The tough times hit home!

    I’ll never forget my grandmother’s stories about the Great Depression. It sounded horrible and was hard for my 10 year old mind to grasp.  But according to my parents, it was probably why she felt the need to stock a pantry the size of a spare bedroom with every canned food item imagineable.  I never thought Americans would ever have to go such a thing again.  Then as I watched a story on the news last night about a “tent city” emerging in California, I realized it may very well be happening again.  These are scary times.  I’ve tried not to get pulled in to the drama of the daily “bad economy” news, since the public’s fear of the economic downturn tends to fuel the problem.  But, it’s hard to ignore when it hits you right in the pocketbook. 

    It started here with a few layoffs several months ago.  But because I wasn’t layed off, it didn’t really affect me.  Then, the company that owns the station announced they’d no longer be matching our 401K plans.  That was disappointing since I really started getting serious about retirement waaay too late in life.  But again, as far as my daily life, not much changed.  Then another round of layoffs.  More of my friends and co-workers were let go…the economy was getting closer and closer.  The the corporation asked all employees who had raises coming in 2009 to give them up and continue at their current pay.  I didn’t have a raise scheduled this year, so no big deal for me.  Then recently our corporate owner announced all employees would be asked to take a 10 day (two week) furlough.  Basically that’s two weeks off with no pay.  I know the company was trying very hard to avoid more layoffs and I tried to think of it as some extra vacation time.  But after I figured out how much money it was (about 4% of your annual salary) I realized that furlough was, in effect, negating (and then some) the 3% cost of living raise most people saw in 2008.  So now we were all going back to our 2007 salaries, and not getting a raise this year.  So we’ll be at that 2007 rate till 2010.  WOW!  Now the economy was having a tangible impact on my life.

    I realize how lucky I am.  My husband has a good job.  It doesn’t appear that is threatened (knock on wood).  I’m still employed by a good company that I’m confident will weather this storm.  Even with the furlough, pay and 401k freezes, I am, at least, getting a pay check.  I am grateful.  I’m not one paycheck away from tent city.  But how far away am I really?  Closer than I’d like to be.  Do you have 6 months of living expenses tucked away in case something like this happens to you?  I can’t say that I do. 

    Its hard to tell now, in the midst of it, where our economy is headed or how long it’ll take to recover.  Will this current situation make the Great Depression seem more like an economic dimple?  Or will we look back on these times in the years to come and chuckle at our over-reaction?  I’m hoping for the latter.  But either way, maybe there is some good that can be gleaned from the situation.  I know, at least for me, I needed a financial wake up call.  For years I’ve been telling myself I should save more.  But I was always going to start right after I paid for this, or purchased that.  Now more than ever I see the importance of being prepared.  I now have life insurance for my husband and myself.  I’m starting a 529 college savings plan for my son.  I’m trying (emphasize the trying) to become debt free.  If I use credit cards, unless its not accepted, I use my American Express that requires me to pay off the entire balance every month.  I’ve acknowledged that if I have to pull out cold hard cash to pay for a purchase I’m much more thoughtful about whether I need to make that purchase than when I slap down the AMEX.  I’m about to start an aggressive coupon clipping regime, complete with actual grocery lists, versus going to the supermarket and buying what looks good at the time and rarely looking at the cost. 

    I’m still a work in progress.  I’ve got grand plans, but its the implementing that I always have a hard time with.  Hopefully, I (along with everyone else in this country) will at the very least look at this current crisis as a “correction”...not only in the stock market but in the way we think.  I’d like to be a little more like my grandmother.  Start saving more and spending less.  I’d like my son to see that and learn from it.  I think most of us could benefit from learning the adjusted value of a dollar.  I don’t want to let this opportunity pass without changing my life for the better….like I did when gas was $4 a gallon and I swore I’d look into electric cars and carpooling!