As everyone knows we are still in the midst of a pandemic, but as vaccines make their way through our communities and the economy opens back up, we can see the light at the end of the tunnel. Could we possibly get back to normal? What is normal, though? It has been reported that Americans paid off more consumer debt this past year than any on record, almost 83 billion dollars according to cnbc.com. Though job loss was reported nationwide, those whose income wasn't impacted were able to save more this year primarily because activities and vacations were limited. This week the guys discuss how to avoid the potential financial pitfalls from being excited to do "normal" things again!
As everyone knows we are still in the midst of a pandemic, but as vaccines make their way through our communities and the economy opens back up, we can see the light at the end of the tunnel. Could we possibly get back to normal? What is normal, though? It has been reported that Americans paid off more consumer debt this past year than any on record, almost 83 billion dollars according to cnbc.com. Though job loss was reported nationwide, those whose income wasn't impacted were able to save more this year primarily because activities and vacations were limited. This week the guys discuss how to avoid the potential financial pitfalls from being excited to do "normal" things again!
[inaudible] Welcome to Talk Wealth To Me, a safe space podcast, where we chat about anything and everything related to personal finance, the information contained in this podcast is for educational and entertainment purposes only. It does not constitute as accounting, legal tax or other professional advice.
Chase Peckham:Today's discussion is going to be really interesting because, you know, we're, we keep getting hit with the fact that we're on the anniversary really in the last month or two we're a little bit over, uh, the pandemic being a full year. Um, I just got my second vaccination. Yes two days ago.
Felipe Arevalo:As did I.
Chase Peckham:Uh, and you got yours over the weekend.
Felipe Arevalo:Over the weekend. Yeah.
Chase Peckham:Yeah. So you, you and I are both, technically we're, we're finished we're we're vaccinated, but we got to wait that two week period.
Felipe Arevalo:Two week period.
Chase Peckham:To be officially vaccinated. And it got us to be thinking about, you know, how we're going to spend money here in the future very soon. And, and the reason this came to light as it's been a topic of discussion within the financial world, there's been a lot of articles coming out, uh, with this topic. And I've seen a lot of just my friendships. I've seen a lot of people that we've talked to in our presentations, listening to people on how excited they are to do like, I guess, quote unquote normal things again.
Felipe Arevalo:Yeah.
Chase Peckham:And it's just interesting to think about what are those industries that are gonna, you know, that boomed because of COVID, but then what is it that people are going to go spend their money on again? And is it going to bust these budgets? Because through COVID we did learn a lot that people realistically, as much as they lost their jobs, a lot of people saved a lot of money.
Felipe Arevalo:Yeah. Overall, you know, I think it's getting back to that normalicy which sometimes for, for a lot of people, unfortunately, that normalicy is not very budget friendly. Um, especially after a year of, you know, having not participated in, in, in many of the activities that they're used to, but there was an article last month that came out on CNBC that mentioned that Americans paid off a record,$83 billion in credit in credit card debt in 2020 and significant amount of money. Um, it was in fact only the second time in the past 35 years that we ended up owing as a country, less money than what we started the year.
Chase Peckham:Yeah. That's crazy. And that's fantastic.
Felipe Arevalo:It's great news.
Chase Peckham:It's not good the way we went about it and why we had to go about it, b ut
Felipe Arevalo:Exactly. But that same article, uh, warns that, um, as 2021 progresses and we get back more into normal. Experts predict this will be a record amount of added debt. Uh, so those perfectly, slightly more balanced budgets that people came up with sometimes just because they had to do the nature of being at home and everything else. Um, things being closed, travel, not being an option all the time. It could be that a lot of that progress that was made last year financially anyways, can we're ready to undo some of it.
Chase Peckham:There's no question. And I, you know, so much of it, we talk about how psychology and, you know, the way we feel about money, the way we feel in general can really dictate on how we do spend money. Um, and it affects different people all over the place. But we do know that, you know, we will spend or not spend based on, uh, our, our feelings, um, based on excitement.
Felipe Arevalo:Yeah.
Chase Peckham:Based on being afraid on certain things. And, and I think that goes to show when there was a little bit of a panic at the beginning of this, that there was not going to be any more toilet paper in there and the bottled water and, and, and paper towels and all those things were flying off the market.
Felipe Arevalo:Yeah.
Chase Peckham:And people were spending an exorbitant amount of money on those things. And I can't imagine that they had storage for all of this stuff, uh, but it can flip. And the, the idea of going back to normalcy and feeling like we have been, uh, sequestered to our homes for so long, like we paid our dues. We, we were almost forced to pay off debt because we had nothing else to do with our money outside of online shopping. Right. Which we've covered.
Felipe Arevalo:and ordering food in.
Chase Peckham:and ordering food in. Yeah, absolutely. But the idea of traveling, going somewhere.
Felipe Arevalo:Yes.
Chase Peckham:How many people had weddings, vacations, all these things that, that were, were canceled.
Felipe Arevalo:Yeah.
Chase Peckham:Because of the pandemic and because they couldn't travel, uh, that now are looking at it like, you know what, let's go, you know, we, we want to get outta here. We've we suffered through this. We want to go do something normal again. And I know that, you know, even my wife who had her second, uh, vaccination four weeks ago is just like, yay, to be able to just go about our lives in somewhat of a normal fashion now. And that means looking at vacations, that means looking at traveling.
Felipe Arevalo:Trips!
:Going on trips and.
Felipe Arevalo:Going back to weddings, going back to, uh, doing birthday activities where you gather up your friends and you say, guys, let's go do, let's go do this. Let's go. Uh, and then let's go do whatever it is that you like to do usually takes money. Uh, but you know, going on a, on a, on a trip to, to visit family that maybe you weren't able to visit for the last year.
Chase Peckham:A hundred percent.
Felipe Arevalo:And you know, for those people who have families scattered across the country, maybe you had to travel. Had to cancel your travel pans. Plans in 2020, and now it's like, okay, we're going to make up for it. We're going to go for a week, uh, to wherever it is that that, that happens to be
Chase Peckham:Exactly. And the idea that, you know, can you imagine what Thanksgiving and the holidays are going to be like,
Felipe Arevalo:Oh, yeah it's going to be a busy travel season.
Chase Peckham:At airports. When it's normally a busy travel season. When last year we couldn't do that. Uh, people just didn't travel nearly as much, uh, because of the gatherings and, and that. And so people are going to be really pent up to do that. So the airline industry, as much as it's suffered, could be in for a boom, the, the, as much as the travel industry.
Felipe Arevalo:Car rental industry.
Chase Peckham:Car rental car rentals are very hard to find right now because when that all happened, we just recently experienced that my family finding a rental car in Florida was incredibly difficult. I mean, the lines in Florida were crazy because those fleets of rental cars that are normally there, they sold those all off,
Felipe Arevalo:They got sold off.
Chase Peckham:Yeah when they realized that we're not going to be renting cars. So now those fleets aren't built back up yet and manufacturing a vehicle
Felipe Arevalo:New cars are so expensive and that manufacturing is down. It's not like they can just replace them very quickly.
Chase Peckham:Correct.
Felipe Arevalo:Or cheaply. Um, yeah, the there's the car rental shortage. There's the everything that's buying. It seems like a, at some point higher ticket items are now the ones that are in shortage, you know, there's the housing shortage, uh, trying to buy a house at this point. It's like is Zillow broken? Because there was these houses here for sale yesterday, and now they're just pending. Yeah.
Chase Peckham:They are gone in hours and there are homes that are being sold. That aren't even being put on the market. It's just, they're quietly being put out there.
Felipe Arevalo:It says coming soon. And then when you see it, all of a sudden it's in escrow and you're like, how did I miss I drive by here every day? How did I miss the part where it went on sale?
Chase Peckham:Yeah. I mean, and there's a reason for that because stimulating the economy, uh, having interest rates being at all time,
Felipe Arevalo:All time lows.
Chase Peckham:All those people are refinancing their homes. And then, but I mean, and the people can afford more home because the interest rates are so low and eventually that's going to flatten out. Um, but as long as there's demand, you know, it is what it is
Felipe Arevalo:Right. Keeping up with that demand is going to it's happening in the housing market. It has been for the last year, but like you mentioned, that demand is going to hit the travel industry, the hotel industry. I mean, you can't even go, you know, because of regulations and things. It's not like if I wanted to this weekend, I could just grab the kids and go to the zoo because you need reservations to get into the zoo. Um, because they have limits on how many people they can have, but, but also just, you know, they're not as it all it's packed. There's always people at the zoo. Um, I don't know, during the week, during the week, it might not be as, as busy, but, uh, you know, travel and, and things that people have been putting off and now they get a chance to do it, or, and just even just the planning of it. And you don't even have to go on a trip now, but if you're planning a trip for the end of the summer or planning that your holidays as, as it starts getting closer to that excitement of it. Uh, and I just hope people remember their budgets a little when they're setting these travel plans.
Chase Peckham:Well and that's the point of this conversation, right, is because it's, it's, uh, it's twofold. It's kind of a weird thing. We want our economy to be stimulated. We want it to be fruitful. Um, it's better for all of us, if our economy is better, but how does an economy get better if we're spending money? Um, and we need to spend money at restaurants that are starting to get back in. I mean, the mom and pop shops that are in retail, the, uh, you know, travel industry, which we discussed hotels, uh, all those things that were really, really affected, uh, by the COVID-19 pandemic, uh, are starting to come back again and we want to stimulate those, those economies.
Felipe Arevalo:Right.
Chase Peckham:We want to stimulate the, the, those, those industries and yet, how do we do that without busting our own budget? And, and so that's the kind of thing that we have to ask ourselves. And, and one of the smart things to do is again, just say, okay, instead of just going out and, and saying, I want to go to Hawaii and I don't care what it costs, let's just book it because we got to get out of here. You want to take a step back and, and, and use, you know, there's the, there's the front frontal lobe part of the brain, which does the reasoning. Right. And I learned this this morning and I in a psychologist was in a presentation that we were watching. And then there's the midbrain, which is the fight or flight or the, uh, the, the part that makes you just, uh, obsessive right. Or compulsive. And then sometimes that compulsive brain can overlap, overtake the frontal lobe, which is all your reasoning. And we will just hit click and we will go, I don't care if, if we can get a flight on Southwest for$5,000 to go to Hawaii, when it normally would cost you a thousand, no, we have to try to peel that back.
Felipe Arevalo:You gotta be careful with the one click buy features.
Chase Peckham:Yeah. And just the, the emotions of it in, in realizing that look, we all want to change and get back to normal. We all want to go places and feel normal, again, feel like a human being, and that we're not in our houses 24 seven anymore. Um, but that can also, you know, our budgets are still going to be the same, you know, or our earning is the same, and unless you've gotten a new job or, or what have you, for those that didn't lose their jobs in my heart, goes out to those that did. And those that were, uh, in the service industry, who did have their incomes diminished, but now that they're coming back, we really have to be careful on, on busting the budget and,
Felipe Arevalo:Yeah. And, and just want people to be aware of that, that we still have to, you know, find restraint where needed. Does that mean that you can't go on your vacation or you it's just a matter of taking a step back, taking a deep breath, doing your research, looking at it like you would in normal times, Planning.
Chase Peckham:Planning ahead. That's really, that's all of it. Uh, because we're all human and our emotions are going to get away with us. And I will tell you, there's probably a lot of emotion that went in today, uh, that my 50th is coming up and that we have a bunch of friends, uh, for, for, for Kerri's 40th three years ago, we went to crash my Playa, uh, Luke Bryan's crashed my player in the Riviera. And so the pre-sale went on today for people, for alumni, people that have been before.
Felipe Arevalo:Yeah.
Chase Peckham:It went on sale at 10:00 AM, Pacific and Kerri got on at 10:00 AM, Pacific and King beds in a certain area were already gone within minutes. So you can tell people are like.
Felipe Arevalo:People are ready.
Chase Peckham:Let's get out of here! Yeah.
Felipe Arevalo:Well, if you had a vacation plan canceled in 2020, and you sat on that money, um, you didn't spend it on something else. And now you add your vacation fund from 2021 to the mix. You can go have a big vacation, or you can go have multiple vacations in 2021.
Chase Peckham:You can. And, but that's the thing is we're going to have to look at it, remember again, supply and demand and all those airline, uh, when we were looking at it during COVID and we looked at the, you know, it was cheap. We could get fairs for,
Felipe Arevalo:Right.
Chase Peckham:I mean, ridiculous amounts. And, and now we're starting to see those go up again and, and, and, you know, unfortunately rightfully so because they were hurting, you know, and, and so supply says, we're gonna ha we can change. We can charge a little bit more. So take that into consideration. We're seeing, especially here in California, and I, I'm not sure the rest of the country, but we're seeing gas prices get back up to pre COVID, where we were down to$2 and 45 cents. At one point I just bought gas the other day at$4 and 75 cents. So the idea, you know, when I got to fill up my car with$80 worth of gas again,
Felipe Arevalo:Right.
Chase Peckham:For a full tank that hurts, that's not something we can just go do.
Felipe Arevalo:Right.
Chase Peckham:So those, you know, what's opening up again, u h, sports right now, we're starting to travel for those things. Again, we're seeing more tournaments.
Felipe Arevalo:Youth sports.
Chase Peckham:Especially those organizations that are feeling like, you know, we need to give our clientele, their money's worth. And so now we're like, okay, we didn't get to do tournaments for so long. We're going to do a lot. Now, all of a sudden you're going, Whoa, that's a lot of extra money that we weren't counting on it. So, yeah, it's, it's, there's so many of these things that we ha you know, it's exciting to be back and getting back to normal, but we gotta realize that, you know, the money's not going to just keep falling off trees, even though it feels like it.
Felipe Arevalo:Right. And then, and then people in 2020 and people were paying off debt, and we have to remember that some people were receiving those stimulus checks and that's added income that won't be in your 2021 budget, aside from the stimulus, the most recent stimulus check. Um, but you know, there's probably not going to be a fourth one, and there's probably not going to be anything after that. So then at that point, you have to take in, take that into account and just, you know, realize that maybe I did so good in 2020, because if you were lucky enough not to be, to lose your regular income, plus you got into that, you've got that added income. You know, now it's like, that's how you were able to make progress. And I think it's going to be important to try or for, for many people to try and find that sweet spot where you can get back to doing the things you want to do, but if you were struggling financially before the pandemic, and then all of a sudden you were doing good financially and, and paying down the debt that you had accumulated beforehand to try and find that middle ground.
Chase Peckham:Yeah.
Felipe Arevalo:Where you can go back to doing things, but go back in a very controlled manner where you don't erase all the progress that you made in 2020. Um, and, and yeah, planning a vacation and go do the things that you like to do. Always remembering to stay within, you know, planning ahead and saving and doing all that, that, that goes along with it. Um, whether it's a big purchase, uh, or, or whether it's a small purchase, but, you know, and getting creative. And, uh, you now know that you could potentially stick around your house all for a whole month and you'd be all right.
Chase Peckham:Yeah.
Felipe Arevalo:Maybe cut down your small little adventures to make one big adventure. Uh, you know, if we have kids maybe instead of going every weekend to a small little thing around town, you save up for a couple of months and you go to Disneyland, um, you know, or, or something like that. You can stay within your, your budget, your budgetary restraints, uh, without throwing away the progress that so many people made in 2020. Um, but I am excited to get back out there and get to doing more things. I think it's, and maybe you have a, an area maybe you live, we're lucky here in San Diego, there are genuinely free stuff that you could do that are fun. I mean, we can go to the beach, uh, people pay to go vacation at the beach. I mean, you have to be a little brave to get in that water. It's a little cold still, um, or have a wetsuit or something, but, uh, you know, taking advantage of the, of the fun things that maybe you weren't able to do, that aren't that expensive, um, or take advantage of, uh, what's in your area instead of going on a trip. And if you're going to spend money, maybe you do a staycation and you help your local economy by staying local to where you are and staying at a local bed and breakfast, or a local small hotel that's in your area that maybe has struggled for the last year and doing things in your, I know I've seen commercials and things are encouraging Californians to vacation in California. Um, and I'm sure other States are doing the same where, you know, we can vacation here. Um, so maybe it saves you a little money and it helps your more local economy as well, potentially. And we're lucky here in California, there's tons of stuff to do. I mean, you can drive, you can do a lot of things in San Diego or LA is just a short drive up the freeway and they got a ton of things you can do also.
Chase Peckham:Yeah. I think staycations will become a really big thing. I know that like San Diego there, if you look at ads are pushing, you know, stay close, stay close by, and that, and that can save you a lot of money. I mean, there's a lot of places that you can go within your town or close to town and just feel like you get away for a couple days, lay by the pool, lay by the beach, whatever it might be. And it still might only be 15, 20, 30 miles from where you live.
Felipe Arevalo:Right.
Chase Peckham:Um, and that can save a lot of money when you're talking about travel and everything else. So that, that is a smart thing to do. Uh, and it can still be, you know, safe. You don't have to feel uncomfortable by walking through an airport, even though I can tell you walking through the airports, they've done a really, really good job of keeping people separated, um, and keeping people pretty healthy. Um, but still, there's going to be a lot of people that are just uncomfortable with that still. And I think that's going to linger, um, talking about the different ways that people shop going forward, that we learn how to do, uh, with COVID, uh, with the pandemic, as far as like curbside pickup and drive throughs, uh, and, and delivery services. I think beyond the fact that, you know, it was safer. I think a lot of people learned that it's very convenient. It
Felipe Arevalo:Is. It is. I know, I know,
Chase Peckham:Especially with young people, you know, young people, they only know what they know younger people are gonna be like, this is great.
Felipe Arevalo:Or for us with young kids, um, like if I'm, if I need, uh, five things from target, for example, pre COVID, I literally just stopped on the way to, on the way, uh, from work or if it was on the weekend, I had to grab the kids gone to target, picked up. How many times do you pick up more than those five items that you need?
Chase Peckham:Right.
Felipe Arevalo:You know, I need a toothbrush toothpaste and this and that. And then you go in there and you start walking around and you're like, Oh, maybe I do need this. And maybe I do. And then the kid says, Oh, I want this from the buckets in the front. Um, and, and now this is something where if they keep curbside pickup, I can go on their order. My five items, I get an email telling me it's ready. And then I just tell them I'm on my way. I park, I don't know if they get the kids out of the car. Uh, it saves me time and it makes it so convenient that I could see myself continuing to do that and not browse the aisles.
Chase Peckham:And it's healthier.
Felipe Arevalo:It's yeah. Aside from, maybe you gotta the extra steps, you gotta find somewhere to make them up. But, um, it's just so easy to do. Um, and, and honestly, to get my, my two year old in and out of the car, you know, he he's at the age where he wants to do everything himself. So now I gotta sit there for five minutes and watch him struggle with the buckle of the car seat. Um, and if I could avoid that and just have him like, look, buddy, keep an eye out for the target person. Okay.
Chase Peckham:And he is also at the age were he is grabbing everything in the store. And he wants everything,
Felipe Arevalo:I can entertain them in the car instead and save myself that in and out process of the car and, and having to tell them, try to explain to them though, we're not going to get the candy. We're not going to get this. Um, it's changed the way things happen. Like I was seeing earlier today, uh, just right now that, uh, Chipotle did really good this quarter, uh, because their online sales have now overtaken their in-person sales.
Chase Peckham:Yeah.
Felipe Arevalo:That's a trend.
Chase Peckham:You mean the walk up pickup?
Felipe Arevalo:Yeah. That's a trend that could continue. It doesn't cost you any more money. Um, you know, I could see that just kind of being a permanent change in the way people shop in the way people, uh, do things.
Chase Peckham:Yeah. And it speeds up our process too, instead of waiting in line, uh, just being at Chipotle a number of days ago. Cause my kids love it. Um, you know, the social distancing, the line to get in there was back out the door. Um, and now it moved a lot faster than it seemed like it was going to because it was indoor, but there were a couple people that ordered online, walked in, got their stuff, walked out and.
Felipe Arevalo:Yeah.
Chase Peckham:But again, and those online things that, that could be dangerous, you know, it's very, they make it very, very simple for us to shop and go get food. And you know, the kids, our kids are really pretty smart and they, you pick them up from school and they're like, Oh, you know, dad, we Chick-fil-A is right there.
Felipe Arevalo:If I order now.
Chase Peckham:You can just order, it will be ready. Yeah. And you know, we, we, we, as a family had this conversation that the kids are going back to school, uh, that both from a health standpoint and from a financial standpoint that we're not gonna eat out nearly as much as we did. And, and I know that we bent over a little bit. Um, we bend bended, um, and we ate out more because there just wasn't a whole lot of excitement right there wasn't.
Felipe Arevalo:Right.
Chase Peckham:We felt bad that our kids were going through.
Felipe Arevalo:What else are they going to do.
Chase Peckham:Right.
Felipe Arevalo:Let them enjoy the food.
Chase Peckham:Exactly. And that's not necessary. I don't know if that was right or wrong. And I guess we'll find out what the impact of this entire thing is, you know, over the next several five, 10, 15 years, sociologists will have some studies of what the impact of this pandemic had on our society. Uh, I, I don't know if any of us can figure that out now, but the idea that we've want to get back to normal eating wise as well, restricting the budget a bit when it comes to eating out. And again, it gets back to what we talked about at the very beginning, is it, you know, you want to help our economy.
Felipe Arevalo:Right.
Chase Peckham:But at the same time, we all gotta be healthy and we have to pick and choose what we do.
Felipe Arevalo:Yeah. And, and maybe that eating out or ordering in budget then turns into, let's save it for a little bit and let's go do a bigger activity, uh, some place down the road or something we don't get to do as often, uh, you know, to still get that adventure feeling.
Chase Peckham:Yes.
Felipe Arevalo:Um, and, and, and as you mentioned in the, in the eating out category, you eat better when you make it yourself for the most part, maybe not as delicious, but usually healthier.
Chase Peckham:Most definitely. Yeah, most definitely. I mean, I think as, as we get further and further away, uh, as we get into, um, herd immunity, um, as, you know, people get vaccinated, uh, and things open up in normal again, uh, I believe June 15th, California, said they're opening everything up completely.
Felipe Arevalo:Yeah.
Chase Peckham:It'll be back. It was back to normal as far as at least.
Felipe Arevalo:Minus masks.
Chase Peckham:Yeah minus masks, Yeah. And who knows how long that lasts, but at the same time, I'm all right with that. As long as I can go to a restaurant.
Felipe Arevalo:Right.
Chase Peckham:And hang out and feel safe doing it.
Felipe Arevalo:Yeah.
Chase Peckham:You know, and I think that's what most people are going through. Uh, it's just that, that yearning for normalcy yearning for being able to experience the things that we used to experience, uh, and not busting our budgets and still being safe. So I think there's a lot to that. And, um, as we go forward, we'll have many more experts to discuss these kinds of things, uh, smarter than you and me.
Felipe Arevalo:Yeah.
Chase Peckham:Um, but, uh, you know, Phil, I, I commend you on how you and your family have handled this entire thing. As we have done this virtually, uh, and our entire staff at the San Diego Financial Literacy Center in DebtWave credit counseling, um, the way they handled things, the way that our leadership, uh, handled, uh, getting everybody at home, working from home and still serving the community like we do, uh, it's been an impressive feat.
Felipe Arevalo:Yeah. Thank you. It's definitely was a learning experience at the beginning.
Chase Peckham:That's for sure.
Felipe Arevalo:As much as we like technology, um, definitely a learning experience, but I think it, it, we've learned some things and we've actually learned some things work better, um, you know, with, with the technology and the things that we've, uh, learned along the way. So it's definitely been, uh, 20, it still feels like last year was 2019.
Chase Peckham:It really does.
Felipe Arevalo:2020 was just, uh, it was just a different kind of year. Um, but, uh, you know, as 2021 progresses and more and more people, and then you start to know more and more of your friends and, and people around you also start to get the vaccine and then it becomes more like, okay, now, Hey, I can go hang out with them and not have to worry about it. And we can have this group in that group, in that group that maybe we're hanging out with each other All of a sudden hanging out in a bigger group.
Chase Peckham:Yeah. And I know a lot of groups that did that, that were sequestered together, that kind of became those COVID families, that kind of pod, so to speak. Now they're talking about going on big vacations together. So, I mean, there is some other stuff, you know, friendships and relationships got much stronger through this whole thing. And as life slowed down, as they speed up again, I think people are going to take a step back and really appreciate the finer things and nice little, little, little things in life here. Like relationships there that we might've gotten away from, uh, and really focusing on family[inaudible].