Mood:
Now Playing: Till The Morning Comes & Hell In a Bucket by Grateful Dead
Topic: Ponderings
Perhaps it is because I am a financial analyst; or I understand how to plan and budget; or it is because I can be very rational when I need to be - I am just not unnerved by this recession. Additionally, I can feel secure in my job (it would take two people to do all the work I do and they couldn't find anyone with my experience and expertise) and I live within my means - WAY within my means.
Recently there has been layoffs at Matt's work and 50 people were cut. Matt's still there and I am sure he will be kept on for the very real fact that he is just too good of an employee to loose. He is cross-trained in at least three or four different areas so they can move him around and he can cover lots of various tasks. Additionally, we live here in town near his work, and if they were going to cut people, they'd cut Wichita people first, as Wellington couldn't take much of a cut and this company would really piss people off if they laid off Wellington people rather than Wichita people.
Still, people at Matt's work are anxious and its been very tense for him there lately. So, to give him a sense of security, I sat down and showed him on a spreadsheet (yes, I am spreadsheet crazy) just how we could make all of our bills and obligations on just my salary; yes, just my salary and him not even receiving unemployment benefits, which of course he would get if he were to be laid off. I itemized all of our bils and put down what the minimum payments we would have to make to keep things a float. We of course would have to cancel NetFlix and the Credit Protection/Privacy Protection Plan I have on all our accounts, and we'd go back to being on a budget for our Food and Entertainment like the lean years when we first got married. Even with all that, we'd end up with $160 of fudge room in case a budgeted expense was higher one month or another. AND, we'd still have all of our Flexspending dollars to pay for medical related things.
Luckily for us, I paid off all of our credit cards in August when I foresaw this crisis in the credit market and stock market coming to a head. I don't put anything on the credit card that I am not sure if I can pay off before the due date - thus sparing any interest charges. I treat it more like a charge card then a credit card. There is a difference and not many people understand that. Like the AMEX card that you once had to pay off monthly that has now gone the way of credit cards - I treat our cards that way. Christmas, holidays, gifts - it is cash in hand or we don't buy it. This year, I paid off my student loans early - done in August - yes, same foresight.
Currenlty, we are making $780.63 in additional interest payments to our home mortgage and Matt's student loan. At this rate, our 30 year mortgage will be paid in 7 years, saving us $96K in interest, and Matt's student loan will be paid off in another 8 years, saving us $7,427.79 interest AND ending our financial relationship with his ex-wife at the same time the child support obligation to her will stop.
I am looking forward to being completely out of debt at age 44. We'll be able to put our mortgage payment, child support payment, and student loan payment into a ROTH IRA every month until we meet the maximum allowable investment and the remainder can then go into various long term CD's and money market accounts...meanwhile, both of us will still be contributing to our company plans - mine KPERS (Kansas Public Employee Retirement System) and Matt's Merrill Lynch 401K.
I'm not worried. I have a plan. I always have a plan because that is what I do. I am a financial planner, and I am ready. I am certainly not asking for Matt to get laid off, but I am also not going to become overly frightened with all the media hype and bullshit they are scaring people with everyday on the news.
My advice to you people out there: stop buying things on credit, put yourself on a realistic budget, don't open your 401K plan statements, and if you are worried - go get a part-time job flipping burgers or stocking shelves. Get rid of your cellphone, your cable TV, your cigarettes. Start spending some time at home with your family reading, playing games, and taking care of your house. Scrapbook your family photos using real scraps - no need to buy manufactured stuff at the craftstore, do what real scrapbookers did - cut things out of magazines, newspapers, and odds and ends. File all your personal papers, organize your closet - you don't need to play that round of golf, or pay $10 for a movie per person plus junk food. Make all your meals from scratch at home and be frugal.
My mother-in-law is the queen of frugality, and although I don't can all my own vegetables, fruit, pickles, and meat like she does - most of which she grows or buys from local farmers, I do know how to economize. Read the book "Living Well on a Shoestring" and learn something about recycling, reusing, and presurving items and repairing them rather than just buying new stuff.
I think this recession was clear and necessary. Four years ago when I was looking to buy our house, I new we needed to get in one before the credit market hit the fan AND I new that our only hope was with an ARM. We got in and paid off as much as we could, bettered our credit rating as much as we could, then refinanced with a 30 year traditional mortgage August 2007 at a sweet rate. This country was headed for a setback financially. It was VERY clear. When my father told me he was buying a house with zero interest the same time I was looking for our house, it confirmed it for me. I tried to explain to him that it wasn't zero interest...it was deferred interest. The cost just gets put off and then you have higher payments later that you can't afford. I begged him not to do it, but he did. He got out in the nick of time and didn't loose money, but he now admits that I was right and he shouldn't have bought that house with that mortgage. How many other people where doing that same thing? Millions. My father is an average Joe, and if he was doing it, it meant to me that in two to three years things were going to explode in the financial markets that held mortgages. I got in and planned my mortgage and got out just in time, like I planned.
So, am I rubbing people's noses in this? Maybe. Am I saying I am smarter financially than the average person - why yes, I am. I am a financial analyst, that's what I do, people, please. I've had two friends recently go through bankruptcy and they have degrees in Accounting! My degree is in Music and all that I have learned about economics and finance has come from my years of working my way through college doing accounting, and from managing budgets for the Tribe I worked for, and for Wichita Public Schools. I have also listened to National Public Radio's nightly MarketPlace report at 5:30PM for more than seven years. I pay attention and observe. I learned the hard way from my ex-husband who couldn't manage money and nearly ruined me. He took care of the finances - why - I can't explain all that right now. Still, a degree in finance doesn't mean squat if you ignore the obvious.
America is in a recession - which is basically a financial hangover for 25 years of absolute excess in consummerism. It is time to pay the piper for living beyond the nation's means.
Updated: Monday, 17 November 2008 7:27 PM CST
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