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How concerned should we be?
Old 09-30-2008, 12:55 PM   #1
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How concerned should we be?

I'm getting this question a lot. I'm no financial guru but I do pay a fair amount of attention to the topic. So be honest, am I staggeringly naive to not be overly concerned about all this?

I'm 37, have a hefty mortgage, a small HELOC an excellent combined income and most of my personal saving is in a 401k.

I'm mildly anxious at best. I'm not sure if that's prudent or foolish, a blessing or a curse.
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Old 09-30-2008, 12:59 PM   #2
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Originally Posted by RDamien View Post
I'm mildly anxious at best. I'm not sure if that's prudent or foolish, a blessing or a curse.
I vote all of the above...

Seriously, if you have a stable job, can continue paying down your debt and increasing your 401(k) savings you are in good shape. Time is definitely on your side.
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Old 09-30-2008, 01:10 PM   #3
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I think what's missing is a solid emergency fund (or maybe you forgot to mention it). Having a nice income is great, but how long would you be able to continue paying that hefty mortgage, without tapping the 401K, if one or both of you lost your jobs?
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Old 09-30-2008, 01:12 PM   #4
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Originally Posted by RDamien View Post
I'm getting this question a lot. I'm no financial guru but I do pay a fair amount of attention to the topic. So be honest, am I staggeringly naive to not be overly concerned about all this?

I'm 37, have a hefty mortgage, a small HELOC an excellent combined income and most of my personal saving is in a 401k.

I'm mildly anxious at best. I'm not sure if that's prudent or foolish, a blessing or a curse.
Hopefully your "excellent income" is sufficient for your "hefty mortgage".
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Old 09-30-2008, 01:14 PM   #5
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I think what's missing is a solid emergency fund (or maybe you forgot to mention it). Having a nice income is great, but how long would you be able to continue paying that hefty mortgage, without tapping the 401K, if one or both of you lost your jobs?
That's a good point and I would give us a passing grade on the emergency fund but it certainly could be better.

She just took 6 months off, 3 unpaid for the birth of our son. No big issues but we tapped the EF a bit and we shouldnt have had to.

Well... someone make sure to tell me when to panic!
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Old 09-30-2008, 01:19 PM   #6
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Hopefully your "excellent income" is sufficient for your "hefty mortgage".
Indeed, point taken. One of my concerns before all this mess and a bit more acute now. 400k mortgage 250k per year roughly in income. Note I was using "hefty" and "excellent" as relative terms. In other words that's how those figures feel to me. I'm sure others make much more and have bigger mortgages.
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Old 09-30-2008, 01:20 PM   #7
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How concerned should we be?
If I could predict the market reliably, I would be an immensely wealthy and powerful person as a consequence. I probably wouldn't hang around the ER forum.

I think we should always be cautious and vigilant, especially right after such a volatile period with big market drops such as we have seen.

Being prepared with an adequate emergency fund is a good idea, whether we are in for a rough roller-coaster ride, a plunge downwards, or neither of these.

Continuing to contribute to your 401K is generally a good plan, as well.
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Old 09-30-2008, 01:27 PM   #8
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That's a good point and I would give us a passing grade on the emergency fund but it certainly could be better.

She just took 6 months off, 3 unpaid for the birth of our son. No big issues but we tapped the EF a bit and we shouldnt have had to.

Well... someone make sure to tell me when to panic!
No need to panic yet... You are making a lot of money so you should be able to pad that emergency fund pretty quickly.
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Old 09-30-2008, 02:37 PM   #9
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Thanks to all.

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Originally Posted by Want2retire View Post
Continuing to contribute to your 401K is generally a good plan, as well.
Another good point. After reading this forum and the boggleheads book, I came away with the notion that my "strategy" to consistently invest via direct deposit in good index funds and pretty much ignore it was a good one.

I've taken stock of my 401k and IRAs, put them in what I feel to be good funds with low/no costs and I'm just maxing out what I can. Then I read this article:

R.O.I. - WSJ.com

Which opens thus:

Quote:
Cut everything.


Drop your cable package and TiVo. Say goodbye to Applebee's and Starbucks. Cancel the ski trip.


Slash every single penny you possibly can from your household budgets and start building up cash.


Yes, I'm serious. The shocking collapse of the rescue package on Capitol Hill threatens a disaster on Main Street. Unless this gets reversed almost immediately, it could turn a slowdown into a slump, and a slump into a depression.
Now that struck me as wild eyed panic rather than pragmatism even though he levels off from DEFCON 1 later in the article. So I suppose a bit of confirmation was in order that I'm not being willfully ignorant here.
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