six-figure salary. But my goal was never six-figures. My goal was to earn more than I did the previous year. I focus on finding a way to earn a bit more money each year. This worked to ensure that more and more money was left over after paying my bills. This mentality (shared by my friend the nurse, and my former teacher) has made inflation, an emergency fund and everyday expenses something I don’t have to worry about.

You have to go get your increase. Don’t wait for it. 

Focus on the Gap, Not Inflation

That gap between your income and expenses is where the magic happens. It’s where wealth is created. The gap is what allows you to build an emergency fund, save for retirement, invest in a taxable brokerage account, pay off your home(early) or save for one. The gap is where you get to build passive income so that your current and future self are not worried about covering the basics. The gap is where you accumulate assets that pay you so that one day work becomes optional. 

The Accumulation of Assets

You build wealth by acquiring assets: Stocks, bonds, real estate and businesses. The trick is to never stop until the assets you collect are enough to live on. The best part is that while you are in the accumulation phase of your journey you get to enjoy a life not consumed by financial worry. If you take the time to consistently buy assets that pay you and appreciate even if the stock market is down, you are winning! 

Okay, time for the April net worth update:

Speaking of a down market. I’m down just more than $7,400 dollars in April. My high saving and investing rate did not hold me up this month. However, I continued to buy the stocks on my watchlist during the biggest drops of the month. Automatic investments proved once again to be invaluable. As I briefly considered pausing them, hoping for the market to drop even lower. I got busy and forgot my silly plan and the buys went through as they have for the past five years.  

Currently, I’m $15,000 away from my $250K milestone. That number has literally doubled since last month. But I remain optimistic that I will reach that milestone this year. It seems when I do finally reach the $250K milestone, it will have so much more meaning. We, humans tend to appreciate the things we have to fight hard to obtain, a lot more than the things that come easy to us.

It’s All About The Dividends

And now onto my favorite thing to do on this blog, check out at all the companies that paid me dividends in April.

April Dividend Payout 
JEPI $              85.50 
O $              13.18 
IRM $              37.63 
MAIN $                9.34 
GPC  $              25.58 
MDT $                7.03 
KO $                0.89 
Total $            179.15 

April is the first month of the new quarter and most companies pay the last month of each quarter (March, June, September, and December). That said, I still managed to have seven different companies pay me a total of $179.15, which is a 27% increase over dividends received in January. 

  • The price of MDT (Medtronic) has finally fallen below $100 so I plan to buy more of it over the next couple of months. 
  • KO (Coca-Cola) has a tremendous history but there are always other positions in my portfolio that I’m more excited about adding to. It will take a goal and focus to improve on this position by the time July rolls around.
  • GPC (Genuine Parts Company) This is a core holding and I plan to continue buying it over the next two quarters.

Overall, I’m pleased with my progress. I know we hate to see our portfolios drop but this has been a tremendous buying opportunity. My early dividend payments were less than a dollar and I wasn’t fully convinced dividend investing would work for me. But here I am today very optimistic and convinced dividend investing can work for anyone. It is money that I don’t have to show up someplace to earn, can assist with budget shortfalls and is taxed lower than my earned income. That’s winning.

Remember, it is a fight to build wealth no matter where you are in the process. Everything around us conspires to take money out of our hands. But you must fight the good fight. Continue to save, invest, and grow your net worth even when it seems impossible. Save your pennies (copper) until they become dollars (cotton).

 

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