Friday, December 5, 2008

We're half-way there.


Whenever I ask my fiance how much longer until we're there, no matter where we are going, he tells me - as he would a child - "We're 'bout halfway there."

Wiki says this about recessions:

There is a view termed the halfway rule according to which investors start discounting an economic recovery about halfway through a recession. In the 16 U.S. recessions since 1919, the average length has been 13 months, although the recent recessions have been shorter. Thus if the 2008 recession is an average one, the downturn in the stock market should bottom around November of 2008. However some economists fear that this recession may last longer.

Well, we're past November, aren't we? And we're already a year into this recession according to the people who know these sorts of things.

The news is telling us now that 1 in 10 mortgages are now in default or other kind of trouble. And then there was today's jobs report. Layoffs worse than the 70s.

I've been wanting to write about this for a while, but not sure how to talk about it without offending or just fanning the flames, or maybe worse, turning our virtual salon of bitchy decor-related conversation into a place of real-life worry and woe.

But I am curious - how is everyone doing? When do you think we will see the bottom? Are you in trouble? Have you lost your job? If you were to get laid off, how many months could you keep it together... get the bills paid and maintain your life, before you ran out of money?

I feel like we're all holding our breath, don't you? Waiting to see what comes next. But I am all out of guesses. I just don't know.

If your crystal ball is better than mine, or if you have updates worth sharing, I would love to hear it. How are you doing? Is life the same? Have you made big changes? And have any of you made changes that you think will stick for good?

64 comments:

Anonymous said...

Honestly? If I lost my job tomorrow, there is no cushion. Never has been. I think about this frequently. I try not to worry though, which could be foolish. The company where I work is very understaffed, so if we lost even a few people, it would prove a hardship to the firm. I am in a senior position but have always felt tenuously attached. Expenses obsess me, so my husband and I have cut back as much as I know how, as have our friends. Lamps are turned off when not needed. No buying breakfast on the way to work or buying lunch at work; I brown-bag. We've cut back on our wine purchases and slowed down on playing around with fancy recipes. We paid off all our credit cards after taking out a small loan on the equity of our house, which was a blessing and has proven a comfort. We rely only on our cell phones (same service, so calls between us are free) and have disconnected our land line. And we've disconnected an Internet connection and piggyback on others' when we can. I'm not scared, just very calm and thoughtful and waiting for the other shoe to drop. To all outward appearances, we are still comfortable urban folks, but the reality is a bit different. I should have planned better than this, obviously, but now that we are in the midst of this recession, I can only coast and hope.

Susannah said...

Oh, thank you for posting this. I've been wondering how people are affected because honestly? This recession has kicked my ass.

I work in Product Development for retail companies, so obviously my industry has been deeply changed. In the past 6 months I have been laid off twice. Prior to all of this, I had been at my job for seen years. I had just been promoted. We had just bought a house in an affluent county because we wanted to raise our daughter where we grew up and where the public schools are outstanding.

Now we are very likely putting our house on the market in February. I am just praying that it is worth more than we owe. I am selling my car. My husband is an architect and is luckily employed right now. But we don't get health insurance through his company so we are now paying through the nose for COBRA. Things are tight. We are only buying one Christmas present and that is for our daughter.

I never thought this would happen to me. Now I laugh at how naive I was.

Thank you for posting that maybe, hopefully, pleasegodplease, we are at the halfway point. On December 23rd when the days start to get longer again, the world better start to get lighter, as well. That is the arbitrary/seasonal date I've given it. After that--gah. Who the fuck knows.

CJP said...

I was at a party a few weeks agp talking to someone who is a financial analyst. She said she thought the bottom was end of November as well. Trying not to obsess about the market, but at least the stocks I own have been inching up since then. My husband and I feel lucky that we have been reassured at work that our jobs are safe. I have a few friends who were laid off in recent weeks. Seems like this is just the beginning. We're not taking things for granted and being as frugal as we can be. It just doesn't feel like a time to be extravagant, even if you have cash to spend.

tracey said...

My husband is one of these finance/fund/share market men who are blamed for putting us into this mess (well, I don't hold him solely responsible - everyone must take personal responsibility for their own greed - he was a hero while making them money!). For years I was telling him that him and his colleagues were out of touch and had lost the plot with what 'real' people were thinking (I'm a school teacher) and now, boy are they feeling it. So, yes, I can't imagine that anyone is spending like they did and I'm sorry to say, but I think this is the tip of the iceberg! Next year, watch out for big job losses. In Australia they have slashed our home loan interest rate to stimulate the economy and it hasn't made a dent! This could take a few years.....

thevintagechair said...

I'm out in Central Oklahoma and things here are pretty much normal, although, there has been a VERY slight dent since gas prices went down (our economy is heavily invested in oil, obviously, but $1.50 for gas ain't bad!). OKC is pretty recession-proof at this point. The biggest change I've noticed is that large chain retail stores like Old Navy and the big mall department stores aren't hiring as much seasonal help. I assume it's because their company has alredy been hit hard. Like I said, it's pretty much business as usual for most of us here. If I lost my job, my husband and I would be fine for up to 7 months. we've saved this surplus for just this reason. we're smart kids :)

Anonymous said...

I'm worried, but I'm a worrywart and good at it, so it's hard for me to know how seriously to take my own worries. I quit my dayjob in July, a few months after receiving a large raise and realizing that didn't make me hate it any less. I'd saved up $12,000 by the time I quit, hoping that would give me a bit of a cushion for the recession (with my own theory that it would end with a new president). I'm not in a situation I've ever been in before, so I can't really judge things that way, but I do know sales for my small business are definitely down quite a bit.

I think I'm doing okay, realistically, and should be good through spring of next year, but I do worry and think of back up plans. Don't yet regret quitting my job, though. And if I drop my health insurance, I'd save almost $500, more than rent...

Anonymous said...

I was laid off from my job in late September, but knew it was coming, so I had time to interview my butt off before having to go on unemployment. I ended up having to go on unemployment anyway and then found out that I don't do well sitting on my butt all day watching shows like The View. So I kept interviewing and finally found a job with a fortune 500 company and was able to breathe a sigh of relief. Know what? They're not doing so great either. Everyone out there is struggling and my company is trying to stay afloat by cutting costs down to the last paperclip. Yeah, I'm a little worried, but I keep my eyes and ears open. Thankfully, I have a little bit of an insight as to the goings on in my company due to my position there. That gives me a little bit of relief. Until then...

Anonymous said...

Interesing post. I'd love to hear from others as well.

My husband and I are your standard "DINK" and live very, very well. But I have to admit that I've been thinking about a word that has never, ever been in my vocabulary: BUDGET. There I said it! When I mentioned this to friends they even laughed at me! So sad! Although we're not realy on any type of budget we're just more conscience of our spending. Something we should should always take note of...not just when times are tough. Other than a reasonable mortgage, 2 car payments and standard utilites, we have no debt. We're not ones to live beyond our means. In the past we've invested well and have a nice cushion should one of us be out of work. Which could be a reality for my husband. I'm not "worried" but concerned. This is the first "down" cycle I've experienced and I hope our situation can stay stable.

ArchitectDesign said...

I feel lucky to still have my job while many of my friends in the profession drop like flies around me. Without the usual bonus, no raise, overtime, etc it's been a bit tight -especially as all my costs and bills only seem to be getting higher! I don't let it bother me too much and try to concentrate on all the small things I can do to save money. I'm still shopping as usual though, eating out occasionally, treating myself to a few indulgences - but I have cut back, definitely. I think I could last 2 months if I lost my job only..that worries me. Suzie Orman would yell!

...love Maegan said...

I honestly think we have a long way to go before it starts getting better. I'm just basing that theory on past patterns though and hoping I'm wrong.

I feel it in the air. Everyone's scared.

Decorno said...

Susannah - I am glad you commented. A lot of people have been reading about what you're going through on your blog, but we're confused what happened. Did you have an ARM loan that increased? Or was losing the second income just too much - tipped the scale in terms of being able to pay the mortgage? Not trying to dwell, but just trying to understand the complete picture...

Anonymous said...

I feel like my industry (arch & design) is just starting to feel it - but will actually be feeling it more next year. Most of our projects are funded ahead of time, so right now we have lots of work...but eventually that will wear off. Our projects will end and their won't be anything coming down the line. So I'm not as worried now - but worried about this spring. The best part of that is that we have time to prepare (my husband and I are both in the industry). blah...

Kristin said...

My SO and I are trying to pay off all credit cards. We're one or two months away, and then we'll be free. I'm proud of us, since our collective debt was huge. We just found out that we're moving across the country next summer for my SO's education, so I'm a little worried about trying to find a new job in the middle of all this. I'm fairly confident that my current job will see me through until then. His income is pretty secure (he's a graduate student in the sciences and gets a stipend until he finishes his doctorate), so we'll probably be able to squeak by if I don't find a job right away. I don't even want to work, anyway. I want to get my Ph.D, so maybe I'll just spend the fall getting my applications in order so I can get in to a good program. It will take some serious effort on my part. Ugh. We don't know yet if his new university will pay for my health insurance, though, so that will be a huge burden if I can't find a job. Home prices in our new city are a quarter of prices in our current city, so we are really tempted to buy our first home. Our new city has been hit hard by foreclosures, so we could get a really good deal if we hold onto the property long enough to see home values rise. My mind is racing about all this, so of course I've become neurotic, and did I feel guilty for buying snacks at the store while I was between appointments today. We're thinking about getting rid of our cell phones and using a landline and are definitely selling our cars and switching to public transit. I need my car for my job right now, but it is not moving with me. We don't have cable television, and we keep our house pretty cold. Our poor pets. We have a cushion if all hell breaks loose, but a good chunk of it is our wedding fund and we'll be dipping into it soon for the Big Day. We need to scale that back as much as possible. Our wedding budget is already pretty minimal (no dancing, just a dinner party, small number of guests because absolutely everyone has to travel to get to it, no alcohol - or very little of it, thanks to my non-drinking family), so I'm scratching my head as to how to achieve a simpler, cheaper affair and not have it be completely lifeless. I want flowers, awesome photos, and good food, damn it!

Anonymous said...

My husband and I have never seen anything like this. Several of our friends, smart and sensible people have lost thier jobs. And there are NO prospects in sight. It is very scary. As to the DINK who says she isn't really worried because they are "well invested", what does that mean? Well invested in what? We are extremely cautious investors and our investments are down nearly 50%. We used to have lots of equity in our home but now there is none. We have 5k in cc debt that we are trying to pay off like crazy. We have an emergency fund that would last us about 4-5 months but from what we see that is not nearly enough. Who say this coming?

Anonymous said...

My job is safe but my husband's job is not. We are both lawyers. There's just not enough business to go around for him right now. We have no credit card debt and no car loan. We have a huge mortgage because we upgraded houses about three years ago, and that means a larger mortgage. Fortunately, we have a 30 year, fixed rate mortgage. We have been saving like mad fiends for 4 months now (i.e., shut down spending on all extras) to add to savings we had already accumulated. If my husband lost his job, we could probably float for six to eight months before we would have to unload our house or alternatively take a loan against one of our retirement accounts to pay the mortgage until he became employed again.

Oh and he has been looking for a job for the last 5 months and the market is as dry as a bone. What really sucks is that I feel like I haven't been reckless or irresponsible with our financial situation and we're still embroiled in this mess. It sure as hell puts a damper on the holiday season.

Anonymous said...

a friend was a senior director at Bear Sterns in NYC and got laid off last summer. She is brilliant and has studied economics and every time I see her she manages to put the fear of God in me (mind you her industry collapsed and she lost much of her retirement savings). She spends a lot of time researching this, nwo that she is home all day with her financial newspapers, and she doesn't see the end coming for a long, long time.

On the other end of it, my husband just had drinks with friends the other night, one of whom works for MTV in reality TV development. She expensed the entire evening -- tons of cocktails and food, car service etc. She even complained that last month they shut off her company AmEx because she spent so much. Obviously that didn't clue her in to maybe scaling back.

Although these times are indeed scary, it seems some companies have a lot of fat to cut.

I work in book publishing which, in theory, is somewhat recession proof. When none of us have any money to redecorate we can all, probably, still afford that new Michael Smith book to page through. That is what I've been telling myself anyway!

Still, for a 30-something married couple living in NYC, my husband and I could probably live for a year if we were both laid off tomorrow. Despite my love for shoes, I grew up in the midwest and saving money has always been engrained. I've never been more thankful for my miser of a father. My Dad buys all his clothes at Brooks Brothers but will not buy a new sweater until there is a hole in the elbow of the old one -- and even then he tends to go for leather elbow patches first.

kallipe said...

We are doing ok, but have always lived well within our means. We have a lovely home that is half the size and price of what the banks and lenders have always told us "we could afford". We can all do with so much less, but it is quite an American phenomenon to "want it all".

When asked about the falling prices of gas, and if this would lower his priority in regards to energy independence, President-elect Barack Obama put it wisely in an interview on 60 Minutes, after answering absolutely not, he went on to say that Americans have a tendency to be either in "shock or a trance"... so true. Just heard on the radio that orders for hybrid vehicles are down because of the low gas prices. I think they could be down because of people aren't buying new cars. But interesting.

I am an optimist. These are very tough times and will get tougher. But I think as a nation we have learned so many hard lessons in the past 8+ years, from our own mistakes. When things start to turn again, which it will, hopefully our collective wisdom, with President Obama leading us says "never again".

Anonymous said...

Anon 6:43

You say, "What really sucks is that I feel like I haven't been reckless or irresponsible with our financial situation and we're still embroiled in this mess"

But didn't "upgrading" 3 months ago contribute to your current financial insecurity? Even 3 months ago people knew how bad things were. Just saying.

muranogirl said...

My husband has restaurants here in SF and our business is down 21% from last year. We started to feel this pullback in February. People that ordered wine are now drinking water and iced tea. They are not ordering the better entrees and are skipping appetizers. As a result the chefs have had to react to this change and change up the menus. People are not paying for white truffles on their risotto, can't blame them. In October, as the market was crashing, our financial dist restaurant completely tanked: it was JUST LIKE AFTER 9/11.
The streets seem empty, sad, tense and anxious. We are waiting for the other shoe to drop. Fortunately this is a tourist town. There are many businesses still sending people here for meetings and the hotels are doing their best to lure leisure travelers.
I would like to believe we are half way there!

Anonymous said...

You know what’s scarier than losing $100k on the sale of our home? Not selling it and watching my husband, a naval submarine officer get on a plane headed to Washington D.C. for his next tour WITHOUT his family. You see we are painfully use to seeing him leave. He is the Weapons officer on the USBN Maryland. The difficult life of a submarine family is one that we are proud to endure. I myself, can get through the long deployments with no phone calls and the occasional emails knowing that our “shore tour”, 2 years of a normal life without deployments, is just around the corner. But this time is different. Mike is heading back out to sea and I am faced with the daunting task of selling our first home in this horrific market.
Yes, yes I know there are a lot of people in worse situations than ours but here’s the thing. We did everything right. Everything! For years we pinched our pennies. Living well below our means all the time keeping our eyes on the prize… a new home. You decor junkies get it, not everyone does...but I just HAD to own a home. Paint my walls whatever damn color I wanted, plant some plants even though I won't see them grow and change a light fixture or two (ok, maybe all of them!). We choose a modestly price home with in our budget and took the safe road with a 30 year fixed loan. But here we are watching the neighbors slash the prices of their homes with the help of their employer's $50,000 "donation". All the while we stand by and watch our employer, the US government talk about bailing everyone else out but doing nothing to protect their own.

Petunia Face said...

Hi Decorno,
What happened is this: we both need to work. So the first time I was laid off in April was tough--we went through a lot of our savings. Then when I was laid off again in November I got what amounted to 2 weeks severance since I'd only been there 3 months. So now we are using the rest of our savings to pay the mortgage. We bought this house in February 2007 thinking we would both always have work. I did not see this coming at all.

Now almost all of retail is on a hiring freeze. Product Development is one of the first things to go, as I've learned. They don't need to create their own product--they can just buy off of lines.

To top it off, my husband had been trying to get his own architectural firm off the ground. He was doing well throughout the summer, but beginning of September his jobs came to a close with nothing more coming in. So he closed shop and went back to working at somebody else's firm. He started 12/1, so for the last 2 months he didn't have an income either. I am just so thankful he was able to get a job. His new firm just posted a position for another architect and in 3 days they received 500 resumes. Oy.

So that's my tale of woe. Better than some, worse than others. :)

xo,
S

Anonymous said...

Anon 8:32, I said 3 years ago, not 3 months ago. We would have shut down our house search in this economic climate.

Ann said...

My husband lost his salary two months ago due to both economic problems in his division and jealousy from one of the owners, leaving only the son in law to run things - no suprise there. He was promised a commission based pay plan instead but we have seen no income. We have just applied for food stamps and we are late on everything. The aforementioned son in law and him formed a business on the side and the company found out about it (we thought they knew). The two owners(one of whom is father in law of son in law) stormed over to our house yesterday while we were decorating the outside of the house and demanded their laptop and company phone. The newly formed business was complementary to ther business, not a direct compete. So we are having such a jolly old time. We are praying like crazy, I can tell you that. None of it makes sense - it is like they are panicing about this new business that has not made a dime yet.

Anonymous said...

I hate how we're living and how we're limited and the total uncertainty of the future. We've cut out every single extra. I'm a freelance graphic designer and my income has been slashed as clients' postpone or cancel projects. My husband works for The Coca-Cola Company and job cuts are in the air. Because we support my mother-in-law (including paying her mortgage) we have exhausted our savings. We put our own house on the market and it stayed there for over a year without an offer. The worst part is having to curb our kids' activities and cut our all of their extras. So, times are very very scary. We've had to tell them that Christmas will be very meager. Really sad. I'm just praying that all predictions are wrong and we'll come out this sooner than anticipated.

Anonymous said...

I have heard that some experts feel we will begin to see improvement in the second half of 2009. I sure hope so. I work for a brokerage (lucky mine ISN'T in trouble and my job is secure) and feel badly for clients who have lost money.

My best friend got laid off last week, but has an interview with another company on Tuesday, so am keeping fingers crossed.

I live very frugally, and I work a second job, so thus far I have not had to worry too much, but I went through a 16-month lay off in 2002-2003, so am hoping it doesn't happen again.

Anonymous said...

Anon 6:43 upgraded three years ago, not three months ago, when relatively few people saw this coming. How sad is our media for not educating us better, or how sad are we for not paying attention.

Anonymous said...

I am heartened by the possible positive outcomes of this recession:
less crazy spending on frivolous things as a way to pass the time. Going to the mall was thought of as an activity. Teaching kids that spending money, often money you don't have, is the only way to entertain oneself cannot be the best message. The habit of buying something new every weekend should not be the only thing that makes you feel better about yourself at least in the long run.
Now, as I volunteer, I have observed more families than ever actually going to the museums on the "free" day, going to the park for a game of baseball and pick-up basketball.

stljoie said...

My daughter, a teacher, has been diagnosed with cancer and is worried about how far her sick pay and shared pay will go. Her fiance's job ends in Feb. from AG Edwards/Wachovia/Wells Fargo. My daughters best friend just lost her job as a reporter on the Cleveland Plain Dealer. I am recovering from surgery with no sick pay but good insurance AND my husband has worked in Social Services serving the homeless population for over 20 years and it is a 'growth industry' but donations are wayyyy down. We live in a house I bought 40 years ago and even with refinancing we are okay. If my part time job is still available to me when I can return we will be fine...no car payments etc. BUT no nest egg either.

Anonymous said...

Here's what my crystal...ok maybe not crystal, kinda more like a smoky topaz ball says:

The government will continue to pump money into the economy, bail out the financials, bail out Detroit...

We might not like it and say,
"who is going to bail me out" but now that we are in this mess, it's necessary to ensure that credit is flowing and unemployment doesn't continue to rise.

This is a top-down approach to shoring up the economy...you know, "trickle down".

The employer/consumer portion of this equation is the wildcard and really anyone's guess. If companies react as they always do to tough times by lowering production, cutting wages and imposing layoffs we could be in this thing for a while. If companies with sufficient cash reserves think creatively vs. slash and burn, we will come out of this sooner. So any of you out there in a position to make a difference, your task is at hand.

Now for the consumer. Uncertainty causes fear, fear causes panic, panic is no good for the economy. Now is not the time to be afraid. It's too late. The time to be afraid was when we ran up credit cards, bought homes we couldn't afford and basically lived beyond our means. I know not everyone did this...but in it's simplest form, that's how we got here. The financials just lived beyond their means and when the money stopped coming in, (just like when someone loses their job with alot of debt), the shit hit the fan. This is the part where we learn the lesson, "If it's too good to be true..."

New adminstration. Obama will come in and continue the top-down stimulus to stabilize the fundamentals. He will also do some type of bottom-up stimulus that will have to include tax cuts, maybe drop interest rates and significant job creation. In essence, this will be the "people's bailout". The kicker with this is it has to be both immediate and significant.

We will have to be patient with promises on healthcare and education.

Geitner will revamp the financial regulatory system. I don't think we need more regulation, just smarter and more current regulation. There's a reason those guys and gals on Wall Street make shitloads of money...they are clever and creative. Our lawmakers have always been in a reactionary mode we need smart people to anticipate.

Better days...12 months.

Nina79 said...

I live in Europe and we have not felt it very much - yet.

We made a budget about 2 years ago to find out where our money was going and have been sticking to it for about a year. I can only recommend that to everyone, no matter how big or small their income is. That way you realize how those 3$ cups of coffee each morning add up to hundreds or thousands in a year.

We haven't got much savings but also no morgage, no car, no credit card debt.
I'm still studying so only work part time and am sure I won't lose that job. If my husband should ever lose his job he would receive about 80% of his current income for 2 years. So I'm not too worried. I am a bit anxious about finish University in about a year and then having to look for a job and how things will be then, but a lot can change in a year.

On a more general note: I do think that people have been living over their means, especially in the USA where the motto for me seems to have been: "Buy now, pay much later". If I can't afford something, then I don't buy it. Of course if you want to buy a house 99% of people can't pay everything upfront, but here it is much more difficult to buy a house or apartment and you need to have at least 20% of the price or banks won't give you a loan. And they look at your overall financial situation pretty closely. So there will be much less people who might not be able to pay their morgage.

Anonymous said...

great topic!

i am a retail and design biz. i have nothing anyone needs, pure desire.

we do have serious problems and my day oscillates from OMG a depression is looming to, we'll get thru this, will just take longer than usual.

BUT, if the media outlets continue to warn everyone to stop spending, the doomsday scenario will take place. of course anyone facing foreclosure should stop but not everyone is in that situation. the trickle down effect will however make this a reality.

question; would anyone in july have believed gas in december would be well under 2.00 a gallon?
let's have some hope here!
debra
www.scentimentalgardens.com

Anonymous said...

I work for one of the largest architecture companies in the US and our New York office is in the midst of massive job cuts. I've heard of many in the industry being jobless and, yes Petunia Face, I can believe that 500 applicants for 1 position is pretty spot on. The office is going to be cutting 40% of our staff, and we watch, terrified, as our friends and colleagues are let go. It has taken a while for our firms projects to slow down, and I dont think that we'll feel the full brunt of everything till the new year and beyond. We saw cuts this past Thursday and Friday, and there will be more on Monday and Tuesday. It's gut-wrenching to sit through. The empty desks are starting to outnumber those still here. Which is oh so fitting considering the head partner's pep talk two months ago that "we're fine, and happily vested in projects oversees".

We're witnessing the same cuts that happened in post 9/11.

We would last maybe three months if I lost my job, my SO is slightly better positioned in the same company, but we're both pretty young and expendable. No real cushion as the cost of living in NYC for young architects is abysmal.

Decorina said...

Money is tight. I lost my job 1 1/2 years ago and have worked part time, off and on (lately mostly off) since. Husband works for the railroad - pretty secure. Railroaders made it through the depression of the 1930's very well. But things are slow with the railroad, too.

I saw this coming and we were careful when we bought this house in May 2006. I think it was slightly over priced, but only by about 4-7% at the time. Value has dropped a little, but is still about equal to the existing mortgage - a VA loan 30 years fixed. I would not let anyone sell us any other type of loan and had to run off some mortgage broker that was trying to sell us an 80/20 ARM, yap, yap, yap. All he cared about were his commissions - and future income when the ARM had to be refinanced. But the payments are high with no down payment (we both went through bankruptcy a few years ago when my small business crashed and burned) but we are getting by. Extras are out, my car will be paid off in June and our one credit card after that.

BTW, during the 1930's one of the reasons that people lost their homes was that long term permanent loans weren't made back then. You got a note for 5 years and then had to refinance - sound familiar? One of the programs they put in place with the New Deal was that residentail home loans had to be fixed rate permanent loans - duh. So when the industry was deregulated, they went back to short term financing for most people's only long term investment.

It isn't pretty, but it seems to be necessary. People were using their homes as ATMs for too long as the feds substituted inflated home prices for real income as productivity continued to rise and wages stayed the same or were lowered. It was a sucker bet that too many people took.

I think it will take at least 2 years for the economy to even start to turn around. Ick.

Anonymous said...

I am more on Decorina's page of two years before it even thinks of turning around.

Let's call this what it is though folks, a Depression. With a capital D. When George W. admits to a Recession, you know we are in deeper.

Luckily, we have our beach house paid off and most of our primary residence paid off. No financial advisor in the world will tell you to pay off your house at such a young age, but do the amortization tables and get a pillow because you will sleep so well at night. (Also, we had situations which allowed us to do that.) We are so in the minority. We bought houses worth much less than we could afford just because we are both very financially responsible and frugal, I guess.

My husband is a lawyer and some of his partners were planning to retire next year or the year after - well, they are not going to retire now. Times are tough for everyone. Really tough.

We have two kids in college - one headed to med school and one headed to grad or law school - and one on the way to college. So, yeah, we feel it, bigtime. However, we have no debt (knock wood, thank God!), except the small remainder of one mortgage which we could pay off if needed.

We have cut back by not going out to dinner anywhere near as much as we used to, eating relatively cheaply when we cook and just not spending on unnecessary items. However, we are spending more on liquor!

Anonymous said...

Thanks for sharing. This is a good discussion in so many ways: good to get a sense of the experiences of real people, good to know what people are grappling with, good to unburden ourselves, etc.

What concerns me about this (among lots of things), is the health care piece. Even if one has a decent savings, who could possibly pay for surgery, a car accident, heaven forbid cancer treatments whilst unemployed?

"When the Job Disappears, So Does the Health Care" in Saturday's NYT online.
http://www.nytimes.com/2008/12/07/us/07uninsured.html?hp
This is a good article. It talks about a young woman who was pregnant with she got laid off. She called the hospital and insisted on an early induced c-section delivery before her employment ended. This is not the best care for her or her infant. But, people will do rash things when they feel they don't have a choice. To make matters worse, now the insurance company is refusing to pay. They say the number of uninsured in the U.S. has more than doubled just in the last couple of months. Lets hope someone without healthcare doesn't come down with an infectious disease which spreads to the general population. There are just so many dimensions to this recession.

jax said...

For those of you needing insurance, try looking online. When I was between positions COBRA was almost $500/month and I found insurance through esurance.com that was only $120/month for the same level of coverage. Also, see if your city or county has programs to help with the cost of insurance. I live in D.C. and they have several programs based on financial need. Also, if you are relatively healthy, as a last resort you can opt for catastrophic insurance. It's usually the cheapest all around.

Good luck everyone and I hope that was helpful.

Anonymous said...

We have been buying homes with something special - views,character, location, good bones - since 2003. We spend time, research, elbow grease, and money - lots of money - on them, and have lived in several before we've sold them.

In August we sold a house we had renovated and lived in for 2 years and moved into another one that we have been working on and was almost finished. But we bought our next project last year, and were waiting for permits before starting on it. So we have 2 mortgages and no income. We are surviving on the proceeds of the sale of our last house.

We've been lucky to sell in a buyer's market, and I think we sold only because the houses really did have something special about them.

We had enough equity to purchase these homes because 1) I worked for 30+ years as a teacher, 2) my husband has always worked in the development business and has been successful, 3) we watched our pennies and saved in RRsp's (we're Canadian - they're like your 401K's, I think), and our kids are grown, though not entirely out of the nest.

But, we're worried. We can hold on for a year or so. I play with the credit card debt accumulated through the previous renovations - move to lower rates when I can, but this requires close attention to due dates etc. Not what I had in mind when I quit teaching.

I feel lucky to be in Canada where our banks are highly regulated and strong. But I fear the worst is yet to come. The ripple effects are now starting to be felt here, the job loss rate is higher here proportionally than in the US, and the housing market is tanking, and capital is hard to come by. Our construction guys need work, but we can't borrow the money to pay them and can't risk using up our limited reserves if the economy doesn't pick up in the next year.

Have I blathered on enough? I think so. I wish us all well - I choose to believe that this too shall pass.

Anonymous said...

How do I write this without sounding like an a-hole? It saddens me that so many people are hurting, but life is going very well for me. I saw this mess coming for a while so was only invested about 20% in stocks; my net worth has only decreased by about 15%. I always lived modestly and well below my means so don't really feel the crunch at all.

For the past 2 months I've been jumping more heavily into the market since so many people are selling off stock of good companies at fire-sale prices. I think it will be at LEAST a year before things start to get better, and yet I kind of appreciate not seeing so many abnoxious fund-managers driving around town in 6-figure cars. So many wonderful sales going on, too.

Anonymous said...

I have never had anything and I have nothing now, so I'm not afraid in this economy. After 10 years of university, I started my own business 6 months ago. I have no debt, no assets (unless you count a few antiques and some shoes) and no salary to count on. I'm used to uncertainty, though I don't like it. I'm optimistic after seeing my business' small successes in its first months. My boyfriend is rich and very generous (he works in a role and industry that is hugely in demand). Even if my business doesn't continue to experience little successes and I need to take a menial job for a while to pay my rent, I don't have to worry about having a roof over my head. My boyfriend will help me if I ask.

Anonymous said...

You all lived through post-9/11 recession so as I was reading some of the responses I was wondering how could people be surprised -- maybe you thought that recession was a freak incident? If it was your first, that makes sense.

It wasn't and this isn't either. I'll spare you the stories of how bad the 70s/80s were! :)

Something like this where you're scared for your financial health will definitely happen again in your lifetime so if you're not ready, just take this time to learn how to change your habits and then keep most of them when it gets better.

I'm in my 40s and this is my fourth major recession as an adult . I've learned to earn high and live low - cars are paid off, no credit card debt, line of credit on our place is open just in case, mortgage on a fixed rate, mortgage is ~8% of my yearly income.

Hubby and I just discussed what to do and are switching to increasing our cash savings, but I loved the idea of buying stock now that someone else mentioned. Very smart!

Anonymous said...

I was laid off in October and the job market is basically frozen in my industry (well, in all industries really). Every job that I've interviewed for is extremely competitive. Employers are getting hundreds of resumes for every job posting. I'm pretty close to getting a job offer, but it means that I have to move to another state where I know no one! I can hardly wait!

Anonymous said...

I am part of the WAMU nightmare but not in the bank or housing division, we had nothing to do with the death of the bank. In my division 98% of the folks are being laid off. The severance is very generous especially if you have been there for some time like myself. My family and I could live off the money for a year and a half with unemployment and if we really tightened up we could go alot longer. I feel very lucky that it was this much money or else I would be panicked.

Anonymous said...

This is such an interesting thread of comments. But I think we have to remember that 99% of the people who are in trouble are good, hardworking people. They did not "ask" for these problems by being reckless and greedy. Rather, they got caught up in the American Dream: a house, car, job, family, a lifestyle that improves each year as long as you work hard, a generation that is entitled to do better than the one before no matter what. They believed in what our culture has fed us: that everyone can own a home, a car, can shop at nice stores, that credit is not bad. Certainly there is some onus on these people, but I hear more than a hint of blame in some of these comments that really bothers me. These people were simply being good Americans, good Capitalists, living their lives honestly in Gap jeans.

The only good that might come out of this recession is that the definition of a "good American" might change. The American Dream will not be measured in material goods but in time spent with family, in peace within.

In the meantime, I wish I didn't sense a smug tone in comments that wonder why people didn't see this coming. Why they didn't save. Why they bought houses, cars. Why. Why cast dispersions when there is nothing to be gained from that? I think we should take this time to look at what we can do for our neighbors, not necessarily in lending a helping hand monetarily, but perhaps in just being a bit more empathetic.

Anonymous said...

Anon 12:04 you're right, most people worst affected do deserve a little empathy. But there have been some people (out there, not necessarily all of the earlier comments) who seem more than a little entitled. Like this whole thing is putting a cramp in their upper-middle-class lifestyle. I am struck by the comment of one person who bought in an affluent area because she wanted her child to go to a "good school." Don't we all want that? But it doesn't make sense to intentionally trap yourself into a two-income life you can't afford just because you think you and your child deserve that. That's just a false sense of reality. Those people who made $80k a year and are now losing everything, those people it's hard to have sympathy for. No one needed to see this huge economic crisis coming to know that paying 50% of your take-home income on a mortgage was setting yourself up for failure. What happened to the 30% rule? Anyone who makes $80k plus should certainly have that kind of common sense. But no. A lot of people have felt entitled, have been speculative, and didn't listen to that voice inside that should have been saying, "Maybe I don't deserve this if I can't pay for it."

Petunia Face said...

Anon @ 12:42--I believe you're talking about me, the one who moved back to the affluent county because she wanted her daughter to go to good schools. First off, I'm not asking for your sympathy. Secondly, don't think you know my situation enough to judge me because you have read some comments I left here or because you read my blog even. You don't. You don't know me or my situation, the percentages of income versus mortgage versus health care versus anything but small words on your computer screen. I did not comment here so that anonymous people could publicly judge me. I commented here because I am one of hundreds of thousands of stories of an economy that is really kicking the collective ass of our country. We are all in this together, whether you have paid down your mortgage and still have your job or whether you are unemployed and selling your house because you can no longer afford the mortgage.

So you may comment again or someone else might and lambast me for whatever small factoid they pull from what I have written and that's sad but I cannot control it. Do I regret decisions I've made? Of course. But I do not owe anyone else an explanation nor will I prostrate myself for my supposed sins on a message board under the judgment of anonymous.

Am I smart? Maybe. Am I poor? That's relative. Am I short-sighted and feel a false sense of entitlement? I am human, that's all I will say.

Peace.

Anonymous said...

I'm 39, have 2 kids, and this thing has got me worried. My husband was laid off and remained unemployed for 2 years after 9/11 so we've been through that. It was really stressful. Currently, my husband and I both work, and have a combined income of 90K. We traded up two years ago for a modest home that we could see ourselves staying in for the long haul. We owe 200K on our home. We've lost over half of savings that we had in mutual funds. It would be very tough to stay in our home if somebody lost a job.

I live in a mixed income neighborhood and drive across town to send my kids to public school in a nicer neighborhood. I have absolutely no guilt whatsover about that and am immune to any guilt-mongering about why I don't send my kids to the neighborhood school. So don't even bother.

I am pretty cynical about all of this economy stuff. I don't think you can just easily flip the switch on the greed button that has driven so many for so long. I have many friends who have been laid off. They are currently going through their savings. I see more people on the street asking for money.

How this has really changed me is that I feel more serious, more sober. I recently changed my blog bookmarks and deleted the links to most design blogs. It seems shallow to be concerned about light fixtures, rugs or countertops when so many people are losing their homes and their jobs. What will happen to them? Will we end up in the breadlines? I think in 2008 for my family aspiration and consumption are "out" and just being grateful for what we have is "in." I realize that doesn't sound sexy and it won't sell handbags, but that is where we are.

Decorno- I left a link for your blog because I think you're funny. But honestly, Vodka has no Carbs is more my speed over marble countertops right now. Because I'm worried.

s. said...

Ah, the knives come out. One person is accused of being smug because she is grateful she got out of the market in time to save her financial ass. Another is considered insufficiently sympathetic because he wanted his child to grow up in a good school district.

Frankly, I find it rather sad that some of you choose to attack those who are answering, openly and honestly, the question that Decorno posed.

Anonymous said...

I was in terrible debt about 4 years ago thanks to a home equity loan used as an ATM. Once I got married, I sold my house even though I lost about 30k. I was just happy to start whittling away at my debts. My husband and I moved into a one-bedroom, cookie cutter apartment with a bunch of partying 20-year old neighbors keeping us up at night. (We are in our 30's). I traded in my expensive-to-maintain European car for an American small SUV. I saved like a mad woman and did odd jobs like dog sitting and focus groups for extra cash.

We now have no debt and a comfortable nest egg--even after our portfolios started shrinking. We could probably get by on our savings for a couple of years without working at all if we had to. We were saving to buy a house, but I am nervous about making a big purchase in this uncertain climate. Renting has been kind of nice and stress-free (we are now in a single family house in a great neighborhood).

My advice for anyone struggling: Don't be afraid to swallow your pride and take your life back down to the basics. Any embarrassment I felt for wearing the same old dress or driving what looked like a rental car has been outweighed by the knowledge that:
a) If I was capable of pulling myself out of massive debt, I was probably capable of creating savings.
b) I probably now have more security than some of those Joneses that I got in to trouble trying to keep up with in the first place.

Good luck to all who are struggling. If I can do it, so can you.

Anonymous said...

anonymous at 12:42: you sound like a dick.

Decorno said...

Anon 4:16, you are hero for our time. Seriously.

Anonymous said...

I love Anon 4:16.

Anonymous said...

I agree with Anon 3:23. I write a blog that I have tragically let up to my partner to update regularly because I cannot bring myself to get excited about things I can't even afford. It's depressing. I love fashion and decor and those topics seem so off the mark right now. I saw a beautiful posting of the Traina Sisters on one of my most favorite blogs the other day and it just depressed me. Why should I care about trust fund babies anymore? It's a shame because they do have lovely fashion sense that I am quite fond of.

I too have changed the sites I regularly visit - I still love Decorno for ripping on the NYTimes articles and making funnies all the time. But mostly I find myself on the Huffington Post or some other news mag. And I'm obsessed with watching the Dow. I'm not even invested!

As for security, my husband is in the armed services, and we live very close to the bone so I'm not too worried about us, but I do have family and friends that are teetering on the brink.

Have any of you changed the your internet viewage? Do you find yourself "over" certain kind of blogs, or do you go to them for a sense of fanciful escape??

Decorina said...

Good question Anon.

Still love Decorno and living through her vicariously as she remodels the "shit hole" kitchen all the way to marble.

The other design blogs...not so much. Too hard to relate, really.

I spend a terrible amount of time on Huff Post myself. Can't tear myself away some days. And I still choke up whenever Obama speaks. Full sentences! Meaningful thoughts! Words with more than 3 letters! It takes my breath away. I even watch MTP on Sunday mornings - never before in my life.

professional psychic said...

you'd think as a professional psychic i would have a prediction to make but i'm uncertain about the timing of all this.

i think a couple of years at least until we return to prosperity. it feels to me as if we are in a huge process of transformation, so i don't anticipate it will ever be what it was. we need a new set of values to live by.

my family is struggling. husband works in fine dining. one restaurant closed...he's back at the high-end steak house in the strip club. it's way up and down. some nights nothing, some nights a lot. people want to escape the pain with a bottle of booze, a pretty lady and pay with credit.

my biz is down. i guess i'm a luxury as my rates are on the high end. still, i'm fortunate to have a handful of clients who show up on a regular basis. getting ready for grad school but need to be able to get it cheap.

since we are both basically self-employed, we don't have insurance which bothers me. there are some things going on with me that i would like to get checked out but just don't. going to get the kids on the state program.

we definitely bought a house that is now too expensive for us now but three years ago seemed reasonable. i wonder if we can have our loan modified or if we should try and sell in the spring? the market here is going down but not as much as some others.

i have credit card debt and home equity debt. i feel stupid about it.

it bothers me as well to see all the finger pointing. i feel awful for the people who did everything right but it seems we're all in this together now so we should try and work together to get through it.

don't know if anyone here is interested in astrology but there was a big shift in late november (pluto moved into capricorn after hanging out in sag (the sign of excess and good times) for 12 years). pluto in cap will last for 16 years and there will be a ton of restructuring. pluto rules death and rebirth. we are in the decay part of the cycle. capricorn is known to be depressive and rules business, finance...the bones and structure of things.

my favorite site is wall street weather. excellent analysis of current financial turbulence from an astro-perspective.

you can also google pluto in capricorn if interested but take it with a grain of salt. some of the articles are pretty disturbing.

PEACE.

Anonymous said...

to anon 2:02
I do find myself STILL lusting after things from Designers Guild, The Rug Company and Madeline Weinrib and know damned well I cannot afford them. It's depressing, yes, but I can at least still be inspired by a color story, placement or overall look.
Like you, I do follow the DOW even though I'm no longer invested. Today I changed the settings on my NY times account. I do not want anymore news alerts in my email. They just make me even more anxious.
I almost miss the election hooplah. At least then I had a diversion!
I have spent some time at ustream.com looking at the sheba inu puppies. Thank God for them!

Anonymous said...

If...you have updates worth sharing, I would love to hear it.

I'm in the rust belt, so we lead recessions and usually follow everyone else out of them. Business in antiques hit bottom two years ago for me and has slowly gotten better.

I've had to re-evaluate what I sell (mid-century modern is not antique and I don't really like Heywood Wakefield) and I've done some wild things to update furniture and make sales.

It's scary, but I perform best when I have a concrete reason to be scared.

Without boring you with my alcohol rehab stories, I'll let you know that sober people survive throwing out careers, portfolios, families, and health. They survive and thrive.

They do this by gathering with other people who want something better. They share experiences, ask for help on the scary stuff, and offer help.

You don't even have to be a drunk to do any of this; you're already doing it here.

My hope is that each and everyone of you will be able to brag about life back in the harsh olden days. Then you can tell kids to get off your fucking lawn.

Iheartfashion said...

Glad to hear I'm not alone. Our situation is not good. My husband's company lost venture funding and shut down last week. No warning, no severance, just goodbye. Now we're faced with paying for health insurance, high rent, etc, with no idea when he'll be able to line up another job.
It's scary.

Anonymous said...

Here's another aspect of this recession/depression. An earlier commenter mentioned being from "the rust belt." I grew up in the so-called rust-belt, in a beautiful, mid-size town, I got an excellent education, (high school, college and grad school), opportunities for travel, lived abroad for a time, etc. The "rust belt" is a great place with high quality of life, top education, etc. It kills me that the wonderful area of the upper midwest is now referred to as "the rust belt."
So, the other side of this, is that when I finished grad school I got a job in the so-called "sun belt." I lived in Texas for more than ten years. The economy in the south is/was booming. I met some nice people and excelled in my career. But, you know what? I longed for the quality of life of the rust belt. The suburban sprawl, shoddy housing construction, very few parks, no town centers, low-quality schools that are overcrowded, very few programs for the most vulnerable members of their society, e.g. children and elderly. I made my husband agree that when we had children, we would move back north. Fast-forward several years. We now have 2 kids, and we moved to new england. The quality of life is incredible. There is no comparison between the quality of life in the "sun belt" to the quality of life in the "rust belt" or new england! The economy is more shaky up here, but the quality of life is great! As a country, I hope we don't just discard the great northern states just because "labor and land are cheaper" in the south.

Anonymous said...

I'm finding design blogs more and more difficult to take seriously; I get sick of the trust fund babies and their anti-IKEA must-have-eames-chairs antics. The recession has meant that IKEA and I have become good friends. I read decorno and apartment therapy, but that's about it.

Yes, in my itty bitty apartment, there is quite a bit of swedish particleboard. Proud? Only in my ability to live reasonably.

Anonymous said...

The phrase 'we're all in this together' is complete bullshit.

I'm just so sick of hearing it, after I have spent years trying to live within my means and wondering how everyone else was able to spend more, have more.

It is really aggravating.

Anonymous said...

Dear Susannah - you should look into private health insurance. You would be surprised that it is most likely cheaper than your COBRA (which are outrageous) and many major insurance providers have some sort of private/individual insurace like Humana and UnitedHealthcare's Golden Rule insurance, Aetna and more - usually varies per state... just a thought to save you some $$!!

Petunia Face said...

Hi Anon @ 1:47: My daughter and I just got on private health insurance and you're right--much cheaper! But my husband is an automatic decline because he's diabetic, so he has to stay on COBRA. Let's hope Obama can reform our health care system (among many other things)! :)

Anonymous said...

I doubt if anyone will read this, but I will write it anyway.. The key to this whole thing is to save as much as you can and put it into a credit union if you can. Credit unions do everything banks do but they are set up to serve the members not the CEO. They will not make the same stupid mistakes that the banks have done.
Our country will rebound when we have money in the banks (credit unions) that will be managed sensibly not just tossed to the winds like the major financial institutions have done. And seem bound to continue.

Anonymous said...

I was laid off at the end of January by a luxury developer who built homes in the $20-35 million range. It was totally out of touch with reality but fun while it lasted. The odds of finding a job in interior design in California right now is quite low, so that is depressing for me. Unemployment will suffice for the time being, but not being creative on a job on a daily basis is mind-numbingly boring for me. Fear is a factor - will I ever find a soul satisfying job again?
To alleviate some of the boredom, I have upped my volunteer time. We have cut back and to be honest, some of the cutbacks feel good - I think we were all mindless about a lot of the choices we were making. I don't watch the news much anymore.
However, I know this country is in deep trouble and I can only hope that a recovery will come before too many people are hurt.