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Old 10-12-2011, 02:23 PM   #41
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I cannot understand why any sentient person, in this economy, would not keep at least a couple of years' expenses in the emergency fund. With unemployment compensation and LBYM, this could last 3-4 years.
We're up to 2.5 years stashed away -- before any unemployment or severance -- and it still doesn't feel like enough.
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Old 10-12-2011, 02:39 PM   #42
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We're up to 2.5 years stashed away -- before any unemployment or severance -- and it still doesn't feel like enough.
It's true that these guys didn't save enough. They should have been saving more, BUT, if you are laid off before your time and cannot find a job for 3 years, yeah, it is going to affect just about anybody.

I am 53, and not ready for retirement yet for another decade (hopefully sooner). I have enough money stashed that I could last5 years or maybe even 6 years if I got laid off and couldn't find a job (I would have to liquidate everything except for the retirement funds like 401K & IRA), but then what? By then, I would be 57-58 years old with no job experience for 4-5 years, so finding a decent paying job at that point, I imagine would be pretty slim. It didn't say if they spent their bankruptcy sheltered retirement funds, but if I didn't touch the retirement funds, I would be in the same boat as they after a while (minus the kids.)

I know it wasn't luck that enabled you to retire early, but it sure helped with better economy which enabled you to keep your job until you accumulated enough money.

Despite that I feel they should have been more frugal, I feel for people who happen to be working in the industry that got hit hard by this downturn. I'm sure some of these people were savers. I have a feeilng if they cannot find another job, those savers are hurting too.
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It's All About The Choices Made...
Old 10-12-2011, 02:56 PM   #43
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It's All About The Choices Made...

...and cumulatively it appears these people made choices that did not work in their favor. There are lots of hard-luck stories in the news and I have some in my own circle of family and friends. But most of the issues seem to center around the poor financial choices people make during their lives.

Any one of us could find ourselves in a bad financial situation at some point (past, present, future) in our lives. Many of us have likely experienced some sort of setback that caused financial difficulty/uncertainty. I'd guess that many of this forum worked their way through it.

DW and I recently discussed this topic after seeing/hearing/reading about the census numbers that show an increase in poverty. I know, I know, that's another subject. But it's related - I'm a believer that people make their own luck. The choices you make put you into positions that allow you to capitalize on the good things and minimize the bad situations. That does not mean that nothing bad ever happens - you simply keep the bad to a minimum and work to maximize the good.

I am very much in favor of private schools. However, I also know that you adjust one financial area of your life in order to achieve another. I know several people who send/sent their children to private schools and they still managed to retire early. In one case the spouse is school teacher. In the second case the spouse did not work at all. In both cases the primary breadwinners made a good salary but they were not SVP's or anything of the sort. They made choices that allowed them to capitalize on good financial situations and they did their best to minimize exposure to the bad financial situations.
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Old 10-13-2011, 01:26 AM   #44
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Yes... my sister was 53 when laid off and could not find a job.... she was a compter programmer and he skills were 'dated'... most places would rather hire a 20 or 30yo even if they are not better...
I do programming also and long ago came to the conclusion that I should assume that by 50 it was not at all unlikely i could end up jobless. Tech companies don't want to hire software people in their 50's for a variety of reasons.

Although ER was a plan for me back then, I also figured it might also be someone else's plan for me at some point. I'm 51 now , and they seem keen on keeping me but i wonder what the result would be if tried to hire on there now. I'm thankful that it is likely to be me doing the deciding at this point.
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Old 10-13-2011, 01:32 PM   #45
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And based on the outcome, he didn't do everything right. He had four kids, sent them to private school, didn't save more than two month's income in the 30 years he was working, and drove a gas-guzzling SUV.
. . . exactly what I was thinking.
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Old 10-13-2011, 09:28 PM   #46
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He didn't think out of the box either. Bright guy, why not home school his kids? Develop a strong curriculum, save money on tuition. Make this time a great adventure while saving a chunk of cash.

I know of families who bought a boat and text books and set sail. I don't recommend that but there is a lot that isn't taught in school that educated parents can provide. I recall taking our children to DC and walking though the art museums while pointing out the difference between art before and after the advent of photography. We talked about the role of the artist and their patrons in society as well as composition, prospective and even the chemistry of pigments. There is so much to be learned outside the classroom.
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Old 10-14-2011, 09:54 AM   #47
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A middle class family does not need private schools in the US. The working parents may need to commute but there are school systems just about everywhere that are adequate.

Reading between the lines tells me that perhaps the better way to phrase it is that: "If you want your kids to be physically safe in that location, then you will have to send them to a private school or home school them."
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Old 10-14-2011, 10:13 AM   #48
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We're up to 2.5 years stashed away -- before any unemployment or severance -- and it still doesn't feel like enough.

The conclusion I came to after spending a good deal of time thinking about my "emergency fund" is that cash is just not good enough. Even if you have a few years of living expenses in cash, it isn't enough.

What I do is save more money than most people. I save for retirement and then I save additional money in a taxable account specifically for creating an income stream from stock dividends.

My stock dividends throw off enough to cover about three months of living expenses every year. A bonus to doing this is that once I get this income stream up to covering 12+ months of living expenses... well then I can retire early.
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Old 10-14-2011, 10:38 AM   #49
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Despite that I feel they should have been more frugal, I feel for people who happen to be working in the industry that got hit hard by this downturn. I'm sure some of these people were savers. I have a feeilng if they cannot find another job, those savers are hurting too.
Yep. It's so happy that we all belong to a forum where everyone is an economic automaton, no one's industry takes a multi-year beating, and getting cancer is brushed off like lint on a collar. "Breast cancer? Pshaw. That only forces people off a job if they're unprepared."
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Old 10-14-2011, 10:06 PM   #50
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I may be diverting this discussion a bit but how many of you caught the interview of Michael Lewis today? My DD, who has booked him, opined many months ago that he is a great book salesman... But...

In his opinion too big to fail is still alive and well and that the European bond exposure may bring us again to facing financial Armageddon and tax payers bailing out Wall Street.
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Old 10-14-2011, 10:17 PM   #51
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I may be diverting this discussion a bit but how many of you caught the interview of Michael Lewis today? My DD, who has booked him, opined many months ago that he is a great book salesman... But...
I think he is a publicity whore who is slightly smarter than Meredith Whitney (admittedly not a high bar).
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Old 10-15-2011, 07:07 AM   #52
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I think he is a publicity whore who is slightly smarter than Meredith Whitney (admittedly not a high bar).
So, I would guess you are not squarely in the positive camp on Lewis. What about the accuracy of his assertions? The Big Short was a good read. I don't mind if it was written by a shallow author but was I mislead on the facts as well?
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Old 10-15-2011, 07:10 AM   #53
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Come on, Brewer. Michael Lewis is a great story teller as well.

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So, I would guess you are not squarely in the positive camp on Lewis. What about the accuracy of his assertions? The Big Short was a good read. I don't mind if it was written by a shallow author but was I mislead on the facts as well?
Like with any good story, it's not about the facts but the way they are presented.
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Old 10-15-2011, 09:00 AM   #54
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So, I would guess you are not squarely in the positive camp on Lewis. What about the accuracy of his assertions? The Big Short was a good read. I don't mind if it was written by a shallow author but was I mislead on the facts as well?
Sensationalism and intentional misrepresentation in equal measures.
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Old 10-15-2011, 11:13 AM   #55
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I do agree with Lewis that many investment banking operations are still too big to fail.

I wonder if the IMF would be as firm with developed countries as it has been with the under-developed?
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Old 10-16-2011, 10:29 PM   #56
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I wonder if the IMF would be as firm with developed countries as it has been with the under-developed?
Its tricky. On the basis of fairness we would like all to be treated the same. Practically speaking, if Kreplachistan blows up it is a quickly forgotten headline and only wounds its neighbors. If one of the largest economies in the world blows up, it is Armageddon for all. Still want everyone treated equally?
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Old 10-16-2011, 10:40 PM   #57
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No, but I was thinking about the workers in a developing countries who have been subject to IMF dictates. They think their lives are as important as .. those in Greece or Italy. Hey, in 1944 it would have been difficult to differentiate those economies. Consider Argentina and Brazil. By way of full disclosure I have a relative who works for that org in Asia. We are at that point in life when we cross at funerals so haven't had the opportunity to get his POV.
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Old 10-16-2011, 10:46 PM   #58
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These aren't fun decisions for policymakers, I imagine, and they don't always know what the outcomes of what they do will be. So I imagine they do the best they can and err on the side of caution. The consideration of how many people will be affected is presumably on their minds, but so are lots of things.
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