Skip to main content

Enduring the down economy

I'll confess, that now, as we are easily in the midst of a down economy (some would say we're coming out of it), it is easy to become somewhat down. For me, this has not been a simple matter of just putting my head down and becoming more of a hard worker. Instead, this has made me realize a few things. Perhaps you have had these observations as well, in which case this will be somewhat of a confirmation of your ideas.

First, this economy hurts more than just the people who have lost their jobs. In many ways, this down economy hurts the people who still have jobs in several ways. First, in families that are usually dual income homes, there may be a sole bread winner now. This adds to the stress for that individual where there is fear that there could be a job loss.

Second, in all situations, there are people who are still working at some companies where there have been layoffs etc. As a result, there is just as much work but fewer people to do it. In fact, due to hiring freezes etc, there are situations where there is simply not enough mobility within the company. People cannot be promoted, hired, and sometimes (for fear of not being able to replace the resource) fired. So, here we are with resources not being allocated correctly.

Third, there is simply less opportunity for investors. Very little is happening in terms of the velocity of money. Whereas a dollar went from your paycheck, then was spent and passed through something like 8-12 hands before it was sunk back into a bank account, now we're still seeing a serious decrease in economic activity as unemployment nears 9% nationally and those who are still working are saving.

All of this has me somewhat nervous. But given my timeframes, I am still investing in my 401k for retirement in nice diverse mutual funds. I look at what I expect to be slow, and perhaps even anemic returns over the next 12-36 months and I still feel ok about investing. I know that at some point, I will get paid off for being patience. I can see the wisdom of this especially given that I play poker...another place where you're paid to wait.

But even more than that, I am focusing on good places to spend my money. I am looking for bargains now for things that I need. I know that the inflation is going to come back; even gasoline has jumped a dime per gallon in the past week. So if you have projects that you're interested in taking on, I would start shopping for prices now. I don't expect to see much in the way of higher bank account interest rates as an incentive to save. And I do expect to see real destruction in terms of purchasing power.

But most of all, I have hope. I feel that I will learn from this some key lessons about self reliance and what I really need versus what I want. I think that most people like to say that they don't live an extravagant life or have many luxuries, but I think that this economy, and these times have shown that nearly all of us have something that is a luxury. Perhaps this will teach me to be even more grateful for what I have. Maybe as a country and a society we'll become more grateful as well. Here's hoping....

Comments

Popular posts from this blog

Suze Orman Goes Too Far!

I've been a fan of Suze Orman for years. When I first started working after graduating college and then I started to make some money, my experience with other members of my family, mostly my grandparents, showed me that I needed to figure this money thing out. So, I set out to understand how money works and I found Suze. Many financial gurus are out there and for the most part, much of the advice overlaps, but Suze really seemed to be right along my line of thinking.  I bought the books, watched the show, and despite the fact that I feel like I've largely outgrown it so long as I follow the lessons, I really wanted to check up on how things were going. I went to the CNBC website and found an interview where she said this: "I do really live within my means. I have absolutely no debt. If I don't have the money to write a check, then I can't afford it. I never, ever, ever spend old money, so I'm only allowed by my own standards to buy something new with new mone...

Do Better With Your Time

Recently, I've been extremely busy with some work commitments. The interesting thing for me is that this increased work activity has really helped crystallize some of my feelings with regard to time. And these ideas are a critical part about my view on personal finance. I'm curious to know if others feel similarly. Time is money. That is, Time, in some way, contains energy. Money, is also energy. In the act of working, I am able to compound and increase the amount of money that I have. I am exchanging my time and effort and thought which are components of my work, for the productivity that I produce. And this production gets me money from my employer. However, the first dollars that I make each day, week, or month are the most valuable. Then the ones that I make at the end are the most valuable. (Forget about taxes for a minute.) The reason is, the first ones help me have a place to live and food to eat. And the last ones are the ones that I can use to really improve my life lo...

Credit Report Review

So, one of the things that I've started doing is trying to pull my credit reports at regular 4 month intervals so that I get a free one frequently to make sure that things are progressing as I'd like them to and also as a safeguard against identity theft. Of course, the part that I don't like is that these reports don't include a fico score - the key number when it comes to determining if you are going to be extended credit and at what interest rate. This time, I got the report from Equifax - I went to the end of the process and for 8 dollars more I could get my credit score. And the Equifax gave me a credit score of 742. This of course is not even close to the perfect score of 850 when it comes to fico score nirvana, but 742 is still a respectable fico score. Things to improve are basically lowering my balances on my credit cards and loans, which I already have a plan for. And also I noticed that the amount that I paid off on one of my loans is actually still being rep...