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View Full Version : How Does a Recession Hurt ME?


Green Tea
01-22-2008, 04:06 PM
I hear the news, and am interested in how the economic downturn, I'm not calling it a recession yet, hurts the average family. What changes on a day to day basis? What hurts the most? What changes occur in an average family during such times?

starwood
01-22-2008, 04:35 PM
As for me, everytime the fed lowers the interest rate the interest I get on my ING and HSBC accounts drop. I was getting over 5% before this whole thing started and I'm sure in a day or two I won't even be getting 4%.

Toby'sFriend
01-22-2008, 04:39 PM
Do you have kids in Public school?

Everytime the economy tanks state and local budgets get hit HARD. When people make less money they spend less money, income tax collections and sales tax collections go way down.

School budgets get really tight during these times.

Then you have declining property values, declining 401k values

Businesses go bankrupt. Services such as Doctors Offices, Hairdressers, local restaurants --- gone.

fakereadhed
01-22-2008, 04:50 PM
What changes occur in an average family during such times?

You or your spouse loses their job, then you lose the house, etc. Move to my area and you'll understand. :sad2:

SaveTheSeaTurtles
01-22-2008, 04:51 PM
Hi. I just wanted to throw in my two cents. (Great subject, btw!)

I am in the construction industry,employed as a purchasing manager. This was a part of the economy that saw a huge downturn before perhaps some other areas. We build new residential homes. I have many friends - well qualified & well-respected in the industry, who are now out of work and have been for several months because the market is not there to support new homes being built. When housing suffers, there is a fallout to other people not directly connected to residential housing but they feel it too. Suppliers, fabricators, contractors (just think about all the parts and pieces that go into building a house!), transportation industry - all of their families are feeling it. It is a domino effect.

The fortunate builders are the ones that did not "go crazy" with the boom that we experienced for so many years, limiting their land position exposure. The custom builders will survive - if they can keep a min. of contracts coming in. Many buyers created problems for themselves when they signed contracts for mortgages that they could not afford. Our industry is much more affected here than in other areas of the country that perhaps did not experience the high volume of sales that we were fortunate enough to have for many many years. So many people want to live in the warm climates...

The media, I think, is partially responsible for creating a small ripple of panic at the moment, but that is what the media does best. No one can argue, though, that things have hit a downturn. People just need to limit their spending, don't buy what you cannot afford and use this time to decrease your debt if you have the means to do so. Too many people are so worried about keeping up with the latest trends and what their neighbors are buying that they overexpose themselves and increase their risk.

Many people do not know if they will have a job next week - and that is scary. Homebuilders are cutting back, paying less and expecting more just to keep the doors open & stay alive. Some companies have already gone under and others will follow. We are all cutting back on spending - because we have to.

I hope there is a turnaround soon. Our industry is predicting it will not recover until 2010. I pray they are wrong. :confused3

Kay1
01-22-2008, 05:02 PM
This feels more like stagflation to me because of the high food and gas prices. Because of the high prices, this would be a very tough time to become employed or lose income.

It's a good time to save as much as possible so we shaved 5 days off our usual vacation. I'm also going back to "black belt" savings at Publix. No more bleu-cheese-stuffed olives for me!

Dory's Twin
01-22-2008, 05:11 PM
higher gas prices, food prices, home heating prices, water prices (okay, utilities in general) take most of our discretionary income....

we have to give up on eating out, traveling, cut back on our clothing purchases, fun times out, I stick very close to a food budget...extras are out...

All the things we cut back on have a ripple effect to others....

MyGoofy26
01-22-2008, 05:17 PM
Good question. I keep reading and hearing about this, but I'm not "feeling" it, you know? I'm interested in all the responses.

I know there are things that do affect me (higher costs) but I just started my first "professional" job since college last year and last week got my 2nd raise already, which means my income is increasing quite a bit with the cost of living so I'm not feeling it like others. And since I just started putting money into a 401K, I don't have a lot to lose. It's dropped $5 total, and I'm still up from what I've paid in so far. I'm sure I'd be more panicked if I was talking about tens or hundreds of thousands invested like some people.

Maybe some of those that are better with this can jump in, but it seems like this could be turned to a positive for someone like me. With the housing market taking a dive, it seems like I could save for the next couple years and sort of "take advantage" of the situation? The fact that all of this hasn't really affected me financially seems like I could spin it in my favor. Or is that wishful thinking?

I'm feeling pretty good about my job too. We're actually seeing more work and money lately. I'm the whole billing/accounting department and our recievables are up 50% (for a few months it doubled) and now that the holidays are over, we're getting booked up again. At one point last week I had $0 in payables - and the week before when it was only a couple thousand, the owner said she hasn't seen that since 1994. To compare, we had about $70,000 in payables when I started. Also got a few of the company credit cards paid off or way down in the time I've been there. So it seems like this downturn isn't working its way to us (yet) . . . it's a court reporting agency and lucky for us, people never stop suing, LOL.

Disneyoverload42
01-22-2008, 05:33 PM
Cost of goods are higher - but actually gas where I live is down to 2.84/gal - I already live WAY below my means (thanks to debt out the wazoo) so maybe I don't see it as much as someone who regularly spends $100 a week on groceries or regularly buys clothes/furnishings etc. I haven't had disposable income in years :confused3 My retirement investments are so little and I'm young enough to recoup - plus I'm a long hauler ;) I don't care what the market does today or tomorrow - it's 15 years from now that I'm thinking about.

I personally think that it is more media hype and bad personal finances (which the gov can't do anything about anyhow) than anything. No matter what the government does, it won't help the person who has 1/2 their income going to car payments, 1/3 going to a house payment (probably interest only) and spend the remainder on credit card payments. Money is finite. This seemed to get kicked off with the acknowledgement of the subprime loans crisis where people really couldn't afford the houses and the banks finally realized it.

If we go into a recession/depression, we'll get through it - our grandparents did (although they didn't have debt). We'll trudge on with extra jobs and cutting back and going back to basics. What else can you do? I refuse to live in fear of something that hasn't happened yet.

<ok, the soapbox going back under desk - somehow keeps scooching it's way out...>

bdcp
01-22-2008, 05:39 PM
I just wish some people wouldnt' panic. Interest rates are historically low even before today's cuts and unemployment rates are still very, very low. People panic and start cancelling extras, trips, etc and it dominoes which makes things worse. Gas prices have been high for over a year yet some are talking like this is new. Property taxes went really high a couple of years ago and utilities have always raised prices. I guess I just don't see the sky falling, but i do see the Media having a field day. We're in a home we've been in for 4 years and that we put 20% down on and have seen an increase in price before the drop and we're still ahead of what we started with. My DS(24) is looking to buy and the readjusment of prices is great news for him and other first time buyers. The mortgage companies didnt' cause the defaults on loans. People who took on loans they knew they could never afford if rates rose caused their own problems by buying a lot more home than they could really afford. It's not the government's job to rescue people because they make stupid decisions. Long term, the stock market will make money. It always has.

Homebuilding has always been a volatile career field. I doubt there's anyone who's been in the field for 25-30 years that hasn't been affected over the years. Everything is cyclical. You just have to prepare for it the best you can.

I saw an economist today who said the fed needs to back off and the government needs to stay out of it because the economy needs an adjustment and it will take care of itself. The government cannot fix the free market economy we live it. They just muddy the waters.

Disneyoverload, can I join you under your desk?

What are we doing?
01-22-2008, 06:05 PM
I personally think that it is more media hype and bad personal finances (which the gov can't do anything about anyhow) than anything. No matter what the government does, it won't help the person who has 1/2 their income going to car payments, 1/3 going to a house payment (probably interest only) and spend the remainder on credit card payments. Money is finite. This seemed to get kicked off with the acknowledgement of the subprime loans crisis where people really couldn't afford the houses and the banks finally realized it.

If we go into a recession/depression, we'll get through it - our grandparents did (although they didn't have debt). We'll trudge on with extra jobs and cutting back and going back to basics. What else can you do? I refuse to live in fear of something that hasn't happened yet.

Well said.
I just wish some people wouldnt' panic. Interest rates are historically low even before today's cuts and unemployment rates are still very, very low. People panic and start cancelling extras, trips, etc and it dominoes which makes things worse. Gas prices have been high for over a year yet some are talking like this is new. Property taxes went really high a couple of years ago and utilities have always raised prices. I guess I just don't see the sky falling, but i do see the Media having a field day.
The media seems to be generating this crisis.

Yeah, there are some lenders and insurance companies that are losing a lot. Yet, they're the ones offering and insuring the interest only loans. They knew it was risky for their borrowers and the lenders still were making the loans.

Then, we have the "poor" borrowers that bought houses that they couldn't afford on the expectation that the real estate market would continue to boom. They gambled and lost. There are exceptions of people with sad stories, but policy shouldn't be written on the exceptions.

The politicians are throwing our money at the problem because they want to be re-elected in November. People are learning that if they whine enough, the politicians will try to fix it for the votes.

Remember, the unemployment rate (5.0% in Dec 2007) is still very low (comparable to the early 1960's) and nowhere near the 10% of 1982.

For a list of historical unemployment rates by month see

http://research.stlouisfed.org/fred2/data/UNRATE.txt

Inflation hasn't been that bad compared to historical data either

http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=0

I lived through the 70's and 80's. I'll manage through anything that comes.

JoyG
01-22-2008, 06:06 PM
We're feeling pinched b/c my salary has only gone up by $10 a week in the past 4 years.

The tuition at my kids' school went up $400 a child this year, and it's going up another $400 per child next school year. We might have to pull them out after this year. If they loose more families, that will affect tuition even more.

dvcgirl
01-22-2008, 06:26 PM
I think this is a great idea for a thread.

First of all, I do agree that this thing is in the media, and it's here to stay. And that will affect spending. People will cut back and that would affect growth. However, even if the "R" word was never out there, the poop would hit the fan sooner or later. We're in the middle of round two of a serious credit crunch and that in itself is enough to throw us into a recession. I've heard people say that if the media didn't hype the housing bubble was about to bust that it never would have happened. As if houses would just keep skyrocketing in prices until the end of time. Same thing here.

The 2007 Q4 retail numbers were pretty bad, and that's before the "R" word was out there in full force. Of course, they wait until *after* the holiday shopping season for that news ;). The fact is that this was the worst holiday season in 5 years. And the concerning part of that fact is that while people spent less than the experts projected, their credit card debt, and the number of credit card defaults increased dramatically. That tells me that budgets are tight, and that maybe people are using credit cards more than ever to pay bills and buy necessities. All of this means that there is a fair percentage of people out there who are tapped out. Remember, consumer spending is 72% of the GDP. If consumer spending drops by just 1%....it's a big, big deal. But doesn't that make you think that this insanity has to end. We can't just keep taking on more and more debt, save nothing and spend more, year after year after year.

The key to how bad this whole thing will be from everything I hear is the jobs situation. I hear the bulls say that corporate America isn't overstaffed like they were in 2001. So there shouldn't be lots of layoffs.....not a lot of hiring either, but if we can avoid lay-offs, that will sure help. If the consumer really puts on the brakes, and that hasn't happened in awhile, then more jobs will be lost and this will be a deeper recession.

Another serious factor this time over 2001 is not that this could be a consumer-led recession, but also that we have the highest inflation that we've seen in 17 years. And *that's* why there's panic in the air.

My other point is that while things may feel okay now, it takes time for the effects to trickle down. When the tech bubble burst and we went into recession in 2001, lots of jobs were lost right away, but my DH didn't lose his until 2003...which is when the market bottomed.

lastminutemom
01-22-2008, 06:33 PM
Clark Howard often talks about how diverse the American Economy is and how certain industries have been in bad shape for a long time (car manufacturing for example, maybe) and others have hit a bad spell (homebuilding, real estate, some sectors of the finance market), some won't be impacted as much.

My husband and I own a business that does over 50 percent of its income overseas. We are doing great, cause our customers are actually spending more... cause their money seems to go further, but our costs are fixed. Anyway, we do have a couple of employees overseas that we have had to raise their salaries to compensate for the decline of the dollar, but we are still ahead.

On a personal level, I do notice that groceries have gotten much more expensive...

camdensmom
01-22-2008, 06:48 PM
It'll be interesting to see what happens after people get their tax returns Typically that is when a lot of frivilous spending occurs (esp. vacations).

As for how it effects me...

My husband's company recently relocated and the commute is now more than double. However, we now view it as him not having an option to look elsewhere because you don't want to be the "new hire."

Green Tea
01-22-2008, 06:56 PM
The school budget comment is interesting. I wouldn't have thought about that. Our system seems to struggle anyway so no telling what a downturn might do to it. The construction industry scenario does seem frightening.

What makes things like mortgage interest rates go sky high? Seems like a bad economy would, but today rates drop again. Is that where the government trying to fix things comes into play? Rates would be going up naturally if not for things like these key interest rate cuts?

dvcgirl
01-22-2008, 07:05 PM
Well said.

The media seems to be generating this crisis.

Yeah, there are some lenders and insurance companies that are losing a lot. Yet, they're the ones offering and insuring the interest only loans. They knew it was risky for their borrowers and the lenders still were making the loans.

Then, we have the "poor" borrowers that bought houses that they couldn't afford on the expectation that the real estate market would continue to boom. They gambled and lost. There are exceptions of people with sad stories, but policy shouldn't be written on the exceptions.

The politicians are throwing our money at the problem because they want to be re-elected in November. People are learning that if they whine enough, the politicians will try to fix it for the votes.

Remember, the unemployment rate (5.0% in Dec 2007) is still very low (comparable to the early 1960's) and nowhere near the 10% of 1982.

For a list of historical unemployment rates by month see

http://research.stlouisfed.org/fred2/data/UNRATE.txt

Inflation hasn't been that bad compared to historical data either

http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=0

I lived through the 70's and 80's. I'll manage through anything that comes.

And I think that's a good attitude to have....we'll all get through this. It will be tougher on some than others.

But to say that this is just a couple of banks and some insurance companies that over-leveraged themselves....well, I think that is underestimating the problem here. This isn't just some banks making bad loans....this is banks making bad loans, then bundling them all together and throwing them out into the market to be sold as securities. This spread the pain throughout the economy. This is different from the early 90s when it was mostly corporate real estate that deflated.

The companies that insured those securities against losses for the banks are essentially bankrupt. They can't cover those losses. You know why? Their business model had the housing sector growing....forever. That's right, their model never factored in the possibility of a drop in house prices. So, it was easy money when the market was on fire, but a disaster as people started walking away from homes in droves.

And so until housing bottoms and all the foreclosures are in....the banks won't know how much they've lost. Until then....lending won't get back on track and that will slow growth in the economy. Our economy can't function without banks loaning money and people and businesses taking on debt. That's what makes the whole thing hum. Deals won't get done at the normal pace, mortgages won't be underwritten at a normal pace, and loans won't be made to small (or large) businesses at a normal pace.

We're talking about billions and billions in losses to date with a whole lot more coming. Banks don't trust each other and are tightening lending big-time to hold onto capital....because even the banks don't know how bad their losses are going to be. This affects consumer lending too (CCs and auto loans), which could further slow the economy.

And so what is the Fed doing....lowering the Fed funds rate, to make borrowing cheap again, so we can start this mess all over again. And by dumping money into the system in huge amounts, don't think that inflation can't get a whole lot worse.

I do agree with you on the fact that the government should stay the heck out of this. When you have excesses like we've experienced in this economy over the past few years, we need to trim the fat and the only way to do that is over time. Instead, the government will jump in, add the national deficit, lower rates and then a few years down the road we'll have a good old fashioned 70's style recession.

dvcgirl
01-22-2008, 07:16 PM
This feels more like stagflation to me because of the high food and gas prices. Because of the high prices, this would be a very tough time to become employed or lose income.

It's a good time to save as much as possible so we shaved 5 days off our usual vacation. I'm also going back to "black belt" savings at Publix. No more bleu-cheese-stuffed olives for me!

I agree...we've cut back too. We saw this coming this time...and got very defensive in our portfolio too, so I'm thankful for that. And I'll be the first to admit that the media can certainly affect your mind-set. Now it's almost a self-fulfilling prophesy to a certain degree. People will likely cut back and if they do that in a serious fashion, we'll end up in a nasty recession. Chicken or egg, it doesn't matter which came first, it's the end result that matters.

So, even though we have no debt and a fully funded emergency fund, we'll cut back on spending and save more. I have no reason to believe that DH will lose his job, there's certainly no talk about it, but you just never know. We're finishing up a "No Buy" January, and it was actually pretty cathartic! Our only spending was on household bills, gas, groceries and vet bills (coming out of the vacation fund for now). We haven't eaten out, and we haven't bought one thing that we didn't absolutely need. We decided that we're up for 1/2 of our normal monthly discretionary spending for awhile....if spending nothing was so easy, than 1/2 should make us feel like we're rich! ;).

I certainly don't feel like it's my patriotic duty to get out there and spend as much as I can. And so I won't participate in the government prescribed insanity.

TheLittleRoo
01-22-2008, 07:30 PM
Recession affects everyone eventually. Think of it as receding water; all boats are lowered. I'm sure cuts will be coming to my line of work. I'm in corporate credit cards (T&E, the first place companies cut their budget) and our forecast for 2008 will be hit as the F500 cut their spending budgets, therefore our manager positions will be cut. That means my kids won't be in daycare, we won't be spending as many retail or dining out dollars, luxuries are OUT, etc.

My husband, OTOH, is with the government in law enforcement, so he's virtually bulletproof (pardon the pun) from losing his job. That's a blessing. We often lament that he could be earning so much more in the corporate world, but he always points out the job security in his position. Now he's finally right!

I do think the media hypes this into more than it has to be. Just like today, even before the markets opened, the Yahoo headlines were screaming about the impending plummet in today's market. Well, guess what? If the average Joe panicked after reading the headline, and called his broker to SELL, SELL, SELL, which came first? The panic or the event?

It reminds me of learning about the Depression, and wishing I could go back in time with pockets of present value money, and becoming the next Rockefeller!

problemchild718
01-22-2008, 09:06 PM
We too have seen this coming. We have been aggressive in getting rid of debt and cutting back for a year or so. We have been trying to pad our emergency fund and are using coupons religiously. We made some adjustments to our investments several months ago. We are really feeling the pinch with energy costs (gas and heating oil). We have considered changing jobs to something closer to home, but like the PP we don't want to be low man. We are not eating out or vacationing nearly as much as we have in the past. I haven't bought clothes in months for myself. (somehow the stuff in my closet looks better when I know its paid for) My kids have been bringing lunch to school and we have been planning meals and having more 2fer dinners (chicken one night and a variation of it another). I too believe the media is fanning the flame here. My family and I will be cautious, but not living in fear

Longsx3
01-23-2008, 01:34 AM
As a Military family we sacrifice a lot but we are also fortunate that for the most part we are not greatly impacted by the National Economy. DH has job security with that comes annual raises(not huge but something), plus longevity raises and promotions. We also have a solid retirement with Medical, you won't hear me complaining....at least not too much.

mello
01-23-2008, 01:47 AM
it doesn't really matter whether it's called "recession" or "inflation" to me, but what we've seen in the past two years is: gasoline has tripled, food and heating have doubled, property taxes have doubled, while our home's value has actually gone down. During this same time my dh's income has stayed the same (he's a public servant) because his organization has been in ongoing contract negotiations with the city. So, it most definitely is affecting us. We're still taking two WDW trips this year, thank goodness they're already paid for. We have no debt besides our home, and we're still saving, but in every area of our lives we're tightening our belts. Less eating out (only for special occasions like birthdays now), less trips to Starbucks, much less new clothing, no going to movies, cutting back on cable tv, making every effort to drive less, and re-thinking every purchase twice before we make it. And we don't currently have any vacations planned for 2009. We'll see how things go before we commit to anything.

barkley
01-23-2008, 02:20 AM
i think the situation with the 'average family' can vary greatly on where the average family currently lives and the mindset of that area/and the age group they are in (not so much crono age but where they 'are' in life).

we lived until about a year ago in northern california. we lived in what had become largly a commuter community, people lived there for the small town atmosphere and great schools but commuted largly long and hard for the higher bay area wages (with the exception of those assigned to the nearby airforce base). we lived in a neighborhood of newer homes (last ones built in 2002) and they ranged originaly in price higher than first time homes (but as compared to bay area home prices they were priced MUCH lower) to what people considered a 2nd or 3rd home 'trade up' purchase. we had almost an even/steven compilation of homeowners-first time usualy very young buyers anticipating amassing big equity to sell and buy up within a few years, 2nd or 3rd time homeowners (generaly like us in their 30's or older planning on staying put and raising the kids to adulthood) and very close to retirement agers who planned on making a killing on equity over 5-10 years, downsizing before their incomes dropped to pension level (often below what was needed to continue paying the mortgage and basic living expenses) and using the equity for retirement. this worked well for many folks until march of 2006 when the real estate market CRASHED (not dipped, bottom fell out completely). prior to this date these homes sold for over 200% more than they sold for new no more than 7 years earlier. now that neighborhood has a combination of (1) recent buyers who are hundreds of thousands upside down in equity (some with rates about to increase-and no way they can re-fi cuz the houses won't appraise at the level of debt), (2) the long term family raisers, and (3) the soon to be retirees who will be unable to pay their mortgages when they retire (or get layed off as many are becoming) and have no 'nest egg' of equity as they had planned for.

this was just the general accepted mind set in that area-and as a result a change in the economy that can decrease earnings, decrease savings (actual by virtue of not being able to put as much aside or earn on, and property values) and increase expenses will, i believe-have a harder effect than on the 'average family' in say, the area we currently live in (small town in washington state). i don't think it hits AS hard here because families (at least in our neck of the woods) have never seen the massive increases in home values such that they had the mind set that their existing home was their primary source of funding their retirement (or child's college education). i also don't see the mindset of within 6 months of purchasing a new home getting a home equity loan to pull out tens of thousands to purchase consumer goods or pay for high end vacations (definatly the norm where we previously lived), so the average family here may not have the same issues with big end debt beyond a mortgage and perhaps car loan.

i found it very interesting when i worked for social services granting cash, medical and food stamp services. during those times in the couple of decades i was there that the economy was in bad state there was of course an increase in the number of families applying for assistance, but it realy was'nt across all economic types. it seemed as though those who worked in the lower paying jobs managed to keep them, and were living within or well below their means such that they were able to maintain (not talking about anyone getting any housing subsidies or other forms of assistance-just basic minimum or a bit above wagers doing everything on their financial own). higher earners though, they seemed to live to the full extent of or beyond their means such that even a temporary lay-off or just not getting the raise they anticipated (and had already overspent based on:sad2: ) resulted in catastrophic financial consequences (they might have had a chunk in a retirement account but if they could'nt access it, well....it was like it did'nt exist) that put them in a much faster downard spiral. once the credit cards were maxed out and any accessable funds were depleted they were in our office applying and were very shocked to find out what the government deemed as sustainable income for their family size:scared1:

i think to some degree saying that our grandparents got through a depression and so can we is not realistic. so many factors today are different. while a person of the depression era might choose to walk away from a home they could no longer afford the consequence was largely simply the loss of that home and any equity it held/poor standing with the local bank-today by vitue of credit bureaus and international data bases it can tarnish a person's credit such that not only will they have difficulty for years purchasing anything on credit, but it can prevent them from securing viable employment by virtue of those industries that factor in credit scores as hiring criteria. many of our grandparents (and my own late father included) found some financial refuge from the depression via mass immigration to the western united states where there were greater opportunities of employment and reasonable housing costs (esp. when the cost of decreased heating was factored in)-i can't think of any area in the u.s where today such opportunities exist. many of our grandparents also found assitance through government initiatives such as the origin of today's public assistance programs the 'w.p.a.' which provided jobs at a set wage for thongs of unemployed workers. today's version can hardly begin to provide for the actual needs of a familt (higher end states allot for 3 people around $670 per month and at most around $200 in food stamps-this is without any subsidies or other assistance in meeting housing, utility or any other costs sans medical assistance)-the cost of living is much higher today vs what is issued as compared to what our grandparents could earn via the wpa and reasonably expect to spend. it's just a whole different world.

Green Tea
01-23-2008, 04:59 AM
And during the depression our grandparents lived through, many had the land to sustain or at least supplement their families, food wise. Not so today.

jakenjess
01-23-2008, 05:04 AM
Good question. I keep reading and hearing about this, but I'm not "feeling" it, you know? I'm interested in all the responses.

I know there are things that do affect me (higher costs) but I just started my first "professional" job since college last year and last week got my 2nd raise already, which means my income is increasing quite a bit with the cost of living so I'm not feeling it like others. And since I just started putting money into a 401K, I don't have a lot to lose. It's dropped $5 total, and I'm still up from what I've paid in so far. I'm sure I'd be more panicked if I was talking about tens or hundreds of thousands invested like some people.

Maybe some of those that are better with this can jump in, but it seems like this could be turned to a positive for someone like me. With the housing market taking a dive, it seems like I could save for the next couple years and sort of "take advantage" of the situation? The fact that all of this hasn't really affected me financially seems like I could spin it in my favor. Or is that wishful thinking?

I'm feeling pretty good about my job too. We're actually seeing more work and money lately. I'm the whole billing/accounting department and our recievables are up 50% (for a few months it doubled) and now that the holidays are over, we're getting booked up again. At one point last week I had $0 in payables - and the week before when it was only a couple thousand, the owner said she hasn't seen that since 1994. To compare, we had about $70,000 in payables when I started. Also got a few of the company credit cards paid off or way down in the time I've been there. So it seems like this downturn isn't working its way to us (yet) . . . it's a court reporting agency and lucky for us, people never stop suing, LOL.

As I was reading your post I was thinking, that sounds like me in the downturn of the late '80s/early '90s. Then when you said you work for a court reporting agency, well, it all fits! :laughing: I've been a court reporter for 24 years, the first 15 of which I worked for a freelance agency. Business was always more brisk when the economy was in a downturn. I've been an official reporter for the last nine years, so it will be interesting to see if we see the same thing in the courtroom. I hope you enjoy your new job. It's a very interesting field to work in!:thumbsup2

Kay1
01-23-2008, 05:45 AM
And during the depression our grandparents lived through, many had the land to sustain or at least supplement their families, food wise. Not so today.

Also, today the savings rate is negative. I'd like to point out that the people who made a lot off the stock market during the Great Depression had the money to hang on.

During bad times people have to sell their stocks, houses, cars, boats, etc. because they need to raise cash just to survive.

reginaastralis
01-23-2008, 05:47 AM
I work as a server, and I can already tell you that I've seen a complete downturn compared to last year. I don't ever remember it being this slow.

This is, of course, effecting the entire staff. If we don't have the sales, we don't have the people on the schedule. Everyone across the board is having their hours cut. If the servers aren't making the tips they need to provide for their family, and some of them aren't, we aren't going out to spend money anywhere else.

I decided last year when I thought the housing market was about to burst out here that I would begin working my hiney off to pay down my debt. If the decrease in people keeps happening, I will be happy to just pay bills on time ... and hopefully sock away a litte into my savings. I can't and won't make money if people can't afford to come out to dinner.

dvcgirl
01-23-2008, 08:16 AM
I work as a server, and I can already tell you that I've seen a complete downturn compared to last year. I don't ever remember it being this slow.



I'm seeing and hearing evidence everywhere. One of my clients is in manufacturing....he owns a factory in south carolina that makes sports apparel. He was at a trade show in California this past weekend, and said that attendance seemed down by at least 25% over last year. His orders are down significantly for the beginning of 2008.

I live in a town that has a real main street, with shops and restaurants...we have a Starbucks, a Cold Stone Creamery, a Papyrus, just got a Tiffany too...(ooh la la). The Cold Stone Creamery is toast, and there are many, many vacant shops right now on that street. Apparently most of the real estate on the street turned over in the past few years, people paid a ton of money and raised rent through the roof. Now smaller shopkeepers can't make a living.

It feels like a big slowdown to me....

MyGoofy26
01-23-2008, 09:18 AM
We're talking about billions and billions in losses to date with a whole lot more coming. Banks don't trust each other and are tightening lending big-time to hold onto capital....because even the banks don't know how bad their losses are going to be. This affects consumer lending too (CCs and auto loans), which could further slow the economy.

(bolding is mine)
I spend a fair amount of time browsing at creditboards.com and just from that small segment of population, people are seeing their CC limits decreased (or cards cancelled entirely) for seemingly no reason. At least not related to their history with the issuer. The credit card companies are getting scared and doing account reviews left and right. American Express started a few months ago slashing peoples' limits over there. I think I just read people are starting to see the same thing from Chase. If they walk away with any credit at all, it's fractions of what they originally had. And most of the people posting are those with good incomes and high scores.

I've noticed myself in checking my own credit report that a few of my cards are doing soft pulls for account reviews. I bet just about everyone here with a credit card will find the same thing.

dvcgirl
01-23-2008, 09:29 AM
(bolding is mine)
I spend a fair amount of time browsing at creditboards.com and just from that small segment of population, people are seeing their CC limits decreased (or cards cancelled entirely) for seemingly no reason. At least not related to their history with the issuer. The credit card companies are getting scared and doing account reviews left and right. American Express started a few months ago slashing peoples' limits over there. I think I just read people are starting to see the same thing from Chase. If they walk away with any credit at all, it's fractions of what they originally had. And most of the people posting are those with good incomes and high scores.

I've noticed myself in checking my own credit report that a few of my cards are doing soft pulls for account reviews. I bet just about everyone here with a credit card will find the same thing.

This is absolutely happening....credit is very tight right now, and the banks are tightening. Amex is seeing defaults rising big time. A NY Times article reported that they were actually calling certain customers ahead of time to inquire whether they were going to have difficulty paying their bill.

Citi reported that they were having to set aside a whole lot of money to cover rising defaults, which of course will make them less likely to lend. And keep in mind that the massive revenue stream from all of this collaterized debt....poof....it's gone.

Bank of American reported yesterday. Their profits fell 95% from last year. From a 5.5 Billion dollar year to a 256 million dollar year. And *they're* the ones bailing out Countrywide.....it just makes me LOL!

Just got an e-mail from a friend with this report from Merrill....they see housing declining another 25-30% over the next three years. And the S&P 500 down around 1,100. That would the Dow in the 10,000 range.

Tough times my friends.....remember, it takes awhile for this to trickle down to us.....

MyGoofy26
01-23-2008, 09:31 AM
As I was reading your post I was thinking, that sounds like me in the downturn of the late '80s/early '90s. Then when you said you work for a court reporting agency, well, it all fits! :laughing: I've been a court reporter for 24 years, the first 15 of which I worked for a freelance agency. Business was always more brisk when the economy was in a downturn. I've been an official reporter for the last nine years, so it will be interesting to see if we see the same thing in the courtroom. I hope you enjoy your new job. It's a very interesting field to work in!:thumbsup2

I really love the job. We're technically a small business, but as you know, court reporters are in pretty high demand since there really aren't that many of them out there, so we do a pretty high volume. Officially I'm in billing/accounting but I'm getting crosstrained in production right now (since it's so small, they like having people crosstrained since one person missing more than a day or two can throw everything off) and I just really enjoy everything I've done so far this year. Just a few months ago I was saying how when I was in high school I wish someone would have mentioned court reporting when I was trying to figure out what to do because I think I would have gone to school for that instead.

But I'm glad I'm not just "seeing things" that business is getting better as the economic condition worsens. Maybe as people get more strapped for cash they're more willing to try and sue those who've "wronged" them? I don't know, but all the money coming in really makes me look good right now, LOL!

MyGoofy26
01-23-2008, 09:42 AM
Just got an e-mail from a friend with this report from Merrill....they see housing declining another 25-30% over the next three years. And the S&P 500 down around 1,100. That would the Dow in the 10,000 range.

That sort of goes back to my first post where it seems like this could be a positive for someone like me. My income is increasing (it tripled last year going from my college income) so as long as I don't let my bills increase with it, I should be able to save up a good downpayment in the next 3 years and take advantage of that housing drop.

Plus since I'm really just starting to save for retirement, it seems like I'm getting in on the lower end and eventually see big returns when the market finally rebounds.

Or I could just be wishful thinking again :rotfl:

jakenjess
01-23-2008, 10:32 AM
Just a few months ago I was saying how when I was in high school I wish someone would have mentioned court reporting when I was trying to figure out what to do because I think I would have gone to school for that instead.



It's never too late!;) We had a couple people working in production at our firm that ended up going to school for reporting and coming back to work for us. There's a real shortage of reporters, and like any job, it has its ups and downs, but it's really been a wonderful career. Best of luck to you!:goodvibes

barkley
01-23-2008, 10:53 AM
This is absolutely happening....credit is very tight right now, and the banks are tightening. Amex is seeing defaults rising big time. A NY Times article reported that they were actually calling certain customers ahead of time to inquire whether they were going to have difficulty paying their bill.

Citi reported that they were having to set aside a whole lot of money to cover rising defaults, which of course will make them less likely to lend. And keep in mind that the massive revenue stream from all of this collaterized debt....poof....it's gone.

Bank of American reported yesterday. Their profits fell 95% from last year. From a 5.5 Billion dollar year to a 256 million dollar year. And *they're* the ones bailing out Countrywide.....it just makes me LOL!

Just got an e-mail from a friend with this report from Merrill....they see housing declining another 25-30% over the next three years. And the S&P 500 down around 1,100. That would the Dow in the 10,000 range.

Tough times my friends.....remember, it takes awhile for this to trickle down to us.....


i think we can see evidence of the situation with housing values and credit by virtue of the changing face of what hits our mailbox each day. a few years ago we would daily get 2-3 solicitations to re-fi our mortgage, over the last few months these have stopped and we get massive solicitations for mortgage insurance programs to cover payments in the case of job loss or disability.

i truly believe the housing situation esp. in the hardest hit markets will get allot worse before it gets better. even those people who got in with traditional, well set up mortgages and a reasonable downpayment will be faced with financial obstacles should their incomes drop or so much as stagnate in coming months and years. i look at a family like the one that bought our former home, here they are with a home that has dropped in value over the past just shy of 2 years (based on current comp sales) close to $150,000 so even if they wanted to sell to downsize and offset increased commute costs (toll in that area has doubled since we moved, gas increased horrendously) and other costs of living they simply can't without a horrendous financial impact. now they are lucky in that california permits property owners to get a decrease in the basis for their property taxes relative to current fmv's, but not every state allows for that-so if they were in one of those states they would be shelling out taxes at a rate far exceeding the value of their residence for years to come:sad2:

i also worry for those retirees who DID save and are now largly reliant on income that has traditionaly been generated vs interest on investments and savings. i look to many of the people who reside in the assisted living facilities similar to the one my mother is in-they are not in a position to be able to supplement their incomes, and as such if they fall below what is needed to remain in those facilities i suspect many will end up with no recourse but to move in with adult children. this sitution can have an effect on families that may currently be 'getting by' by virtue of being 2 income households. the introduction of a senior citizen who is in need of daily assistance can create the necessity of one adult quitting a job in order to provide since the cost of hiring out such care is in most cases prohibitive (when we looked at BASIC non full time assistance for my mother it was far less costly for her to receive these in a bundled package which includes housing, utilities, housekeeping and meals vs hiring just part time assistance services in her private home).

lastly, i have to wonder how many of my co 'baby boomers' now faced with the depletion of much of their anticipated equity nest eggs and reduced potential for earnings from investments (if they saved anything:sad2: :sad2: ) will put off retirement. i have to anticipate that reducing the number of annual retirees from most professions will result in fewer job opportunities for people across the board-and esp. recent college grads. a couple of years ago there was talk of the impending 'silver wave' of boomers retiring and making application for social security benefits, it will be interesting to see if instead there is more of a silver trickle.

PatriciaH
01-23-2008, 10:57 AM
Hi. I just wanted to throw in my two cents. (Great subject, btw!)

I am in the construction industry,employed as a purchasing manager. This was a part of the economy that saw a huge downturn before perhaps some other areas. We build new residential homes. I have many friends - well qualified & well-respected in the industry, who are now out of work and have been for several months because the market is not there to support new homes being built. When housing suffers, there is a fallout to other people not directly connected to residential housing but they feel it too. Suppliers, fabricators, contractors (just think about all the parts and pieces that go into building a house!), transportation industry - all of their families are feeling it. It is a domino effect.

The fortunate builders are the ones that did not "go crazy" with the boom that we experienced for so many years, limiting their land position exposure. The custom builders will survive - if they can keep a min. of contracts coming in. Many buyers created problems for themselves when they signed contracts for mortgages that they could not afford. Our industry is much more affected here than in other areas of the country that perhaps did not experience the high volume of sales that we were fortunate enough to have for many many years. So many people want to live in the warm climates...



I am amazed at how much building is still going on here in central Florida. Every week we notice a new condo community or time share going up and say what are they thinking? There are so many homes and condos on the market right now I don't get it. Why build so many more? I guess the whole state would fall apart if everyone just stopped building though. This state seems to be buit on real estate and service jobs.

fkj2
01-23-2008, 11:09 AM
The Budget Forum can be a tough neighborhood to visit and I've restrained myself from posting on this thread until now.

For those who've written about how people survived the Depression of '29, I think it's important to consider how they survived. For the majority of Americans--not including the extremely wealthy or those who leapt to their deaths from windows of the buildings on Wall Street--times were difficult.

My folks were children during the Depression. Both were reared in rural areas. My maternal aunt now believes her severe osteoporosis is related to deprivation of calcium: my grandparents couldn't afford to buy milk. I guess my grandmother could purchase about one quart of milk a week, enough for cereal and coffee. My dad never wanted my mother to serve stew for dinner when I was growing up: he'd eaten so much of it as a child he never wanted it as a meal. And as far as living off the land, let me remind everyone just how physical gardening--or farming--can be. It's back-breaking work and few find it appealing. That's one reason so many commercial farmers have to hire illegals to harvest crops. Plus, there's the cost of getting the ground ready. I spoke with a farmer just this morning who told me how the cost of a ton of fertilizer had risen from $370 to $540 just in the last three months. What'll you think THAT will do to food prices over the next year?

My maternal grandfather couldn't find work...anywhere. He was probably in his late-40s/early 50s when he was finally hired into a steel mill. That may have been around the time when he was too old to enter WW II and the younger men had been called up. He'd come home so cramped up that my grandmother had to help him out of the car.

College was out of the question for either of my parents. The only store-bought candy my mother had as a child came from her aunt/uncle, who "had money," (meaning jobs) when they'd come up from Pittsburgh to visit. My mom and her sister's clothes were remade by my grandmother from those a female cousin had either outgrown or no longer wanted.

Several months ago an article by Jim Juback over at the moneycental.com site generated hundreds of responses by people who had either lived through or had been children of parents who'd lived through the Depression. If anyone would be interested, it's a very humbling read.

Motherofboys
01-23-2008, 11:18 AM
The Budget Forum can be a tough neighborhood to visit and I've restrained myself from posting on this thread until now.

For those who've written about how people survived the Depression of '29, I think it's important to consider how they survived. For the majority of Americans--not including the extremely wealthy or those who leapt to their deaths from windows of the buildings on Wall Street--times were difficult.

My folks were children during the Depression. Both were reared in rural areas. My maternal aunt now believes her severe osteoporosis is related to deprivation of calcium: my grandparents couldn't afford to buy milk. I guess my grandmother could purchase about one quart of milk a week, enough for cereal and coffee. My dad never wanted my mother to serve stew for dinner when I was growing up: he'd eaten so much of it as a child he never wanted it as a meal. And as far as living off the land, let me remind everyone just how physical gardening--or farming--can be. It's back-breaking work and few find it appealing. That's one reason so many commercial farmers have to hire illegals to harvest crops. Plus, there's the cost of getting the ground ready. I spoke with a farmer just this morning who told me how the cost of a ton of fertilizer had risen from $370 to $540 just in the last three months. What'll you think THAT will do to food prices over the next year?

My maternal grandfather couldn't find work...anywhere. He was probably in his late-40s/early 50s when he was finally hired into a steel mill. That may have been around the time when he was too old to enter WW II and the younger men had been called up. He'd come home so cramped up that my grandmother had to help him out of the car.

College was out of the question for either of my parents. The only store-bought candy my mother had as a child came from her aunt/uncle, who "had money," (meaning jobs) when they'd come up from Pittsburgh to visit. My mom and her sister's clothes were remade by my grandmother from those a female cousin had either outgrown or no longer wanted.

Several months ago an article by Jim Juback over at the moneycental.com site generated hundreds of responses by people who had either lived through or had been children of parents who'd lived through the Depression. If anyone would be interested, it's a very humbling read.


I agree, let's not romanticize it as a time when Americans had to "make do". It was a time of desperation and hardship - more than just giving up cable and not going on vacations.

My grandmother lived the depression as a child and had deformed feet the rest of her life to show for it - no money for new shoes. That doesn't even begin to tell the stories of no good food to eat, going to bed hungry, not being able to get health care when ill, not having money for properly fitting clothes, and the trouble that it caused between parents, families, etc.

I think all of us would be in for a serious reality check if we ever had to face an actual "great depression".

labgeek
01-23-2008, 12:04 PM
It's amazing how we all have so different lives, different occupations, ect...but it in the end we are so much the same.

My DH was downsized Aug of 06. I am so glad that he suggested we use part of the severence to pay off his truck. Of course, we still had a new van we bought in Jan of 06. We had no warning on this. He was the companies only cost accountant and they cut the position. Because of his salary it was like cutting 2 people lower on the food chain (he had been there 13yrs.) Last february my DH opted to open a business. I am blessed with a great job and at the time if he paid off our van we could make it just on my salary (barely, but barely makes it). As he is 37, I told him to go for it if he wanted and I would support him no matter what. He took out his 401K, paid off my van and our only cc and used the rest to open our business. It't outdoor sports, guns, archery, fishing, live bait. At this point it's holding it's own. My DH has been very wise, in that there is no cc tied in with the business. All inventory is paid for. So if it went bust, the rest of the lease is all we would be out.

One thing he is starting though is pawn. He said at this day and age that it's a great way to make money. Part of me feels like we are taking advantage of people, but as he put it, they bought the items, they are bringing them to us, and if we don't offer it, they will just go somewhere else. He says that if we want our business to make it, we have to supplement somewhere.

Like everyone else, we are cutting back also. My son really needs new uniform pants, but I am going to see if I can let the hem out and give him another inch or so in the length. He grew an inch and a half between 11/16/07 and now. He really needs new shoes, and I have to get him good ones. I have an 11 year old whose toes are shoved to the tip of a size 12 man's shoe. He is also flat footed. We do watch the sales at Kohls though and try to get them there. I had him special fitted at a run/walk shop this summer and they were 100.00, but it was worth the investment to be shown what kind of shoes to buy and what not to buy.

I am proud, we haven't eaten out in 9 days now. That's like a streak for us. (Between my 1hr commute each way an 12 day work marathons that's a feat for me). I am lucky in that my employer does my retirement on top of my salary. We usually get a year end bonus, which I was really wanting, so I could get estimates on some new windows. But, we didn't. It's okay though, because he supplemented my retirement even more instead of a bonus. In the last 2 years (not counting what he just did, because I haven't recieved the paper yet) he has put over 10,000 in my account. My boss is a financial guru. Does all the stocks and markets and all that stuff I know nothing about, so I am lucky to have him. We do have a savings, but got a feeling it will be going to uncle sam this year. We really want to do a WDW trip, but we will wait till after taxes. We did nothing last year. We borrowed a camper from a family member and went to a local state park. That didn't even turn out. Something electrical broke on the 2nd night and we had to come home.

Labgeek

marshallandcartersmo
01-23-2008, 12:31 PM
This is a great thread. Scary, but great.

I'm thrilled we're getting a large tax return so we can pay off almost all of our credit cards we charged throughout last year (I know I know........I totally failed the Dave Ramsey class we went to).

However, the scared side of me wonders if we should save part of the money, and have it as some cash reserve.

In a recession, which is more important...........no credit card debt or no money "stashed"??????

dvcgirl
01-23-2008, 07:08 PM
lastly, i have to wonder how many of my co 'baby boomers' now faced with the depletion of much of their anticipated equity nest eggs and reduced potential for earnings from investments (if they saved anything:sad2: :sad2: ) will put off retirement. i have to anticipate that reducing the number of annual retirees from most professions will result in fewer job opportunities for people across the board-and esp. recent college grads. a couple of years ago there was talk of the impending 'silver wave' of boomers retiring and making application for social security benefits, it will be interesting to see if instead there is more of a silver trickle.

This is exactly what will happen if you believe the work done by the Employee Benefit Research Institute. 52% of workers over age 55 have saved less than 100,000 for retirement. 75% have less than 250K. So, unless all of these people have solid pension plans, well, it's going to be pretty tough to retire at age 65.

Younger workers are in even worse shape....and they're far less likely to have a pension than their older co-workers. A lot of people have gotten used to a higher quality of life, a lot of that "quality life" funded by a total lack of savings and an addiction to credit. I read threads on this board on a regular basis where people will list their financial goals. Often I see that people first want to pay off the credit cards, then save up so they can make the next WDW trip with cash, and then start *thinking* about retirement. And for many, the don't get there. And when times get tough, like now, 401ks get raided.....

EBRI also estimates that a couple retiring at age 65 will need about 300K alone to supplement Medicare. And that's if medicare is able to continue to pay out at current levels. And of course that's not going to happen. Medicare's current tab for future promised benefits is underfunded by a mere 32 *Trillion* dollars.

The fact is that most people will have to work as long as they possibly can. I'm just noticing more and more older people working these days. I think in many cases that they're working because they have to work, even if for the supplemental health insurance.


There is just an immense mountain of problems that we'll face in the coming 20 years in this country. I don't think many people think about it. If they do, they just brush it off and decide that they'll "'live for today", save nothing and spend every nickel they have. Or they figure that it will all just somehow work itself out. And it will likely work itself out in some manner, but the outcome may not be the one you were hoping for.

Disneyoverload42
01-23-2008, 09:00 PM
The Budget Forum can be a tough neighborhood to visit and I've restrained myself from posting on this thread until now.

For those who've written about how people survived the Depression of '29, I think it's important to consider how they survived. For the majority of Americans--not including the extremely wealthy or those who leapt to their deaths from windows of the buildings on Wall Street--times were difficult.



Several months ago an article by Jim Juback over at the moneycental.com site generated hundreds of responses by people who had either lived through or had been children of parents who'd lived through the Depression. If anyone would be interested, it's a very humbling read.

I for one am not romanticizing the depression - I simply think it was lived through - as rough times are. I don't even have to go back that far for stories to draw on... my mother grew up without indoor plumbing. They kept their meat in a storage tank under ground because they didn't have a fridge. She picked up change at the drive in in order to have spending money - this was all 40 some years ago - not in the depression. And it wasn't in some rural area, they lived on the outskirts of a major city. My mom is the one who taught me that "this too shall pass" and "you can overcome ANYTHING in life if you put your mind to it".

I just think it's human nature to plow on - can't let the cockroaches win! ;)

barkley
01-23-2008, 09:44 PM
I agree, let's not romanticize it as a time when Americans had to "make do". It was a time of desperation and hardship - more than just giving up cable and not going on vacations.

My grandmother lived the depression as a child and had deformed feet the rest of her life to show for it - no money for new shoes. That doesn't even begin to tell the stories of no good food to eat, going to bed hungry, not being able to get health care when ill, not having money for properly fitting clothes, and the trouble that it caused between parents, families, etc.

I think all of us would be in for a serious reality check if we ever had to face an actual "great depression".


i was the 'late in life child' for my parents, both of whom grew up during the depression (though mom was quite young and did'nt remember much of it but dad who was a teen and young man during it sure did. as a result, many of the survival habits and long lasting effects of dad's youth were ingrained as i grew up such that they were part of our everyday lives.

we never were served any lamb in our home because of the mutton broth many chairities served during the depression (my father recalled it as so foul that even the smell of lamb made him physically ill). 'mustard salad' was a regular sidedish on the dinnertable because dad became accoustomed to his mother using ANYTHING to provide for a meal or sandwiches they could take on searches for work (it was made of cold mashed potatos, raw onions and mustard:scared: ). 'graveyard stew' was something my parents enjoyed regularly-dry toasted bread with warm milk over it. dad said it was often considered a tremendous meal in his youth due to the lack of funds to get milk. 'catsup soup' was frowned upon by dad but he did say that campbells tomoato soup tasted identical due to the sweetness ('catsup soup' was made by going into a restaurant and asking for just a cup of hot water-then you poured catsup from the tabletop bottles into it and added pepper).

dad was rabid about having good quality shoes for us because he had too many siblings and friends whose feet were deformed for lack of properly fitting shoes. dental care was a top priority as well due to the number of his family members and friends who died or came near death due to untreated infections and abcesses. immediate medical attention for potentialy infectious situations (like stepping on a rusty nail) was tops on the list-dad had a brother who was unable to get treatment and was near death with blood poisoning from an untreated cut at age 7 (survived but showed the effects in his legs and joints for the rest of his life).

my dad was like many others who not only lacked indoor plumbing but plumbing of any sort-they lost their home. there was no food to put into refridgeration of any kind. there was no spare change to pick up because no one dared drop it-and if any were to be found it would'nt have been spending money it would have been handed over to their parents for the family's survival (a look at the average number of highschool graduates during the depression points out how many YOUNG kids left school as early as elementary level to help support their families).

not that i want the economy to get bad or for anyone to suffer-but i do think it would be valuable for the 'average' kid to get a look well before adulthood at how easily financial circumstances can change. perhaps it will be a learning experience that will get them on track to save as their grandparents and further back did when they were able.

natenapril
01-23-2008, 11:17 PM
As a Military family we sacrifice a lot but we are also fortunate that for the most part we are not greatly impacted by the National Economy. DH has job security with that comes annual raises(not huge but something), plus longevity raises and promotions. We also have a solid retirement with Medical, you won't hear me complaining....at least not too much.

We're in the same boat. My DH is only 1/2 way through his career in the Air Force. So I feel safe in his job. I am going back to school so we will see what happens when I graduate.
By the way Longsx3, We lived at Kadena from 1998-2003. We loved it! MY daughter was born at Lester. I would love to go back!

dvcgirl
01-24-2008, 06:40 AM
There's an interesting article on cnn.com on what experts are now calling "the coming recession". While many think this will be a shallow and short recession, three economists here talk about their "worst case scenario". I certainly hope that they're wrong.

One interesting point that is brought up is that state and local governments make up 11% of our GDP. This is an area of the economy that is sure to take a hit from from that area with foreclosures causing a decrease in tax revenues.

The basic idea out there is that this recession *could* be a lot worse because it would be consumer led, with a housing depression, rising inflation and credit crunch thrown in for good measure. In 2001 we had a corporate led recession, really even more narrow...a tech corporate led recession and a major correction in the stock market. Most of the lay-offs were in that sector, consumers kept spending, and other than their 401Ks taking a hit, most people weren't affected.

http://money.cnn.com/2008/01/23/news/economy/how_bad/index.htm?postversion=2008012405

fkj2
01-24-2008, 08:39 AM
I for one am not romanticizing the depression - I simply think it was lived through - as rough times are.

Just to clarify, I wrote observations and recollections as related by my folks and grandparents. I was not the poster who used the word romanticizing the depression in a post. And I made no reference to any other specific post.

When children today--or adults for that matter--feel deprived without cell phones or Ipods, I think it's reasonable to introduce into the discussion just how severely the Depression affected daily life.

Free4Life11
01-24-2008, 08:55 AM
Well, the poor economy has hit my company. They just announced they are cutting 300 jobs and this is coming after 400 jobs they cut in October. :sad1: It is very scary, but I hope my job is safe, I will find out on Friday when I go in to work. It is partially due to new government legislation that affects our industry but also the tightening credit markets...we do student loans and it is a lot more expensive to lend students money (and riskier!) All I can do is get through today and hope for the best tomorrow.

dvcgirl
01-24-2008, 09:18 AM
Well, the poor economy has hit my company. They just announced they are cutting 300 jobs and this is coming after 400 jobs they cut in October. :sad1: It is very scary, but I hope my job is safe, I will find out on Friday when I go in to work. It is partially due to new government legislation that affects our industry but also the tightening credit markets...we do student loans and it is a lot more expensive to lend students money (and riskier!) All I can do is get through today and hope for the best tomorrow.

Just wanted to say that I hope you keep your job!

Free4Life11
01-25-2008, 07:48 PM
Thanks for that. My position was kept, so I am very pleased with that, but it's very sad to see many in my department leaving! This was a wake up call to me....I definitely need to increase my emergency savings and I sure won't take this job for granted.

LoveBWVVBR
01-25-2008, 08:11 PM
As for me, everytime the fed lowers the interest rate the interest I get on my ING and HSBC accounts drop. I was getting over 5% before this whole thing started and I'm sure in a day or two I won't even be getting 4%.

I am getting 5.7% on one CD and 5.4% on the other right now. They come up in April and May respectively. I don't even want to think of the amount of $$ I'll be losing when I have to renew them at 5% if that:sad2:

momxx5
01-25-2008, 08:22 PM
The the OP question.....

cost of gas, cost of food, clothing, heating, water, etc. All added together with higher cc interest rates makes for a very tight budget.

Sad to tell the kids no soccer or you can sign up for basketball but not get bb shoes.

We lived so comfortably for so long. Now it has caught up with us.

Mrs.Reese
01-25-2008, 08:28 PM
We are starting to see some cuts happening in our schools' budgets. The districts are really being slow in bringing on new staff. We will not be hiring any support staff in the next year. School renovations desperately needed are being pushed back due to state shortfalls. We're seeing an increase in families applying for free/reduced lunch and calls to social services. More children are coming to school hungry, dirty, tired, angry.

dvcgirl
01-25-2008, 09:39 PM
The the OP question.....

cost of gas, cost of food, clothing, heating, water, etc. All added together with higher cc interest rates makes for a very tight budget.

Sad to tell the kids no soccer or you can sign up for basketball but not get bb shoes.

We lived so comfortably for so long. Now it has caught up with us.

Your last line speaks volumes....and I think a whole lot of Americans will be feeling the same way very soon if they don't already.

pisces219
01-25-2008, 09:45 PM
we are feeling it. my job was eliminated this past oct, along with two others. i heard another person got let go last week too. last year at this time the company had 26 employees, two left on their own and another 4 laid off. so obviously they are effected by this and cutting back and if things continue on how it's predicted they may cut more people.

dh and i have been trying to get by on one income and some savings we had. we have cut back on some things(home improvements, eating out, and other extras) we have cut back even more tightly since the new year and had a very "light" christmas because we wanted to take a trip to FL to see some family and go to disney.

i remember when i went to the grocery store or walmart and never priced things out, just bought what i wanted. i also remember vacations where i bought new sneakers, clothes, purses, sunglasses etc or picked hotels, rental cars, flights, choose restaurants without even thinking about the price too much...so overall we had a much larger chunk of spending $$$. this trip is as budget as we could get it and i have figured out ways to keep our "during trip spending" low too.

however i think i have definatly learned a few things in the past few months, things i will keep doing from here on. when we return we will still be living on a very tight budget, not buying extras until i begin working. some people must think "if things are tight, why r u taking a vacation" well we want to see my family-aging grandparents and we have learned the hard way "they dont live forever" so it's important we go. and if we are spending the $$ to go to FL it's stupid for us not to go to disney because we got an amazing deal (dh is a cast member)

JuneChickie
01-28-2008, 09:34 PM
subscribing :)

Jeninindy
01-28-2008, 09:54 PM
From Dave Walker, comptroller of the United States......its long, but informative.....

http://youtube.com/watch?v=KjZBOCAgR64&feature=related

sarahlovesmickey
01-28-2008, 10:26 PM
It is affecting my job because the worse the economy gets, the more calls and cases we get. I see my caseload going way up. =(

dvcgirl
01-29-2008, 06:36 AM
From Dave Walker, comptroller of the United States......its long, but informative.....

http://youtube.com/watch?v=KjZBOCAgR64&feature=related

I like David Walker....bright guy, a true public official who is facing the facts that the politicians won't. Oh, and by the way, that 46 Trillion dollar underfunded figure is now 53 Trillion, just four years later.

DawnM
01-29-2008, 06:58 AM
Read through the entire thread....whew! Great responses.

I am a *bit* concerned. We are not in the right area for DH's job if they end up needing to cut, but right now they are fine. Time will tell if there are any issues.

House sales do concern me.

Thankfully we have been faithful Dave Ramsey followers for almost 2 years and only owe 2/3 of our house, everything else is paid for.

Dawn

Kay1
01-29-2008, 07:39 AM
Layoffs coming and in large number. Up 37% this year.

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080128/REG/600868279/1036

kfeuer
01-29-2008, 09:52 AM
lastly, i have to wonder how many of my co 'baby boomers' now faced with the depletion of much of their anticipated equity nest eggs and reduced potential for earnings from investments (if they saved anything:sad2: :sad2: ) will put off retirement. i have to anticipate that reducing the number of annual retirees from most professions will result in fewer job opportunities for people across the board-and esp. recent college grads. a couple of years ago there was talk of the impending 'silver wave' of boomers retiring and making application for social security benefits, it will be interesting to see if instead there is more of a silver trickle.

I think quite a few won't be given a choice. My father's an engineer, and has worked for the same company since he graduated from college back in the 1960's. Unfortunately, this company's biggest customers are US auto makers :scared1: He's in upper management and was hoping to work another couple years (he'll turn 65 this year) but he's been given an early retirement. Luckily he's getting 8 months severence pay and he's got 2 pensions to draw on (for however long that lasts), but it's a scary time to be entering retirement. They have a nice nest egg saved up, but things are just so uncertain right now.

I work for a small insurance agency, and things have been very tight around here in recent months. We've had quite a few commercial clients go out of business, and alot of others have smaller sales/payroll, which means their premiums are going down and that hurts us. My fortunes are tied to this business, so I'm really hoping we can weather the coming storms.

crisi
01-29-2008, 10:31 AM
More depression information -

People were saving money, but savings were often wiped out between the stock market crash and bank failures. The FDIC was put in place to keep people from having their savings wiped out because of the depression. Just because we HAVE the FDIC, the government can't stay out of this potential recession - which is anticipated to hit the financial services industry particularly hard. Managing to keep banks from failing short term will "move the pain" to a later point, but might manage to keep the federal government in better shape than doing nothing other than what they've already committed to.

Although lots of people kept gardens and farmed, drought covered much of the country, making it difficult to live off the land in much of the Midwest. Can't live off your garden when their is no water and the soil is blowing away in the dustbowl. My Great Grandparents lived on a farm in Minnesota - East enough of the worst of the dust bowl conditions to continue to farm, but times were very tough - and they had a ton of relations who had farms further West move in - in addition to their own twelve children they had as many as four other families on the farm to feed during the depression.

dvcgirl
01-29-2008, 12:57 PM
More depression information -

People were saving money, but savings were often wiped out between the stock market crash and bank failures. The FDIC was put in place to keep people from having their savings wiped out because of the depression. Just because we HAVE the FDIC, the government can't stay out of this potential recession - which is anticipated to hit the financial services industry particularly hard. Managing to keep banks from failing short term will "move the pain" to a later point, but might manage to keep the federal government in better shape than doing nothing other than what they've already committed to.

Although lots of people kept gardens and farmed, drought covered much of the country, making it difficult to live off the land in much of the Midwest. Can't live off your garden when their is no water and the soil is blowing away in the dustbowl. My Great Grandparents lived on a farm in Minnesota - East enough of the worst of the dust bowl conditions to continue to farm, but times were very tough - and they had a ton of relations who had farms further West move in - in addition to their own twelve children they had as many as four other families on the farm to feed during the depression.

Yes, and others have pointed out that FDIC insurance doesn't mean that you got paid immediately. As I understand it, they can take their sweet time in paying you back.

I agree, financial sector and of course housing will be hit particularly hard. If jobs start to slip, then a lot of businesses will begin to suffer and this will be a much deeper recession that the one we experienced in 2001.

I was talking to the owner of the local wine shop just yesterday. He said that business is slowest it has been in five years for January. He's really hurting. I see more and more "For Lease" signs going up in the shops in my town's main street. Each night my street is usually filled with patron's cars who are eating at the restaurant around the corner. Other than Friday and Saturday night there have been no cars parked on our street.

And yet we went to Border's Books last weekend and it looked like it was December 22nd....packed. So it's tough to completely gauge what's happening thus far.

scottygirl
01-29-2008, 01:12 PM
Be glad if you don't live in Michigan. We have a beautiful state with wonderful people, but times are tough here. DH is waiting to hear this week if he has a job. He is in banking, not automotive. Thankfully we have savings and house we can afford with an old fashioned fixed rate mortgage!!

HenDuck
01-29-2008, 01:40 PM
Yesterday, I went to Long's Drug store to pick up a couple of things off their sale ad.

First, I really scrutinized the ad and looked in my pantry and debated about whether I really NEEDED certain items. Then I made my list. Then I cut things off my list. I planned to get 4 items which were very good deals, plus I had a couple of coupons.

Off I went to Long's. There shelves were EMPTY of sale items. People were acting like they'd never be able to buy Ritz Crackers or Spam again. :confused3 I asked the manager for a rain check for an item. She said they had more stock in the stock room but they were very short handed and didn't have enough clerks to refill the shelves. There were 3 people behind me also looking for rain checks too. I only ended up with 2 out of the 4 things on my list.

So this illustrated two things to me. 1. People are really feeling the pinch since grocery prices are rising. So much so that when there is a decent sale, people go nuts. 2. Businesses are cutting way back on their employees. Services will start to suffer. :sad2:

Personally, with the grocery prices rising on everything, and our household plan to cut back on the grocery bill, I have been spending very little on food and household items. We're eating out of the pantry and freezer for the next two weeks, except for bread, milk, etc. I'm going to buy a couple of gallons of vinegar and clean my whole house with it. And we've already said adios to soda and bottled water.

DH and I also had a money talk last week. My job this week to submit a proposed budget with more areas to cut/reduce, etc. Buhbye land line!

LKHomemail
02-01-2008, 08:03 AM
Hold on to as much of your money as you can and yes you should try to buy something for cash or with low mortgage. most all homeowners are losing equity. those that need or want to sell are very motivated so they will take much less money to make a deal. also , the new condos / houses built are not being sold like they anticipated , therefore, they are available cheaper at auctions for 1/2 of what they were intended for. builders can often afford bigger losses than a family will take on their residence. cash will make you king in this . negotiate hard and look around a lot. know what you are offering / buying. good luck.

eliza61
02-01-2008, 08:12 AM
[QUOTE=bdcp;22725650
I saw an economist today who said the fed needs to back off and the government needs to stay out of it because the economy needs an adjustment and it will take care of itself. The government cannot fix the free market economy we live it. They just muddy the waters.

Disneyoverload, can I join you under your desk?[/QUOTE]

Unfortunately all that may make sense logically but when you go to the supermarket and a flipping bottle of milk cost you $5.00 bucks you feel the pain. Politicians want to get re-elected but it's hard when you've got the entire country screaming because the cost of living.
Our lovely Govenor of NJ is raising the toll on most roads by 50% next year, that means all the trucks that bring food and essentials to the stores will raise their rates, now the cost of food goes up, once again...

eliza61
02-01-2008, 08:18 AM
Be glad if you don't live in Michigan. We have a beautiful state with wonderful people, but times are tough here. DH is waiting to hear this week if he has a job. He is in banking, not automotive. Thankfully we have savings and house we can afford with an old fashioned fixed rate mortgage!!


Scotty girl,
Michigan is in my prayers every day. I have a good friend who is a lawyer in that state. I don't care what folks say about having no sympathy when people lose their houses, I've seen what happens when entire neighborhoods go into foreclosure and it's heartbreaking. No where is that more evident than Michigan

dvcgirl
02-01-2008, 08:24 AM
Unfortunately all that may make sense logically but when you go to the supermarket and a flipping bottle of milk cost you $5.00 bucks you feel the pain. Politicians want to get re-elected but it's hard when you've got the entire country screaming because the cost of living.
Our lovely Govenor of NJ is raising the toll on most roads by 50% next year, that means all the trucks that bring food and essentials to the stores will raise their rates, now the cost of food goes up, once again...


I agree with you, I really do, but how does NJ, any other state, or the Federal Government attempt to balance their budgets if they don't raise revenues? It's expensive to live in most parts of NJ, for sure, and everyone is always screaming about property taxes and such. If the state mandates property tax cuts, the problem gets worse. As it is, many states are seeing big declines in revenue due to the increase in foreclosures.

New Jersey (and many other states) also have a huge deficit in their state-workers pension funds. While we have a 2 billion gap in the budget, about 30 billion in debt, the estimate is that the pension fund is 56 billion under water. Where is *that* supposed to come from?

scottygirl
02-01-2008, 09:12 AM
Scotty girl,
Michigan is in my prayers every day. I have a good friend who is a lawyer in that state. I don't care what folks say about having no sympathy when people lose their houses, I've seen what happens when entire neighborhoods go into foreclosure and it's heartbreaking. No where is that more evident than Michigan

Thank you for your support. Luckily my DH has made it through the cuts this week, although one of his boses (not direct line) that he admired very much was let go. We live in a neighborhood that appears to be in pretty good shape. I only know of one foreclosure. We have always been very fiscally prudent and will continue to live that way.

mpls_mm
02-03-2008, 02:51 AM
I don't get worried until I start reading through these threads:scared:
I haven't worked for a set salary in a long time, I get nervous getting the same thing. I can get the cold sweats thinking about a fixed number. I am in sales and now have my own business now. I have weathered some bad times, but I just don't see much difference. Bad salespeople quit and then there are fewer of us, so it seems to stay steady. Businesses get nervous and cut back on advertising lowering sales, I plan to increase. I keep taking classes and learning more so I can make my business better, I hope it stays steady. I have been doing some career and marketing consulting for free to build my references and help people find a better way. I am also hoping some trade shows we couldn't get in because of a wait list will have openings and then we will get a spot. I still get a little worried, but I just depend that the tighter the economy gets, the greater the need for a salesperson. I do noticed than when it gets tight, I get a lot more applicants to pick from and more skills are offered. But I do hear from all kinds of people in different parts of the country and I hear horror stories.

englishteacha
02-03-2008, 12:01 PM
We're seeing some effects here in rural Maine. The school where I teach has a frozen budget...I wonder what we'll do when we run out of paper?? It's a very low income area to begin with, and I have students who honestly can't afford school supplies.

I've noticed a lot of coupons and specials for area restaurants/take out places. It seems like everywhere really needs to drum up business. I know DH and I have reduced our eating out and take out. But when we do go out, we're taking advantage of the specials and coupons.

My DH owns his own IT/web developing business. While he's doing OK, some of his clients are not spending as much on IT as they used to. Luckily, DH has taken on a couple small local businesses in addition to his bigger clients which helps our income.

kinntj
02-03-2008, 01:05 PM
We're not feeling it, but we have cut out eating out and I cook at home much more. We're eating out of the freezer and pantry this week and part of the following week. In April, we're looking to buy a used car instead of new. This is the first time venturing down this road, so it's a little scarey.

My FIL just called this morning and asked to borrow $2k+ for taxes. They inherited DH's grandma's house when she passed and now since they can't sell or rent it out, they have to pay taxes on it. They can't come up with the money, so they are asking us for it. It's now become part of our problem. :confused3 :mad: His parents were never good with money, so that's why I get so mad when it comes to them and money.
We live in Michigan, so we can't see an end yet to the major problems this state is in. We are so forunate and I thank God every day for DH having his job, because he's been laid off in the past and we know the stress that comes along with it.

I'm in school, so we'll see what job I can get when I get my degree and take my test to be licensed.

I think any money that can be saved right now is a good thing. If our family starts to squeeze now, then it won't be so bad if we really need to during this year or next. We have a trip to WDW in May, but that's the only vacation we have planned this year. We probably will stay in state next year to do long weekend vacations.

MrMarv
02-04-2008, 07:35 PM
It would be really nice if the government would stay out of the way and let the market & economy 'work itself out'.

I also feel that the upcoming recession will be much worse because, as others have stated, too many consumers have been using their homes as ATM machines, and lots of their financial problems are self-inflicted.

When the government does throw itself into the marketplace and picks winners and losers (the ongoing ethanol hoax/fiasco/disaster/con job being the most recent example), everybody loses.