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Jan
25
I had a chat with someone earlier today about various subjects and the economy came up. I suggested — the optimist that I am — that I’m hoping the economic downturn doesn’t last much longer than a few more quarters. My friend suggested we could be looking at 10-years of more economic pain and misery.
I hope we’re not in for 10 more years of economy pestilence, but with many institutions that once seemed strong collapsing seemingly overnight, I’m also keeping an open mind. I’m hoping for the best and preparing for the worst. It can’t hurt and could put me into a better position once the economy picks up steam.
The bad economy is dominating the discussions on the news and on blogs — especially those dealing with the legal profession. Big Law is suffering in similar fashion as it did when things were going well — spectacularly. If people thought the high points were wild, reading about the lows is even more remarkable. Firms failing, mergers, and all sorts of craziness are dominating the law firm news. The ABA Journal’s latest issue details the meltdown and its daily news reports deal with legal layoffs and cutbacks at places that were once known for paying rock star salaries.
We in Indiana aren’t rock stars, so many may be spared because things have been fairly even. We don’t seem to have the highs that are followed by the valleys. Living lean during the good times makes it easier to live lean during the bad. It’s not hard to not buy a Porsche when I wasn’t ever planning to buy one anyway. Switching from $2000 customer tailored suits isn’t on my mind because most lawyers in Indiana aren’t spending that kind of coin on clothing.
Every day, some tidbit of bad news is released. Layoffs here, bankruptcies up there. 60 Minutes is detailing the death of DHL and how it decimating Wilmington as I write.
Am I being naive for being optimistic?
I can’t envision our nation being stuck in neutral or worse for a decade. But, if others feel like were heading for tougher times, I’m not going to not listen. I’m going to reduce debt and am not planning any major purchases in the near future, despite my feeling that we’ll start hearing about an upturn around the end of 2009 that will continue into the election season and beyond.
Every other modern downturn has only lasted a relatively short time. I suspect our leaders will do everything possible to stimulate the economy so bring us out of the current tailspin in the shortest period of time. I also hope that the political class refrains from doing anything to harm the economy during these trying times. The 2010 election season is almost here again, so nobody wants to be the one to vote for tax increases that slam workers, shutter businesses and could end up inspiring the masses to throw the bums out of their cushy Congressional jobs.
What do you think?
Is it time to dig in and prepare for the worst? Or, are we nearing the end of the meltdown and can expect a return to normalcy?
If you’re of the thought that were looking at difficult time for years to come, what are you doing to prepare?
Comments
6 Responses to “Hoping For The Best But Preparing For The Worst”
I’m extremely intersted to hear what your other readers are doing to ‘prepare’ themselves for our uncertain financial future.
So far we have a loose plan. We are expecting the second half of our triple-adoption tax refund this year…and still hoping that there might be some sort of a year-end bonus from David’s company. He just completed his review last week so we may know something in a few weeks on that.
At any rate we have plans to bank a good deal of anything extra we come across this spring. I’m anxious to build our saving back up…and pay a chunk of a certain credit line off too.
As far as spending…I’ve been working my way systematically through our freezer and pantry using up things that normally might sit around. We’ve been making do by using what we have and doing without some things that might have otherwise sent us scurrying to the grocery store or local mega-mart. It does make for some less than conventional meals sometimes…but otherwise I’ve found that this has been pretty easy to do and find myself wondering…why do we waste so much money? LOL. Maybe a ‘depression’ is a good thing. You learn pretty quickly to appreciate and enjoy even the smallest things!
Beyond that we are not planning any major purchases…but we may use a gift card bonus that David has earned to purchase a new TV. Not that we need it…we can continue to use the one we have indefinately…but how long do you dare leave Best Buy gift cards lie when Circuit City is tanking? It’s not like we can buy groceries with them! LOL. We’ll see I guess. I know we will end up being tempted to spend more than our gift cards if we start looking at flat screen HD’s. *Sigh* Stupid technology!
Why does it have to look *so* good?
Traci Bests last blog post..Rock Candy & Soft Pretzels
I feel ya, Chris. My wife and I are living with only one car so that we can pay down our debts faster. Trying to eliminate all credit card debt and such in case one of us loses our jobs (knock on wood). Her job is fairly stable (people always need health care), but mine is pretty much a gamble every year (government grant-funded program). We’re just trying to be conservative with our spending and pay off debt!
Dans last blog post..The Mystery of Theology
Hi Traci,
I think we’re thinking the same with trying to pay down debt and not waste things that might have been replaced by newer items. Plus, I’ve found that anytime we go to the store just to get one item, we end up with a cart full of things. Staying out of stores is one way to save a little bit and a good tip.
I also hear you with the gift cards. You can never tell — there are sometimes fees that companies deduct after a certain time — so it’s good to use them before the fine print catches up.
Hi Dan,
I just read something that said health care was the only industry in America that is still hiring on a wide scale. (I just hope it isn’t nationalized, then cut to save money. My wife is also in the health care field).
We also been working on getting rid of debt. If things go well, it’s always nice to not be owned by some bank someplace. If you’re in debt, you’re working for someone else. If the economy goes bad, not having debt means not having to worry about changes to terms and conditions, increasing interest rates, etc.
Some debt isn’t necessarily bad — i.e. a mortgage that you can pay or low interest rate student loan — as long as one can pay for them. I feel sorry for students these days leaving school with $150K in student debt, then getting $30K/year jobs that leave them with no money to save.
Just found out today that there will be no raises at work this year. That’s fine with me. It seems like a shared sacrifice, and is certainly better than layoffs.
Regarding the downturn lasting 10 years, I don’t expect it to last that long. But remember the ’90 recession. It wasn’t until ’95 or so that things really started to pick back up. We’re a year into this thing, we could easily have another couple of years of very mediocre growth.
On the positive side, Wells Fargo just refinanced me for free on a 30 year fixed rate at 5%. Come hell or high water, that aspect of my finances is locked in. Bring on the hyperinflation! I’m good.
My wife and I are generally pretty frugal. Oh, I have periods of “irrational exuberance” (our house, my car), but overall we’re turning down the thermostat, eating in, got the chest freezer going, shopping at Aldi, etc. Her van is 7 years old and not about to be replaced.
Buzzcuts last blog post..Tax cap vote goes along party lines.
Hi Buzz,
Sounds like you got a great deal on the house refi.
We were also exuberant with our house purchase. We closed right around the time the banks started getting tougher and had to switch from our broker to a regular financial institution because the funds weren’t flowing out from the banks. (We did get a nice deal — the market was falling, so we negotiated for a price break to match the market). It was good that we moved when we did, because we might not have been able to do so if we would have waited. (There was a foreclosed home that was vacant and usually left wide-open a couple of houses down the street from our old place).
I’m with you on keeping the older cars. As long as they drive, it makes sense to pay for maintenance. It’s cheaper than a new car payment. However, if you were looking for a deal, this is the time to get a new car.
I’ve heard people predicting hyper inflation. If one has no adjustable rate debts, it might not be a bad thing, like you were saying. If you have a credit card and you can’t pay it off, you’ll probably be screwed in that situation.