October 2, 2009
-
Economic effects on me
How has the economic downturn affected you personally? What changes have you made in your life to save money, pinch pennies, stretch your dollars? What thrifty tips can you share (places to shop, coupons to use, places to eat, etc.)?
From: Featured GrownupsOnce again, I think this is a situation where your generation and background makes a difference in how you have been treated by the recent economic downturn.
As a child of the Great Depression (1929-40 – I was born in 1930), I learned some frugal ways early on. My family lost much during that era and my parents really never recovered their previous status. There were actually times when my family did not know where their next meal was coming from, and as sort of decayed Semi-upper class people (They had the breeding and the contacts, but never regained the wealth) they were never really happy in their later life.
I did not develop particularly frugal habits as a child, but I did inherit a healthy distrust of risk and debt.
Eventually I inherited a little money but never invested any I did not think I could afford to lose. Also my frugal wife insisted in getting our money’s worth and delaying gratification until we could buy without debt – a practice which seems to be notably missing nowadays.
I made three “flyer” investments: In a software company ; A Federal Savings & Loan; and a liquor store. Yup, all three went under within three years – but I did retrieve some mighty fine wines from the liquor store. Undeterred, I continued to invest , now in Mutual Funds and US T-bills (I liked the idea of the US treasury sending ME money). In the mid ’80s I sold the mutual funds and from then on have only invested in Non-taxable muni bond funds, CDs and money market funds. That means we never rode the stock market up during the great bull market – but also we never lost anything (Except those software,S&L and Liquor store stocks, and that was only a couple of thousand dollars).
More importantly, we never tried to keep up with the Jones and never went into debt. Our credit cards are, for example, paid off each month and we paid cash for our last three houses (made a killing on sales of two of them).
Recently, i did move some money from a bad insurance company investment to an investment trust (ING) it lost about what everyone else lost – but has a guaranteed pay-out, and was not an important part of our portfolio – which is now mostly a Revokable Trust for our heirs.
We spent our working lives as teachers, retired early and now have a net worth comfortably into seven figures, with a yearly income of six.
The recent downturn has not changed our spending habits at all – why not? Because we simply followed the general rule of not spending any money we did not have.
Comments (23)
Good for you! Congratulations. I hope this will be us some day. We have no debt but with 3 small kids it seems like we are spending everything that doesn’t go into retirement. I would like to save more.
Thanks for participating. You are linked
For future reference… the direct link to this post is the one that appears in your address bar when you are on this page reading the comments for the post
Nice entry
great tips…smile
nice post
A comment regarding young couples with young kids:
There is no doubt that kids are an expense and it is difficult to deny them what you think they should have. When your income drops, you have to re-think what they really need – sometimes this is difficult to explain to them, but I think it is better to carefully explain the situation than to try to hide it from them – be careful not to exaggerate and cause them anxiety – this is tricky to do.
Living through the Depression is an experience worth drawing on, when it comes to getting through this period we’re undergoing now.
Not spending any money we did not have…this is indeed the golden rule of financial management.
Well, I’m younger, no family, not big into investing, but I’m great at not spending what I don’t have. Really, I think that’s the best advice anyone can give, even though it seems so obvious. Honestly, most of the investment stuff went sailing far over my head, but I certainly understand that next to last line. So I’m sure you know what you’re talking about. [=
I’m glad to see someone enjoying their golden years the way you and your wife are
! It was great to visit and see how you managed it.
justme
cm
Sounds as if you took good care of yourself and planned well. I don’t know if I will be that fortunate on the day I need to retire. It is a blessing if one can retire with dignity and without the need of support from others.
You’ve inspired me to make that appointment with the retirement planner! I am a teacher in my late thirties, and while I have no debt besides my mortgage, considerable equity, and a healthy amount of savings, I have done little to really invest in my future. I definitely have some catching up to do!
Dear Dick,
Since I lost my parents when young, and they haven’t been around to give me advice since I was a child, I always like to listen to the members of the Great Generation when you weigh in on modern problems. “Never tried to keep up with the Joneses” is the watchword here. During the 50s, after the war, there seemed to have been a concious trend in the country, esp. through advertising, which really took off with a fervor unmatched since after the Civil War. (Post war society always seems to involve asking the populace to buy more stuff!) to encourage the American public, not only to “keep up with the Joneses”, but with planned obsolescence to keep buying new cars and appliances each and every year in order to keep current.
My parents never bought into this fallacy, but because of their failing health in the late 60s, by the time Dad died, he had no life insurance left.
I am impressed that besides a few misdirected investments, you pretty much stuck with those that would steadily pay you in dividends, instead of riding the bullish waves of the stock market, which tends to crash and readjust itself every couple of decades or so.
Michael F. Nyiri, poet, philosopher, fool
Mike: The bad investments were mostly flyers taken at the suggestion of my college-friend-broker who actually offered to buy back my software company loss. I did not take him up on that and later got some very good – but heard to follow – advice from him: When you retire, plan on retiring to a raise. Easier said than done,but we actually did it!
I think your last sentence says it all. Too many people simply can’t save for their luxuries, they want them now. Buy now, pay later.
I, too, am a Floridian, and the depression was in full swing when I was born. I never went hungry, though. We lived by the ocean and had all the fish, crabs, clams, and oysters we could eat. Dad always kept a few chickens around and a vegetable garden.
I chose the military as a career and am now retired. We’re comfortable, but we gotta watch our budget.
A Jewish guy was in a wreck. When the rescue people came, they put him in the back of the ambulance. One medic asked, “Are you comfortable?”
The Jewish guy replied, “Well, I make a living.”
A simple general rule, right? Live within your means.
Maybe I need a blackboard where I should write that 100 times.
A day.
Nice to meet you.
Good solid advice, thank you!
Not keeping up with the Jones will always help keep you in better shape when the economy turns.
Great advice on spending money. Soon this phase will pass and may the lessons remain.
Have a great day!
Now that you’ve had some time to visit all of the other entries, what did you think? Who was your favorite? Did you enjoy this topic? Did you get as much traffic to your site as you’d hoped? How can we improve for next time? Please let us know. And if you haven’t visited the later entries, please do so! Thanks again for your great entry
very wise advice!
Great post. Thanks for participating
I think if we had all spent our lives living as if we needed to be careful, there would not be so many of us struggling with the concept of being careful with our funds now.