An exercise in reality and imagination

Ok. We’ve been hearing endless stuff about “The Economic Crisis” and what can/may/might happen as a result. I, for one, am getting overwhelmed. I can’t tell anymore where the line is between realistic caution and fearmongering. And I am sick to death of interviews with Ordinary Americans Feeling the Economic Pinch.

I know there are real problems out there, and I know they go deeper than I can really grasp. But I’ve always been good at creating my reality out of sheer bullheadedness and refusal to believe in the limitations others try to put on me. We’ve learned from fairy tales and the stock market and psychology that belief matters: that what you think about a situation has the effect of making that situation “real.”

So I’m tired of taking their crisis talk hook, line, and sinker. I am going to write here what I’m noticing about my own financial life right now, and I’d love to hear from the rest of you. Is it as bad as they’re saying? Are there pockets of us out there who are actually OK? Maybe we can create our own picture of reality here that’s less scary than what They are telling us. Even if it’s short-term, I need to hear some news about what IS rather than OH NO WHAT MIGHT BE!!!

My details after the cut…

Economic impact at Eat Close to Home, as of Oct. 13, 2008

  • We are both employed full-time, just got our annual raises, and I have almost more consulting work than I can handle.
  • Gas prices have dropped by $1/gallon in recent months.
  • I refinanced the house in January and locked in a very good rate for the remaining 25 years of the mortgage. We over-pay each month, and we even have a plan to be able to repay it in about 12 years…though that plan’s contingent on not needing the money for other things like a new well, food, healthcare, etc.
  • Food prices are rising, but they’ve been doing that for at least a year now. But we’ve been voluntarily paying more for our food for years as we move to an organic, local, sustainable diet, so it really doesn’t seem like news to us. In fact…
  • Meat prices have remained steady, perhaps because we buy local free-range stuff that is less dependent on fuel and corn prices, and our expenditures on yogurt have been cut in half because we’ve started making our own.
  • Our retirement accounts have lost about $10,000 all told recently. But that was imaginary money, really, and we wouldn’t be able to touch it for 30+ years, anyway. It may well come back as magically as it disappeared. Though I am changing the plan from “depend on 403b and don’t count on Social Security” to “don’t depend on any savings plan except a paid-off house and cash in a guaranteed account.”
  • Our non-stock savings accounts haven’t lost any value; in fact, moving one money market to a savings account has increased our monthly interest earned.
  • We have no immediate need for credit unless some kind of disaster strikes.
  • Talking about all this has got my sweetie and I thinking and acting on a lot of our values much more actively than we’ve done in the past.

So how about you? Are you really, truly, having a crisis right now?



  1. curiouslyinspired said,

    October 13, 2008 at 10:47 am

    Hi. Not having a crisis personally – but a few people around me are in a much worse shape:

    – A friend had all his life savings in an Icelandic banks. Now he is having to borrow money off family and might not get his own money back at all. I believe it might be quite a lot
    – My mum has some money in an Icelandic bank too which she cannot get at presently

    Our pensions and investments have dropped considerably, but as you say it’s long term so not going to loose sleep over it yet.

  2. kate said,

    October 13, 2008 at 11:07 am

    I’m in the odd position of having just taken a much-better paying job than I had a few months ago. My travel costs are higher, since i have to fly to see my husband these days, and his job future is unclear. It’s not yet clear if my cost of living is higher, aside from travel. I’m OK now, but January may be another story.

    As far as the Scary Economic Situation… it’s mostly affecting me because there was a possibility we’d buy a house next summer. That seems more up in the air right now, and I’d like to be on your retirement plan eventually (having unwisely looked at my retirement statements….) Short term, I’m a little glad we didn’t spent money on a new couch last month. The old one is still functioning, even if it’s old and ugly.

  3. Eva said,

    October 13, 2008 at 12:13 pm

    Report from the San Francisco Bay Area:

    There are some effects, but we’re holding steady, for the moment, but we could be looking at heavy weather. On the other hand, we have a LOT of room to tighten our lifestyle, so I’m not worried about us. Other friends are under much more pressure.

    – Work: My husband’s old place of work will almost certainly be doing layoffs because they rely heavily on ad income. His new place of work has funding until January. They think they should be able to manage longer. If not, we’ll be in some trouble, but we’re fortunate to have no credit card debt and reasonable savings.

    My place of work (which doesn’t outpace the cost of childcare, and would have to be jettisoned if something happened to James’ job) has secured grant funding until early 2010.

    – Gas here is terrible (sometimes $4 a gallon), but neither of us uses a car to commute to work.

    – Food prices are up, but they’ve been climbing slowly for a couple of years. What I’m actually seeing is that my cheats for cheaper edible food – chiefly Trader Joes for dry goods, dairy and free range meat – aren’t working any more. Free range and/or organic meat, in particular, is terribly expensive here. That’s okay — we can and should work around it. The dairy, on the other hand, is brutal. $6 a gallon for organic milk. Our CSA did raise its prices this year by $5 a month (fuel prices), but that’s an easy cost to absorb.

    – Savings: We’ve lost $20K of future retirement income (recoverable) and about $5K in short term savings. We can deal.

    – Housing: Rents here are climbing, and we can’t afford the larger space we want. 2 adults and a toddler in 770 square feet is very tight, especially since I’d like another one, and shouldn’t delay for age reasons. As with other things, we can deal. I think we’re going to get a storage space and move a lot of things into it — that’s much cheaper than moving for the moment.

    We wanted to buy a house in the next year or so, but not being able to, here in the commutable parts of the Bay Area, is hardly unusual. I’m immensely grateful that we didn’t stretch and buy one last year – if we had we’d be in potential trouble now, particularly if we’d moved to the suburbs to get more space.

  4. dakota said,

    October 13, 2008 at 3:11 pm

    Well… we’re actually buying a house. This is in part because we really want a place to call our own and to invest time in for gardens and whatnot, but it was precipitated because our current rental was taken over by a very, very bad management company, and we were unwilling to live under their rule. We’ve both got decent jobs, and neither of those jobs look like they’re going under any time soon. So buying a house isn’t too much of a stretch for us, and the bank finds our credit histories very acceptable, so we’re good there. Any extra money we find ourselves with at the end of the month goes toward paying of our school loans. We were also very, very lucky and got very good interest rates on all of this.

    Like you, we’ve been voluntarily paying more for food, but I usually see those extra costs when we go to the local organic store instead of at the Farmers Market. Alas, next Saturday is the last Saturday for market, and then we’ll be relying on the stores again, but I’m also more savvy in my shopping there. We also just bought a quarter of a buffalo to put in our freezer – which was much cheaper than paying for the equivalent amount at the store – and that should last us through a good bit of the winter.

    So, no, we’re not really having a crisis at this very moment. I think it would be possible to completely avoid a huge crisis if we were able to switch from a money based transaction system to a value (barter) based system – at least in local areas – for the time period of the problem.

  5. TeacherPatti said,

    October 13, 2008 at 3:39 pm

    Knock on wood, all is quiet here. Of course, with my district $400million in the red, that can always change.
    I’m extremely frugal–always have been. We bought a house that is small and that we can easily afford (no funky mortgage–straight 30 year, with 26 more years to go). We have a small car payment, no credit card debt, no student debt (except what I paid for my teacher certification, which SHOULD be paid off by the government after I teach in my district for three more years…of course, the government could always pull that program). I haven’t looked at my 403b or Jeff’s 401k and I’m certainly not counting on much of a teacher’s pension, but there’s always hope.
    As long as we keep our jobs, it will be OK. Jeff got a raise and I got a raise plus a “step” increase (teachers increase every year until you’ve taught for ten years, then you just get the cost of living raises, which of course is better than nothing).
    But I am Generation X. I’m used to this shit. My parents, both Boomers, are just shocked about this. They came of age when you were guaranteed a good job (uh, if you were willing to work at it), could live very well on one income (they did), and knew you’d get your 30 years in and then get a great pension (dad does). Certainly, Boomers had their share of trials and tribulations, but Generation X has been screwed since the word go. I graduated from high school in 1990-no jobs. From college in 1994-no jobs, everyone went to grad school. From law school in 1997-no jobs. There were jobs in late 1999 and 2000…but that’s about it. Otherwise, we’ve been screwed IMHO. Jobs for teachers are especially scarce…there are literally thousands of applicants for every job out there.
    Sorry to whine/vent!!!

  6. Suzie said,

    October 13, 2008 at 5:23 pm

    No, no crisis. And even if there was, what it really means is “different than you had expected, perhaps by a lot.” My grandparents lived through the depression, lost all their houses, and survived to tell the tale.

    “realistic caution and fearmongering” – or just ‘newsy news.’ You may want to cut back on news intake and/or check your blogroll and other info sources for people who are inflammatory and/or negative.

  7. mandi said,

    October 13, 2008 at 5:50 pm

    we are ok here in central texas. we live on one income(under 50k), have 2 small children, a small house, one car that is paid off, no debt except our house. we had a 80%/20% loan on the house. we’ve paid off the 20% (in 2 years-woohoo!) and are chewing on the 80, making higher payments than need be. my husband walks to work, we walk/bike when we can. gas is down, groceries are up. but i’m like you- we are csa members and buy local meat (or eat vegetarian when we can’t afford it) and dairy. we have always lived frugally, always under our means. so for now, we are ok. we feel the need to be on land in the next 10 years. to live off of it the best we can. i think if things are getting worse, we will need to be as self-sufficient as possible.

  8. Colin said,

    October 14, 2008 at 3:37 am

    You’re not the only one not really having much issue and wondering what the media is getting so riled up about. My wife has a full-time job in the corporate world back in St. Paul, and I’ve just started graduate school with loans and all. We bought a house a year after graduating college. So we should, according to the media, be in a horrible situation right now, I guess. But we planned ahead – we bought a place in the city, where we almost never need a car unless it’s to visit our families in the suburbs, and there are several organic grocery stores within a 15 min. walk. So our transportation costs are low (even though bus fares are set to rise .$25 to .$.50 cents). And I’ve noticed that organic produce, unlike conventional, hasn’t seemed to really get any more expensive at all over the last couple years, at least not around here. Since we make the time to cook from scratch most of the time rather than watching an hour of tv, food costs are not an issue for us (and, tangentially, our healthcare costs are low since we’re both young and eating well, so our immune systems are being further strengthened by a sane diet). And we decided from the get-go to make sure we budget each month and live within our means. Comfortably, mind you – neither of us really feels as though we’re going without anything. But we still manage to put away 10-15% in savings from every paycheck, and we’re starting when we’re 22/23. We bought a used hatchback with good gas mileage. If we stick to the budget and hold off on kids until it’d be responsible to do so (ie I’ve got a job and she can afford to stay home for a couple of years at least), even paying back my student loans in a couple years time will barely put a dent into our standard of living. Perhaps most importantly – we pay back EVERYTHING on our credit cards with every bill. We don’t go the “cut up all my cards!” route because, frankly, they’re really useful if you don’t want to carry cash around all the time. We just view them as a form of delayed debit, in a way, rather than as a magical source of free money.

    I’m confused by a lot of what people are saying in the media, and frankly amused/startled when I visit places like Frugal Village and see people talking about paying off hundreds of thousands of dollars worth of debt now that their husband lost his manufacturing job and they’ve got to feed four kids. And somehow that’s the GOVERNMENT’S fault, I guess.

    Common sense and personal responsibility have seen us through well enough. We’re thinking of cutting our savings down to 10% of every paycheck (it’s doubled by her employer, anyway) and giving the 5% to charity. Once we find a charity that doesn’t waste half of its money on pointless overhead and misguided projects.

  9. October 14, 2008 at 6:39 am

    I feel very blessed that I’m still doing well. I do have a good-paying job, and though I would rather be doing something else (homesteading!), for now my position is secure and pays the bills. My retirement fund has lost 1/8 of its value so far, but I’ve long considered that “play” money and not really real as I have long doubted that I’d ever see much of it. (So why contribute? Got me…) My IRA seems to be holding steady, but I have stopped adding to that, and my CD doesn’t mature until May. So if I do end up needing money, I’ve got savings, CD, and IRA — in that order — to tap into IF NEEDED.

    What I am trying to do now is to invest in infrastructure — the things I will need to be more self-sufficient: grain mill, garden equipment and seeds, etc. I have two or three places where I can garden, and I hope to take time next year to spend time on local farms and learn more. I’ve put up a LOT of food for winter, trying some new low-energy-storage techniques, and have ordered lots of grains and nuts to stock up. I’d like to buy a couple bolts of basic fabrics, too, for clothes, and at some point I might stash away a little more yarn.

    My concerns right now are for my parents, who live on a limited retirement income (and kiss some of that goodbye now) and have a seemingly endless supply of increasingly urgent medical bills. I’m doing my best to share with them (esp. regarding food), but I do worry about them and how they will manage. Even though they were raised in more self-sufficient households, they are more attached to creature comforts than I am now — and I recognize that some of that is a true need, due to physical conditions. So I’m looking for other ways to help.

    If anything, I’m looking at this “crisis” as the chance to make more positive changes in my own life — and to live an example that I hope will persuade others. I don’t expect my parents to give up their vehicle as I did, but I am seeing some changes in their lifestyle, and I’m really happy about that.

  10. Emily said,

    October 14, 2008 at 8:39 am

    Thanks, everyone. This was really nice to read this morning.

    Colin, your idea abut increasing charity spending is a great one – they sure need it. Have you seen ? They delve into the annual reports of thousands of charities and make it easy to assess if a place is one you’d like to give to. One of my favorites ever is our local Food Gatherers, who keep good food from being dumped (day-old bread, untouched cafeteria trays, etc.) and get it to hungry people. They even take garden produce! And Charity Navigator rated them the top food bank last year.

  11. Leasmom said,

    October 14, 2008 at 9:11 am

    I live on a limited income, and the only problem for me is gas because I’m driving an two hour trips twice a day to take and pick up my daughter from school, other than that, I made sure to stock up, and fortunately we had already planted a garden thats still yielding, though slowly, and canned, and I’m continuing to can. So, we will survive.

  12. Colin said,

    October 14, 2008 at 9:32 am

    Charity Navigator looks like exactly the sort of guide I’ve been trying to find. Many thanks!

  13. mrtumnas said,

    October 14, 2008 at 9:06 pm

    I lost 50% of my stock portfolio and will be losing my job by Janurary (they’re shutting down) but no, I’m not in a crisis. I eat three times a day, have a warm place to sleep, make more than enough to get by and live like a king compared to the majority of the world population. Have I done better? Heck yeah.
    But I not going to wait for the government to make everything better, I’m changing my investment strategy and trying to start a business. I’m in control of my own success or failure. I’m not going to run screaming like a chicken the way our leaders seem to be. Attitude is everything, and people need to buck up and realize that the world isn’t going to hell in a handbasket because some people couldn’t pay their mortgages.

    Anyway, I LOVE your bog and am adding it to my feed reader and blogroll. Keep it up!

  14. Momster said,

    October 17, 2008 at 6:45 am

    I’m a boomer and I am so happy to have you all on this planet.

  15. Oldnovice said,

    October 26, 2008 at 4:27 pm

    I’m a boomer too, and my husband and I haven’t suffered at all, but we’ve always been frugal, as well. Saw a map of how the recession has affected various states and Texas (where we live) isn’t one of the states affected.

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