Monday, September 29, 2008

Now What?

I haven't really commented much on this whole economic crisis and bailout issue, but seeing just now that the bill failed, and the corresponding drop in the stock market... well, it kind of made my heart sink. I don't know what the right answer is and what's going to happen next. I keep reminding myself that I have a good 25-30 years to retirement. But that is starting to be less consoling, as the kind of turmoil we're in now could take a long time to turn itself around.

I haven't made any changes in my long-term financial strategy as this all unfolded over the last few months. Who knows whether this will turn out to have been a good idea or a bad one. I haven't made any lifestyle changes either: I'm still trying to live within my means and save money, even if its value seems to evaporate faster than I can save it. But I haven't made any cutbacks to allow myself to save more. Normally, it would be easy to look at what I'm doing and think I'm on the right track to achieve my goals, but it's getting harder and harder to believe that the old rules apply.

I found myself wishing that my grandmother was still alive-- she was one of those people who definitely had a bit of a "Depression mentality." But in her youth, when the Depression hit, she was a young woman who was having fun, a couple of years before getting married and having her first children. I wish I could ask her how it felt, back then, to hear that bad things were happening to banks, and wonder whether it would affect her. How did it feel a few years later to be raising a family amidst such hardship, and did she look back and wonder why people didn't see it coming? How did it really affect her life? She was never wealthy, but she was never dirt poor either-- did her family lose any savings in a bank failure, or did they never have any to lose, and were just fortunate enough to always be employed?

As many people will point out, there are important differences between what is happening now and the Depression, but there are scary similarities too. Life will go on one way or another, but what are we about to face?


Gord said...

I guess the trick will be to secure your stream of income (job) and or try to enhance it as well as to protect your assets. And above all, invest wisely in quality assets. This is probably one of the greatest buying opportunities of the last 70 years. My Grandma used to say,"Take care of the pennies and the dollars will take care of themselves." And in all that, don't forget the hungry, the sick, and the homeless. It could have been any one of us.

Anonymous said...

Everyone keeps saying that now is the time to buy, but I have certainly been putting my money in my Roth and 401k, and it's not like I have extra just sitting around waiting for today to come. So..I will keep on keepin' on, and hopefully this mess will all be straightened out in the next few years so I still have time to plan properly for my future.
One can only hope.

Anonymous said...

I also happened to change my contribution to 401k. This week is our company's 401k open season and after a weekend's consideration, I think I would rather have more cash in my hand instead of putting in evaporating assets, especially we have very limited funds to choose. I should start looking for a house to buy next year. If I am a house owner, I will put paying my mortgage as priority instead of putting it to the stock market.

Anonymous said...

What a year I picked to finally start a Roth IRA!

I'm not changing my contributions to my Roth or my work retirement account because I'm still 30+ years away from retirement, my job seems stable (I hope), and on an intellectual level the dropping stock prices should mean increased buying power for my funds, but I can appreciate the temptation.

Sicilian said...

I have stopped participating in my 401B with this check. I am also going to try to opt out for one year on my retirement account.
We are going to get some cash too tomorrow. Just thinking that a run on the banks might be happening.

Anonymous said...

I have about 20-25 years to go..but you know those people who saw similiar situations in the '80's who were in there 20-30's...probably said the same thing...I understand the whole time is on your side and in the long run down markets go up...I also know it is relative to where you are when it goes up or down and in the long run...we all end up in the same place sooner or later.

Melissa said...

My grandmother grew up during the depression too and I asked her about it.

Here's what she said: her family lived on a farm and grew all of their own food. Her father was a farmer (in fact he was eventually killed by a mule kick which perforated his intestines, but that was much later) and all of the kids worked all day (6 of them). They weeded, planted, and when harvest time they canned, pickled, etc.

I used to marvel at how my grandmother would go into a frenzy of food preservation every fall (she *always* had a HUGE garden, and I am talking big enough for our extended family). She said that they never went hungry and their family really wasn't affected too badly by the depression. The only "depression mentality" that she had was related to always thinking ahead and preparing for the winter by preserving food. If you think about it, it's the one thing that we really must have.

Anonymous said...

I was glad that this bill failed in the House. I support getting some economic help but not 700 billion on a plan that may not work.