Bad news, everyone. Inflation is still high. January’s Personal Consumption Expenditures price index, the Fed’s inflation gauge, came in at 5.4% higher than a year ago. The Fed will continue to raise the interest rate to bring inflation under control. Despite their best effort, everything is still getting more expensive every day.
However, high prices aren’t fazing American consumers. We are spending like crazy! This will fuel the economy and keep prices high. It’s simple. If demand is high, businesses will charge more. Eating out is crazy expensive, but all the restaurants are packed. Prices will go up.
NPR did a good story on this, but I want to give it a personal take. Yes, the RB40 household is part of the problem. We are going to Disneyland! This trip will cost more than our 12 days vacation in the Maldives. The price is ridiculous, but we’ll do it anyway. See why we are spending like crazy along with many other American families.
Strong labor market
The job market is still very strong. The unemployment rate is just 3.4%. That is super low. It seems like anyone who wants a job can get one. When you have income, you don’t worry too much about spending.
Mrs. RB40 took a sabbatical last year. She loved it but decided to go back to work for 4-5 more years. She still enjoys her work and she likes making money. Her job is secure so high prices don’t really bother her that much.
On the other hand, my income is much lower since I retired from my engineering career. Over the last few years, my blog income has been dropping and I haven’t been able to find a good side gig. I’m a lot more sensitive to inflation than Mrs. RB40. I don’t even want to step out of the house anymore.
Like most married couples, we joined our finances so we have to find a middle ground. Since Mrs. RB40 is bringing home the bacon, her vote has more weight. As long as she has a good income, she wants to splurge occasionally. I’m fine with that. Our passive income is still increasing so that takes the sting off a bit.
Inflation
Another big reason why Americans are spending more is inflation. Everything is more expensive so we spend more even if we buy the same stuff. Groceries, utilities, transportation, and entertainment are all more expensive this year. We are all spending a ton of money on just the necessities.
Also, Americans want life to go back to normal after being stuck at home during the pandemic. We want to have fun again. I feel the same and splurged on a trip to Disneyland. For the three of us, our 2-day tickets to Disneyland cost over $1,000. The flight to CA during spring break cost $1,600. Two nights at the cheapest hotel near the park cost $500. I’m pretty sure food will be very expensive in the park too. This same trip would have cost much less just a few years ago. The travel and leisure industry is making up for the lost time.
Today, Americans are splurging on experiences even if they cost a lot more. The pandemic showed us that life is short. We only live once so we might as well enjoy it, right? Who knows what can happen next? Besides, RB40Jr is 12 years old now. We want to take him to Disneyland before he’s too old to enjoy it.
The good old days
Disneyland used to be an affordable experience for everyone. My dad took us there when we immigrated to the U.S. in 1986. Each ticket was under $20. Even poor immigrants could afford that price. We visited several more times in the 80s and 90s. Back then, Disneyland was the place to go when you visit California.
Mrs. RB40 grew up in Southern California and visited Disneyland 10+ times when she was young. She was part of her high school band and they performed at the park once or twice every year. They’d play a few songs and get the rest of the day to roam the park for free. Wow, that’s awesome!
Mrs. RB40 and I had great childhood memories at Disneyland and we want our son to experience it at least once. Unfortunately, Disneyland is becoming unaffordable for many Americans. The ticket price has risen more than inflation nearly every year. However, people who visit Disneyland want their children to experience it too. And we’ll pay whatever it cost. Many families will need to save up or put the trip on credit cards, but they’ll do it to relive the good old days.
Fortunately, we’re wealthier now and can afford to splurge occasionally. But this probably will be the last time I visit Disneyland. For the same price, we could have a lot of fun in Argentina, Vietnam, or some other exotic destinations.
Spending like drunken sailors
American consumers have switched from spending money on stuff to spending on experiences. The travel and leisure industry is taking advantage of this shift and jacked up the price. We don’t like high prices, but we’ll still pay for it because we want to have fun now. Why wait? A trip to Disneyland probably will be a lot more expensive in a few years and our son will be too old for it.
As long as the labor market is strong, Americans will continue to spend like crazy. The Fed will need to put the kibosh on the economy to slow down consumer spending.
What about you? Are you spending like drunker sailors too? Or are you smarter than that?
*Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. It’s been working so well that I’m planning to sell our rental condo so I can invest more. Go check them out!
Disclosure: We may receive a referral fee if you purchase or signup for a service through the links on this page.
Image credit: Bermix studio
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
Latest posts by retirebyforty (see all)
- Make Your Partner Happier by Being Cheap - March 26, 2023
- 4 Ways to Avoid The 10% Early Withdrawal Penalty - March 22, 2023
- Goodbye SAHD FIRE, Hello Barista FIRE - March 19, 2023
- Don’t Stop Investing When SHTF - March 15, 2023
- Pack Your Bags for A 3-Year-Cruise - March 12, 2023
I have 5 kids and I think we are done with Disney for now. We’ve gone multiple times in the past /before Covid. It was expensive but ok. We were happy with it. But the current price increases are just too much. For reference, I’m a sub-specialty surgeon. A trip to Disney with the family will now cost about $8000 (park + hotel) for a long weekend. This does not Include $500/day for the new Genie+/lighting lane (We used to enjoy 3 free fast passes but that is now = (29+20+20) *7)
I haven’t even added transportation and food.
We can make it cheaper by staying off Disney and waiting all day in lines. Or we can go camping/hiking/biking in a national park and still send the kids to college.
So we’ve said goodbye to Disney.
Ouch! I can understand that. A Disney trip for a big family is quite expensive.
Trying to re plan a 2020 trip. Prices seem higher but as we all get older, if not now…when will we go?? And as for other spending it seems unavoidable. Groceries and other general supplies cost what they cost. I save well so there’s only so much I can do.
I’d say I’m spending like a tipsy sailor, not a drunken sailor (ha!). Last year we saved 40% of our income despite spending $10k on travel and this year we’re looking to do the same.
You’re certainly well-positioned enough to splurge on a Disneyland. Hope you and your family have a great time!
Great job saving 40%. We spent a lot of money on travel last year too. This year we’re only going to Disneyland. After that, it’ll be road trips and local sights. We spent too much time on the road last year. This year, we’ll stock closer to home.
Great article. I’m somewhere in between. I eat the same keto crap so my grocery bill, annualized, is negligible. Other than that, like many dudes, I buy replacement parts like jeans, sock, shoes but always on sale.
However, I love to to travel and do it cheap. In early Jan I snagged tix to Japan for lil over $500 RT for this OCT. I’m a nimble, single guy with the same type of gf so we can spend without getting drowned. I also recognize I’m an anomaly.
Oh wow, $500 RT for Japan is fantastic. Enjoy it! We can’t really go during low season anymore because our kid needs to be in school.
We’re going to Disneyland in mid-late March – maybe we’ll see you there. We usually go to Disney World, but we are switching things up to see some friends out on the west coast and go Universal’s new Super Nintendo World.
I didn’t look at prices too much. My wife can get military discounts for the park passes, so we’ll save a little money there. We have some flight vouchers from when Southwest messed up a flight last year. My wife may have gotten a government rate on the hotels. So we’re saving money in a lot of ways, but it probably just fights back inflation to the old days. We’ll take it!
Like you, we’ll probably mix outside the US destinations going forward and driving vacation amusement parks like Six Flags (or Hershey Park, which is a favorite for us).
Cool. I’ll DM you and see if we can meet up. It’s great that you can save money with discounts.
This trip will be quite expensive for us.
Still working past full retirement age so I can spend on the things I want, which to be honest aren’t many any more. I help my kids and grandkids. Maybe a trip to Japan one more time.
That’s great. Work keeps you active and the income is nice.
I’m no drunk sailor, but I’m also not too concerned about spending money on experiences. I started a mini-retirement over a year ago, and this year, we will be traveling more than last.
However, I don’t waste money on things that bring no joy to my life.
I am surprised by how many people seem to be spending freely during inflation. Lots of people complain, yet they still spend and spend.
I hope they have their finances under control, but in my heart, I know most people are financial trainwrecks.
We traveled a lot last year. This year, we’ll go to Disneyland and then travel locally. Camping and road trips are much cheaper than flying to a destination for now.
I, too, am surprised at how many Americans don’t seem to bat an eye on discretionary spending despite price increases. Airports, hotels, shopping centers, restaurants are packed. Even going to an appointment on a random Thursday morning, the mall parking lot is packed!
I’m wary about all of this, and naturally if I can’t get a good deal, I’m not going to get swindled by greedy companies! Camping and short road trips are good enough for now. Maybe people are getting FOMO and don’t mind paying crazy prices for Disneyland while waiting in huge lines and dealing with crowds. I agree, was much better back in the day!
I think we’re still in the post-pandemic phase. A recession will bring everyone back to their senses.
We’ll go camping this year too. Road trips and camping will balance out our travel expenses.
Hey Joe! I consider myself a very frugal person and we are DIYers to a fault. But inflation continues to make it feel impossible to make gains even while taking advantage of the “free” things in our area (DC Metro). One thing we will not skip is travel but it done on the super frugal. Interesting to see folks spend like there is no tomorrow. It will catch up to everybody eventually. Saving isn’t hip or glamorous and is ultra boring but I remind myself that if I stopped saving or stopped seeking out free or almost free things than I am really in trouble! Enjoy Disneyland and let’s see you recreate some of the famous Disney dishes on the cheap when you get back! Keep up the good work. We all need the continued motivation!
I think DIY is the only way to beat inflation. Hiring any skilled worker is so expensive these days.
We’ll save after we come back from Disneyland. No big plan after that.
We never ate in the park when I was a kid. We took sandwiches and other things from home.
Not sure what we’ll do this time. I’ll ask Mrs. RB40.
We have some friends who just got back from Disney World last week. They have 4 kids and knew it was going to be expensive going into this. I’m looking forward to getting together with them next week to hear what the final tally was for this trip. 🙂
We’re continuing to spend money on travel, but we’re pulling the reigns in a little this year. We’re still planning on 4 trips so no complaints, but we’re being strategic in keeping the trips pretty low-cost.
I know it’s expensive, but I’m sure you guys will have a blast at Disneyland!
Wow, 4 kids. This will be our only big trip this year. We’ll take road trips. Next year, we’ll fly more.
Have fun at Disneyland! We were going to take my 12-year old too, but then we saw the prices! We decided to go to Six Flags and Sea World in San Antonio instead. We just want to enjoy some vacation time before he’s a teen and no longer wants anything to do with us!
Although I have to admit, the Marioworld addition to Universal Studios is extremely tempting! We may go to California next year!
It’s crazy how expensive Disneyland became. A regular family would be better off visiting Mexico or some other countries.
Six Flags is good too. We’ll take our son when he’s older.
Hi Joe, spending is good for the economy. It may not be good for the people who spend but really can’t afford it.
I think it’s after-the-Covid syndrome. People have to make up the travels and funs that were missed in the last 3 years.
Even a homebody like me, I traveled much more last year, and plan to do the same this year.
Have fun in Disneyland!
Disneyland is our big splurge this year. We’ll take road trips for the rest of 2023.
Camping is still very affordable.
Thanks!
I retired seven years ago and have done all kinds of part time consulting since then. I cut back to near zero work a couple of years ago but still get frequent offers without soliciting any of them. However, I was very intentional in developing some niche skill sets during my working years just so I’d have the credentials and contacts to do some consulting. The people I know who retire and then try to figure out some kind of part time lucrative side gigs haven’t had the success I’ve had, and I chalk that up to a lack of planning on their part. I spent decades setting up my retirement part time work opportunities, and they did not.
Not sure what you said has anything to do with the post. But anyways, you didn’t retire, you went from working full time to part time.