Wide Open Wallet

An honest look at family finances

Archive for the ‘recession’ Category

Signs of the times

Here are 10 things I’ve seen around my neighborhood that I believe are due to the state of the economy.  Please share anything that you have noticed in your life.

1. Front parking spaces at almost any retailer…

2. Except for Costco.  Costco is packed.

3. Improved customer service.

4. Brand new BMW parked in an empty lot with a hand written for sale sign.

5. More stray pets.

6. Foreclosure signs in my neighborhood.

7. No waiting for a table at the most popular steak house in town…

8. But the local pizza place is packed.

9. Dads at the park in the middle of the day…during the week.

10. Larger clearance sections in the store.

pic by: Jim Fenton

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  • Filed under: recession
  • Gift Giving Dilemma

    What is a good birthday gift for someone who is laid off?

    My brother in law is currently laid off and his birthday just passed.  Under normal circumstances we would have gotten him an actual gift for about $25 or so.  My husband had a gift picked out for him.  Something for his Playstation I believe, I’m really not sure.  Anyways, it just seemed so frivolous.  But at the same time I felt kinda bad giving him a gift card to the grocery store, or something equally practical.

    On one hand we wanted to use this opportunity to help them out with something they actually need.  On the other hand, we know he won’t be buying anything for himself for a long time and it is his birthday.  I know I would have a hard time getting something for myself if I was worried about supporting my family. But everyone is different and maybe they are ok.  His wife works, and I certainly don’t know every detail of their financial situation.

    We went back and forth a dozen times.  In the end, we got him a $50 gift card to someplace where he could either buy himself something, buy his family something, or both.  We spent twice as much as we would have normally but that way he can get what he wants and still put some towards groceries if he wants.  Or if they are really worried about bills then we helped out a little extra.  Or he can get himself something extra good for his birthday… which is fine too.

    pic by: Manassas cakery

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  • Filed under: life, recession
  • Why I deserve a bailout

    I’m upside down in my van and I feel strongly that I deserve a bail out.  The government should forgive some of the principal of the loan.  Don’t think so?  Let me explain.

    You see… I bought my 2007 Kia Sedona two years ago for $22,000.  I didn’t put a dime down.  In fact, I even financed the tax and license.  It’s true.  My husband and I walked into the dealership, signed some papers, and drove away in a brand spankin’ new minivan.  (and a loan for $24,000)

    The problem is that right now we owe just under $17,000.  Which is totally not fair!  I just saw an ad for the 2009 version of our van for only $15,000!  I don’t think that’s right.  I shouldn’t have to keep making the payments on my van when I could buy a brand new van for $2,000 less than I currently owe.  It’s not fair!  I think the government should wipe $7,000 off the principal of my loan.

    Isn’t it the right thing to do?  I mean, just because I agreed to pay $22,000 for my van doesn’t mean that I should have to actually pay that amount.  It’s the dealerships fault that I paid as much as I did.  They should have told me that the prices would drop this much.

    It’s not fair!  If they are doing it for houses, they should do it for cars.

    So I’m going to stop making the payments and wait for my piece of the bailout pie.

    (For those who don’t know me… I’m totally kidding.)

    Pic by: Matt McGee

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  • Filed under: recession
  • Housing prices over time

    I know this chart is hard to read, but I felt I had to share it. I saw it about a week ago and haven’t been able to get it out of my mind.

    The chart is an index of American housing prices going back to 1890.  It is based on sale prices of standard exisiting homes, not new construction.  It shows housing prices in today’s money.

    The second shaded area is the Great Depression.  The fourth and fifth shaded areas are the booms during the 70’s and 80’s respectively.  The last shaded area is the current boom.  Wow.  Check that out!

    The important thing to notice is that after each boom, or depression, the average standard house price returns to levels that have been consistent since the 1950s.  The dotted line is an estimation of future housing prices.  The last year listed on the bottom is 2013.  So according to the chart housing prices won’t reach bottom until about 2017.

    Gulp!

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  • Filed under: recession
  • Guest Post: No Raises in 2009

    Today I have a guest post from Not the Jet Set.  I hope you enjoy it and I encourage you to see what else they have to offer.

    About Not the Jet Set

    He’s a spender, she’s a saver. Together, they’re Not the Jet Set.

    Fed up with working too hard to not have any money, we made the decision to take control of our finances. We began a mission to get out of debt and stay out of debt - forever. On June 23rd of 2006, we completed Baby Step 2 by paying off over $42,000 in 20 months. During that time and ever since then, we’ve seen it as part of our calling to help others achieve what we have - financial peace.

    not the jet set . net is a blog about money, stewardship, and frugal living - personal finance for the rest of us: one family’s story. We don’t claim to know it all. We won’t claim to make you rich. But we may get you to think a little differently about money and how it affects your life.

    ***********************************************************

    Why I’m Not Getting A Raise in ‘09

    I worked my butt off in ‘08.  It was my second year with this company - in many ways it felt like my eighth or ninth.  None the less, I was gunning for a good review this year.  I’d done well in my first year (2007), but was dogged by the fact that I was new.  There was this assumption that a new hire could not perform above par in their first year.  This was despite my manager continually asking how long I’d been with the company, as he was in disbelief of my newbie status.

    I was having none of it this time around - no excuses.  To quote Step Brothers, “I’ve been snappin’ necks and cashin’ cheques”.  Literally, well… the second part at least.  Throughout ‘08, I received 3 performance based bonuses.  0-1 per year would be considered ‘on par’.  I even took on a new role in Q3 with about double the responsibility.  So far, I’ve handled it - cleaning up the messes left behind and avoiding new ones.

    So how is it, dear reader, that I can tell you with such confidence that I will not be getting a raise this year?  A solid 2 weeks before my performance review??  It’s the economy, of course.  Few companies have gone through these times unscathed, and we are no exception.  So, the announcement came down, from the CEO himself: There will be no raises in 2009.  None.  Other rays of sunshine?  401k matching funds will now be given in the form of company stock.  Swell, huh?  Annual bonuses on the other hand, are still TBD.  Tax man steals about half of it anyways.  Still I’m holding out hope there.

    I know this all could be far, far worse.  This post could have been a How To: on filing for unemployment (varies state to state by the way, check your state’s website for more info).  Or, we could be talking about getting by with less and handling pay cuts (I do know folks in this boat, and maybe that post is still coming).

    So here is my plan:

    1. The company’s performance is not my own, so I expect a fair performance rating regardless of the company’s ability to compensate.  It may be possible to leverage that next year assuming that things improve by then.
    2. No money for raises - fine, I get that - so give me what you can.  I’m planning to ask for an increase in vacation time.
    3. Continue to work my butt off, and pray that there are better times ahead of us all.
    I know it may not sound like much, but it’s the best plan I can come up with.  I’ll be posting updates at our site, not the jet set . net - pay us a visit or subscribe for all the latest and more.

    Has this happened to you?  How did you handle it?  Let us know.
    pic by: neubie

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  • Filed under: career, recession
  • Pay cuts vs. Layoffs

    One of my classes this semester is an Accounting class.  Last night I was talking to the woman who sits next to me.  She works for a charter school in the area in their accounting department.  She said that they have 400 employees and yesterday they were all given a choice.  They could either agree to a 3% pay cut, or 25 people were going to get laid off.

    OUCH.

    She is going to agree to the pay cut.  One reason is that she is the low man on the totem pole in her department so she is pretty worried about getting laid off.  She also said that she wouldn’t feel right keeping it knowing that people got laid off so she could have that little bit extra in her check.  Hopefully everyone else feels the same way.

    If the pay cut passes, the school promised no layoffs this school year.  But no promises about next year.

    Hearing this story the woman who sits in front of us turned around and said she works for an Accountant.  She recently took a call from a woman who knew the bare minimum take home pay she could live on and wanted to know what the gross pay was that would give her that take home.   She is going to go to her boss and offer a pay reduction to try to save her job.  That’s gutsy… and sad.

    It’s getting bad out there folks.  Have you, or anyone you know, done anything bold to try to save your job?

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  • Filed under: career, recession
  • My husband sent me this article the other day that says America’s debt has shrunk for the first time ever.

    They said…

    The government reported Thursday that household debt in the third quarter fell for the first time ever. Meanwhile, net worth dropped by the largest amount on record based on data going back to 1951.

    Household debt fell by a seasonally adjusted $30 billion, or an annualized 0.8% in the third quarter to $13.91 trillion, according to the Federal Reserve’s flow of funds report.

    They quote both the fact that interest rates have increased which has lead to less spending on credit and the fact that credit in general is harder to come by.  Another major factor is that so many people have lost their homes.  When the bank forecloses they take the debt onto their books, removing it from the homeowner.  This will show as less overall debt on consumers.

    They go on to say…

    “There has been a particularly steep rise in the savings rate recently,” said Englund. “With a large part of thriftiness due to panic, this trend could continue for a long time.”

    “Consumers are going through a major change in their spending and savings habits,” said Lyle Gramley, a former Fed Governor. “Throughout the housing bubble, consumers had a savings rate of zero, relying on the rising price of their homes. Now they’re saving money for the future instead of spending it.”

    I’m not entirely sure what to say.  When I hear that saving rates are up and debt is down it makes me happy.  But I know that these changes are what’s driving this horrible economy.  While my family has been negatively affected, I know that others have been hurt much worse than us.  But over the long term I think it will benefit our country if we keep up these trends.

    An economy built on debt is not sustainable.  At some point the house of cards will come crashing down.  Is that what’s happening?  I have no idea.  But when the whole thing folds in on itself a stronger economy will emerge.  I’m willing to sacrifice my net worth, my retirement accounts, and my fancy things so that my children will have a strong economy.  It’s unfortunate that people who didn’t create this mess are going to be the ones picking up the tab.  But someone is going to have to pay for it, and if I have to choose between me or my kids.  I choose me.

    pic by: The Jamoker

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    Several times over the last few days I’ve heard on the news how the city is getting ready to lay people off.  The reporter always notes lower sales tax revenues and property taxes are the reasons for the city wide layoffs.  On the surface that seems reasonable.

    But the whole thing rubs me the wrong way.  My first thought is “If the city can run on less, then why weren’t they doing this the whole time?“  I mean, you’ve all seen the scene on the side of the road.  Three guys standing around while one guy is working.  It shows me the government is no different than my neighbor.  Spending just because they can, no plan, no restraint, money burning a hole in their municipal pockets.  Except I get no secret pleasure when the city has to cut back, like I did when my neighbor put a for sale sign on his Hummer.

    Secondly,  wouldn’t it be nice of while the private sector was booming the government was holding back.  If the government would lay people off while jobs were plentiful and growth was abounding it wouldn’t hurt so much.  Those people could easily find jobs.  Meanwhile the government could try to mitigate the private sector’s rapid growth.  Attempt to hold that pendulum from swinging too far. They could sit back and collect their nice big tax revenues and save (ha. ha.) for times like right now.

    Then when that pendulum comes screaming back the other way and the private sector beings to struggle, the government could then inject all their savings into the economy.  They could call it a stimulus package if they wanted! They could be hiring right now, rather then laying people off.  They could be building roads, expanding programs, spending money, and creating jobs.  The government could be helping to fix the economy in a real and local way.

    Take my neighborhood for example.  My house was built in 2004.  Literally a mile away they were also building a new freeway.  Now, it should have taken 3 months to build my house.  But it took 7 because labor and materials were so hard to come by.  We had to wait for concrete for the foundation, then we had to wait for framers to be available, and on and on.  If the government had restricted their building they wouldn’t be right in there competing for these precious resources.  They could let the private sector have the workers and materials.  Imagine if they were building that freeway right now.  Think of the jobs they could be providing, of the business they would be helping.

    But instead the government is struggling right there with the rest of us.  It’s too bad.

    pic by: Rick

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    Kids and the economic crisis.

    I found this interesting article that talks about what you should say to your kids about the economic crisis.  It can be an interesting time for parents.  While you are feeling pretty pessimistic about our economy, you don’t want to burden the kids with worries.  On the other hand you want to be honest.  So how do balance honesty and optimism?

    While I do believe that you should never burden children with adult problems, kids are smart and perceptive little devils.  They often know more than we expect them to.  If your little ones are showing concerns about the economy then there are ways to ease those fears while still being honest.

    Try not to say “We can’t afford that”.  Even in good economic times we should avoid those words.  They aren’t accurate for most scenarios, especially ones that your kids will be involved in.  A more truthful way to say it is “We choose to spend our money on other things”.   Not only is that true, it also conveys the point that choices have consequences, and that we have control over our situation.  If the child pushes you can explain that buying a new car means that you wouldn’t have enough money left over to pay the electric bill.  And what fun is having a new car in the drive way if you don’t have power.

    I was at a store one time and there was a candy machine.  A little kid wanted a quarter to put into the machine and the dad said, “No, we can’t affor… We don’t spend our money on things like that.”  I had to smile.  I wanted to go over and commend him, but I thought that would be weird.

    Have them help with frugality.  Kids love to be involved.  Tell them you want to plan a family fun night but that you don’t wan to spend any money.  I bet the kids can come up with a half dozen things to do.  I know my daughter can.  We would be dressed up in fancy clothes having a tea party in the backyard, complete with home made cookies.  This is a great time to let them see that you don’t have to spend money to have fun.  Plus, it lets them feel in control of the situation.  They dont’ have to sit back and hope for the best, they can be involved in getting the family through this tough time.

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  • Filed under: recession
  • Well, I barely hit the “publish” button on my post about my fears regarding the economy and one of them is realized.  And you guys thought I was being paranoid!  (No, my husband didn’t lose his job… thankfully!)

    My husband called me this morning at about 8:30.  Which is strange, not totally out of the question, but strange since his mornings are usually pretty busy.  Before he even says anything I can tell by the background noise that he is outside.  Also strange, it means he wants to talk to me without his co-workers overhearing. All of this oddness makes me think something is up.

    We chat for a bit about random stuff and I think ‘oh maybe it’s nothing, he’s just calling to say hi.  Maybe it’s slow over there and he’s bored.’  But then he says “I got some bad news.”  Oh crap! Oh crap! Oh crap!

    I’m going to do explain this the best I can, which isn’t very good since I don’t fully understand it myself.  Company A hired Company B to do a job.  Company B hired Company C to actually do the work.  My husband works for Company C but he physically works at Company A’s site.  Does that make sense?  Company A and Company B just recently signed a 5 year contract.  Which is good for us because my husband just gets hired on to which ever Company C happens to be at the moment.  It changes every few years and my husband has to go and interview for his own job again, which he always gets.  While that is kinda scary who is better qualified to do the job than the guy who’s been doing it for the past 15 years?

    But I guess part of the work that he does isn’t part of the actual contract.  They just do it.  Well, this section of the work got contracted out to Company D yesterday, because they will do it cheaper.  So that means a big chunk of work that my husband and his three guys no longer have to do.  Which is bad.  It means no overtime. It means they don’t even have enough work for the guys who currently work there.  My husband’s boss said that they will watch it for a month and see how it looks, busy wise.  But my husband doesn’t see how they are going to keep the lowest man on the totem pole.  Which sucks.  Since it’s such a small team they are all pretty close.  It’s actually my husband, his two brothers, and a family friend they have known since they were kids.  It will be sad to see one of our friends get laid off.  It also means that we are that much closer to having it happen to us.  I feel like I’m standing on my front porch during a hurricane, and the flood waters just covered the bottom stair.

    There is one small silver lining.  My husband used to work at Company D and the person in charge of this new contract is one of his very good friends.  I’m not sure how that will help us, but it can’t be bad right?

    I really haven’t comprehended what exactly the whole “no overtime” thing means.  It’s not good.  I’m not quite ready to go there and figure out just how not good it is.  That is a post for another day.

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  • Filed under: recession
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