Inflation Versus Interest Rates

[kcollinsdesign]

My son paid for all his college from working in high school and during college and graduates in February, should have zero debt. He had a lot of scholarships also. I told him my parents kicked me out after a few months after I got my degree and he will be out also - that's just the way it is. He completely understands. He has his mind set on buying a duplex so I'm super happy about that.

Most kids aren't geniuses or star athletes that can get scholarships. And most high school kids can't make enough money working part time and during the summer to make much of a dent in their college costs. College loans are a fact of life for the vast majority of young people. The good thing is, at least at present, finding decent, good paying jobs after graduating is easier than it has EVER been. The median salary for a college grad is $47K a year, which is just slightly less than the median salary for all workers (regardless of experience). The average amount of college debt is around $30K, which can easily be paid off in a few years by living frugally and putting off home buying and starting a family until it is affordable.

Of course, MY kid graduated debt free and is now making six figures. Based on my experience and several of those posted above, us sign makers must have some pretty good genes!

 

[Stacey K]

Most kids aren't geniuses or star athletes that can get scholarships. And most high school kids can't make enough money working part time and during the summer to make much of a dent in their college costs. College loans are a fact of life for the vast majority of young people. The good thing is, at least at present, finding decent, good paying jobs after graduating is easier than it has EVER been. The median salary for a college grad is $47K a year, which is just slightly less than the median salary for all workers (regardless of experience). The average amount of college debt is around $30K, which can easily be paid off in a few years by living frugally and putting off home buying and starting a family until it is affordable.

Of course, MY kid graduated debt free and is now making six figures. Based on my experience and several of those posted above, us sign makers must have some pretty good genes!

I guess we do! LOL My son was lucky. He started for a landscape company when he was 16 and worked a ton of hours during those 3 summers before he left. He already had saved $15,000 before he started. Scholarships were in the $1500 range and he had a few. He also worked for a landscaper during the weekends at college which paid his housing and spending money. It's funny because just last week some kid asked him for $10 to go to Subway because he had no money left and hadn't eaten since the day before. My son said no, if he wanted to borrow $10 he would bring him to the grocery store and he could buy bread, peanut butter and jelly LOL He has been amazed at the amount of kids who complain of being broke but yet they eat out every day.

My younger son didn't get to work as much because of sports and he's not quite as savvy with money. He always makes enough during summer to cover his spending and gas for winter. Now football is done so I told him he has 2 weeks to find a job or the car is gone. He needs to be pushed more than my older one LOL

 

[Johnny Best]

Lets be honest, you never have enough money. This post was started by an older gentleman who has problems with higher costs taking his money. Elon Musk has more than enough but just bought a new company, kind of like Grubler wondering if a new warehouse will help her business. And Stacey giving her boys ultimatums on no tickey, no laundry, thinking she needs to impliment good work ethics into them because it work with her through her parents instilling it into her.
I still give money to my grown children. I even gave $20 to a bum on the street yesterday and my wife quoted the Fool and his money are easily departed. I don't care if he is buying drugs or liquor with it. The government gives me money every month for doing nothing and pay all my medical expenses. I still work so I just let that SS just roll over. But you know what pisses me off. The money I put into my SEP IRA for years to save on income tax, well, the government gets that back since I have to take that money out since I am over 72. Out of the $2500 yearly pay out the government takes $350. That's used to pay off somebody's college debt. But do I get a "thank you", no, Brandon gets that and a sniff of your hair. I have a pervert President living in my basement spending my money. And, don't get me started on EE bonds when I cash them in.

 

[Notarealsignguy]

I think the younger generation feels the same way. They watched their parents give up their lives because it was never enough and the older crowd can't wrap their heads around the kids not wanting to grind away, like they did, for virtually nothing. All you end up with are things and once that rush of the new thing wears off, you have to get more things. Maybe the millennials are smart rather than lazy? It's the older managers and business owners, like me, that need the young people to work their ass off so I can make more money without having to grind so much. They don't need you though, they get along fine enjoying life and making enough to cover their essentials. We are the dumb ones.

 

[kcollinsdesign]

I guess we do! LOL My son was lucky. He started for a landscape company when he was 16 and worked a ton of hours during those 3 summers before he left. He already had saved $15,000 before he started. Scholarships were in the $1500 range and he had a few. He also worked for a landscaper during the weekends at college which paid his housing and spending money. It's funny because just last week some kid asked him for $10 to go to Subway because he had no money left and hadn't eaten since the day before. My son said no, if he wanted to borrow $10 he would bring him to the grocery store and he could buy bread, peanut butter and jelly LOL He has been amazed at the amount of kids who complain of being broke but yet they eat out every day.

My younger son didn't get to work as much because of sports and he's not quite as savvy with money. He always makes enough during summer to cover his spending and gas for winter. Now football is done so I told him he has 2 weeks to find a job or the car is gone. He needs to be pushed more than my older one LOL

My daughter got the GI bill and we spent the money we saved for a new truck. Military life suited her, and she blossomed!

 

[Bobby H]

I think the younger generation feels the same way. They watched their parents give up their lives because it was never enough and the older crowd can't wrap their heads around the kids not wanting to grind away, like they did, for virtually nothing. All you end up with are things and once that rush of the new thing wears off, you have to get more things. Maybe the millennials are smart rather than lazy?

It may be they just don't have as much living space for all sorts of tangible things. Millennials and Gen-Z people do appear to be more interested in spending money on experiences rather than stuff.

One area where the younger generations do seem "smart:" they have no illusions about the American culture sales pitch: get married, buy a house, have some kids and live happily ever after. So many were raised as children of divorce. They've been "behind the curtain" to live through what actually happens. The divorce rate in the US has dropped from 50% down to 39%. But younger adults are now far more selective about who they marry. And a growing number of people just aren't getting married at all. Co-habitation is growing more common. Lots of young people know that parenthood can be a gateway to poverty, make life a lot more complicated and take away a lot of options. So they're getting better at avoiding unwanted pregnancies. Of course there are plenty of other traps to snare young people -like debt from student loans or just stupid spending.

50 years ago if a kid got his high school girlfriend pregnant he typically had to marry her and start "adulting" when the baby arrived. My dad joined the Marine Corps because he was barely drinking age and already had a wife and two kids. The military allowed us to escape poverty. The cultural standards have been different for quite some time now. Today, if a teen girl or young lady in her 20's has an unplanned pregnancy chances aren't so good the "dad" is going to do the right thing. Women know men can be notoriously unreliable @ss-hats. Even marriage itself is no guarantee. So women are generally getting a lot smarter about not letting some guy knock them up and take away a lot of life possibilities. More are choosing to pursue their own careers, make their own money and then (maybe) have children later on their own terms.

 

[Texas_Signmaker]

All this talk about getting teen girls pregnante is too much to read about so early in the morning.

 

[Johnny Best]

Getting back to the subject: The Fed might be raising the interest rate by three quarters of a point again today to fight inflation.

 

[Notarealsignguy]

Good, conservative savers can finally make a little bit.

 

[Johnny Best]

I remember in the late 70s and interest rates were really high, up to 18- 20% and I made interest rate boards with changeable copy for bank lobbies. Old people would come in and check interest rates and if the bank across the street were posting higher they would quickly get in line and remove their money and run across the street to deposit for new CD for higher interest rate. Banks got smart and started to have a penalty for early withdrawal. Those teens that Bobby H talks about should have that, early withdrawal.

 

[Texas_Signmaker]

I remember in the late 70s and interest rates were really high, up to 18- 20% and I made interest rate boards with changeable copy for bank lobbies. Old people would come in and check interest rates and if the bank across the street were posting higher they would quickly get in line and remove their money and run across the street to deposit for new CD for higher interest rate. Banks got smart and started to have a penalty for early withdrawal. Those teens that Bobby H talks about should have that, early withdrawal.

There is no fun in that.

 

[Bobby H]

There's fewer, ahem, "deposits" being made in the first place. The US is in the early stages of what could be a serious, long term baby bust.

As for the Fed raising the interest rate another 75 basis points, it does seem very likely. But it comes at a cost of the Fed losing money, rather than raking in profits (that it typically has to turn over to the Treasury Dept). The Fed made $100 billion last year. Last month it lost $6.3 billion. Those losses may balloon to $100-$200 billion. They're doing some creative accounting tricks, using something called a "deferred asset account" to move around the balance sheets. They project it will take 3-4 years to recover that deficit. And that's provided IF we have a proper economic recovery which is no guarantee. Some of the stuff happening now is from policy makers and various industries kicking the can down the road for literally decades.

 

[Notarealsignguy]

This is why you should always save for a rainy day. Really though, nothing catastrophic is gonna happen. You guys follow around that carrot on the stick too much. Some new buzz word topic will come along soon enough and everyone will move on to being internet experts on that.

 

[ProSignTN]

It may be they just don't have as much living space for all sorts of tangible things. Millennials and Gen-Z people do appear to be more interested in spending money on experiences rather than stuff.

One area where the younger generations do seem "smart:" they have no illusions about the American culture sales pitch: get married, buy a house, have some kids and live happily ever after. So many were raised as children of divorce. They've been "behind the curtain" to live through what actually happens. The divorce rate in the US has dropped from 50% down to 39%. But younger adults are now far more selective about who they marry. And a growing number of people just aren't getting married at all. Co-habitation is growing more common. Lots of young people know that parenthood can be a gateway to poverty, make life a lot more complicated and take away a lot of options. So they're getting better at avoiding unwanted pregnancies. Of course there are plenty of other traps to snare young people -like debt from student loans or just stupid spending.

50 years ago if a kid got his high school girlfriend pregnant he typically had to marry her and start "adulting" when the baby arrived. My dad joined the Marine Corps because he was barely drinking age and already had a wife and two kids. The military allowed us to escape poverty. The cultural standards have been different for quite some time now. Today, if a teen girl or young lady in her 20's has an unplanned pregnancy chances aren't so good the "dad" is going to do the right thing. Women know men can be notoriously unreliable @ss-hats. Even marriage itself is no guarantee. So women are generally getting a lot smarter about not letting some guy knock them up and take away a lot of life possibilities. More are choosing to pursue their own careers, make their own money and then (maybe) have children later on their own terms.

I give Loretta Lynn the credit. If you've got two siblings instead of seven. Thank, or blame the Queen of Country.

 

[Bobby H]

Loretta Lynn and her story might deserve some credit for the choices young adults are making today. They've seen their parents struggle in person and saw the lesson being played out in real time. They're not looking to repeat the same mistakes and have to live through the same hardships.

I remember how my own parents struggled financially and how my dad ended up having to join the Marines to get us out of the literal arm-pit of New Mexico. My brother and I took those experiences to heart and were extra careful not to get any girlfriends knocked-up while we were still in high school and not really ready to be parents. My parents are still married to this day. But so many younger adults have seen their parents get divorced and then have to live through all sorts of unorthodox nonsense. Younger adults are getting better at covering their a$$es, at least when it comes to unintended pregnancies.

 

[Boudica]

This is getting weird.

 

[Bobby H]

Weird? How? Exactly why would it be weird for someone to want to avoid knocking up their girlfriend unintentionally? If anything it seems like younger people these days are getting a little bit more responsible. Unintended pregnancies cost a stupid fortune, even if the parents get some government assistance. Uncle Sam doesn't pay for everything. And young adults know it. That gets back to economics and factors like our current interest rates. It's all connected.

 

[Texas_Signmaker]

You can count on Bobby to bring up impregnating teens.

 

[Vassago]

Can someone please explain to me how raising interest rates is an acceptable way to stifle inflation. My home mortgage is an adjustable rate and is up several hundred dollars a month. Who decided that this is a preferable way to hold down the price of groceries?

The problem is.. This isn't inflation. This is an exceptional event which is causing supply chain issues.. Not an abundance of money.

Raising interest rates won't stop something that isn't happening.. It'll just hurt those exposed to it via mortgage, rising costs, etc.

But..it depends on how you see things.. It could benefit those who want to make people reliant on the state. Offer a way out.. But as always - read the small print

 

[JamesLam]

Just a general statement about how to save money when times are tough, not directed at all towards RJ's students.

There's one class they should require every high school senior to take. It's called "Math for Everyday Living". In this class you clipped out a job in the newspaper, you clipped out an apartment. The job had to be something that at 18 you could get hired for. The teacher had us calculate our taxes and he had estimated electric, heat and water. We then had X amount left. We were required to literally go to the grocery store and make a list of what we would buy, and track all our mileage so we could track our gas spending. We did this for the entire quarter while also learning about checkbooks, 401K's, the stock market, etc.

You learn REAL QUICK what the world is all about. The only way to pass the class was to get your budget under control. BEST CLASS EVER. It's not available at our high school but you can bet I went over all of this with my kids!!! They have been involved with my "saving money scheme" their entire lives. Making laundry soap, washing in cold, hanging dry, making meals vs. eating out, growing your own food, canning, freezing, etc. We do go out and we do use the dryer but there's plenty of times we don't. And I spend under $20 a year on laundry soap for 3 people. I bought a book when my kids were little that really helped me as a stay at home mom to stay home for as long as possible.

All of this also reduces emissions for those climate people.

Our daughter teaches in Sweden and one of the classes in her school is 'Home Economics'. Canadian schools ran away from common sense schooling long ago.