What was the worst ecomonic period you had to suffer through

[wildcat]

How bad was it hindsight 20/20? How did you weather the storm?

Although I wasn't around for the early 70's, I imagine we will get a lot of responses for that era. I believe that there isn't always a general era for everyone and your response could be very specific to you as an individual.

 

[cute fuzzy bunny]

The late 70's. I was just starting out working and inflation sucked. Every time I went to the grocery store everything cost more.

A close second is retiring in early 2001 and watching the markets take a dive.

 

[wildcat]

The late 70's. I was just starting out working and inflation sucked. Every time I went to the grocery store everything cost more.

A close second is retiring in early 2001 and watching the markets take a dive.

I have mixed feelings on 2000-2001 era. I had just got out of school and finding a good job was tough. I didn't have a huge portfolio so it wasn't as painful as it was to others. Inflation wasn't that bad and the recovery was underway after a couple of years. I just kept living like a broke college student.

I do recall my parents cutting back a bit around the time of the first Gulf War and I remember hearing the word "recession" for the first time.

 

[TromboneAl]

The great depression, hands down. Hated every minute.

 

[wildcat]

The great depression, hands down. Hated every minute.

Didn't think you were around for that one. Only in spirit?

 

[maddythebeagle]

The great depression, hands down. Hated every minute.

I suppose that is what got you into the ziplock bag washing habits, right...The early 2000 market back peddling was annoying...pretty much didnt invest much for a few years and concentrated on my house rebuild/remodel...the early 80s recession hit some of the folks pretty hard where we lived since several were auto workers....

 

[tightasadrum]

I've never worried too much about the ups and downs in the market, even through the 70's and 2001. Just maintained my AA and didn't look until things turned around. It always did of course. Having said that, I'm more troubled about overheated markets today than I've ever been, so I'm sitting on a far lower equity allocation. Might have a lot to do with getting closer to taking money out and wanting to end the commute madness. Starting withdrawals with P-to-E's at this level is worrisome.

 

[kcowan]

In the early 80s. I got caught holding 2 $250,000 houses after moving east from the oil patch. Bridge financing peaked at 22% interest. Was 3 months from bankruptcy when the old home sold for $230,000, $30,000 below what the realtors consensus estimate was.

BTW it sold again 5 years later for $150,000 so it was good to get out even with some scars. It changed my perception of leverage permanently.

 

[2B]

Every time was "special" but I waddled through.

In the late 60's my father lost his job and my older brother, father and I cut grass for FHA repo's. He was going to pay us $1.50 and hour but never did. I started college and graduated into the big early 70's energy boom. My salary skyrocketed until the early 80's.

In the early 80's I had put all of my available cash into the down payment of a house. That seemed like a good place to put my money because interest rates were around 14%. When I was put out of work suddenly I had enough cash to pay the mortgage for 3 months or live on for 6. That was tense but out of nowhere I got a great job offer which included a home buy.

The early 90's never impacted me. However, in 2002 I lost my "important" job and probably would have qualified as clinically depressed (in runs in my family and I know what it looks like). Financially, I really didn't have anything to worry about but "it was the principal of the thing." If I had been plugged into this forum I might have ER'd.

After 15 months, I got a far lower paying job as a NASA contractor. Now after almost 2 years, I am making money more than ever before in a very low stress position. I can thank the new oil boom for my "last hurrah."

BTW, I discovered the forum and lurked for over a year before I finally, finally had to ask a question. This was during my NASA days when I averaged 6 hours a day being dedicated to my ongoing job search, cleaning up my personal finances, surfing the web, walking/playing around the site and generally goofing off.

I have been very fortunate to come out of my trials without a significant scratch. Things could have been better but there were so many people I knew that went through the same things and lost everything -- homes, wives, cars....

 

[Nords]

I was 13 in 1973 when we started lining up for gas and our family darn near became vegetarians due to the rising price of meat. (I wish I'd saved my "Whip Inflation Now!" button.) By the time I hit college, stocks were dead and everyone was investing in hard assets like gold, diamonds, & collectibles. In 1981 I had a checking account paying 10% interest.

1987's "Black Monday" was just a blip on our financial radar. We were too busy with our lives so we just rounded up all our spare change, dumped it into our mutual funds, and went back to our normal daily activities. That was probably the cornerstone of our ER portfolio.

I was too busy with work in the 1990s to devote any time to considering the potential of the Internet gold rush, but the 2000-2001 markets sure got our attention. I ER'd in June 2002, just in time for the gut checks of July and October.

Last week will probably be another blip on our financial radar.

The great depression, hands down. Hated every minute.

I think Al's referring to the gazillions of times our parents & grandparents have forced us to relive their experiences. They only had to go through the Depression once, but we've had to listen to their stories thousands of times and deal with the seemingly irrevocable changes that it seared into their behavior & attitudes.

For some reason nothing since then has succeeded in changing their minds about the life lessons formed during the Depression. I still can't get my father-in-law to deal with the effects of inflation on their retirement portfolio. "Safety now" is far more important to them than what their money will be worth in 25 years... maybe because they're counting on being able to use our money too!

 

[OAG]

Too busy most of the "bad" times. I do remember the early 70's but was living in Alaska (remember MOGAS sold by the US Air Force) for our personal vehicles at $.25 to .30 a gallon, no lines, station about 100 ft from the office. Best years of our lives in Alaska from 70 to 75. Frankly, being 66 years old, and living through it all it has not been bad at all. Those "depression" stories I heard from Grandma and Grandpa, while redundant and repetitive, must have worked very well as I learned to save, save and save some more to preclude ever having to live something like that.

 

[Outtahere]

Watched my dad go through the 70's patch trying to support 6 kids, they fished on the weekends, grew vegetables, we wore handme downs and I remember the worried look on his face. Stepdad (mom and dad were divorced) was a union carpenter, went though lots of up and downs in the 70's. I was in highschool, watching it all and listening to my grandmother talk about how bad the depression was and warning there was another coming.

In the 80's I was working two jobs to pay my mortgage that had a 17.5% interest rate, only one I could get and I was damned lucky to get that being a single woman.

All those times make me a very frugal person.

 

[CyclingInvestor]

My financial path to ER was very smooth - always plenty of savings, never
unemployed (programmer in LA area). The only nervous spot was around
88-91 when the LA aerospace industry was contracting. Many of my friends
lost their jobs and had a hard time getting decent new ones.

 

[W2R]

How bad was it hindsight 20/20? How did you weather the storm?

Even though I am 59 years old, the worst economic period that I had to suffer through (as far as my investments are concerned) is this week!

I think I've mentioned having been married to a non-LBYM'er for 23 years until 1998, and he spent enough that we never had anything left to invest. Before that I was a college student - - 'nough said.

During 2000-2002, I was just starting my first 401K. I contributed the maximum and figured that the 5% match made up for a lot of the loss, so I wasn't bothered. Hey, something put aside for retirement is better than nothing, right? Since I had never invested and was confused about the market, I did not invest otherwise but saved my money and put it down on a house in 2002.

In May-June 2006, I got pretty nervous and went from a 75/25 allocation to 60/40, and that allocation feels right to me.

February 2007 was a little unnerving, but it was good experience and I was able to hang tight with my 60/40.

This time (July 2007) seems easier. Guess I am gradually getting the hang of this.

 

[Lsbcal]

I like the answers to date. As always Nord's is interesting (and honest). Want2Retire, that picture (of you?) looks really nice -- too bad I'm already hitched and besides who likes blue bunnies? You sound like you've discovered the right allocation, took me a little longer in my investing experiences.

Well, in 1987 we were probably about 100% stocks and then came the October crash. Was following a moving average approach (extreme market timing) at that time and just missed getting out. But my wife had pnuemonia and was in the hospital and we had a 3 yr old son -- still remember reading the Wall St Journal while waiting in emergency. She recovered nicely but our portfolio went down a lot and I pulled out mostly (after the event) -- dumb, dumb.

Then in 2002 I remember the July decline and people acting pretty normal at a neighborhood BBQ on the 4th when I thought they should be talking about the market . Hmm, maybe I was taking a bit too much risk. We were 80% in stocks and virtually no bonds.

Then in 2003 I got ER'd by megacorp. At least that one turned out nicely.
By then I had sworn off market timing and was seeing the virtue of a balanced portfolio. Luckily it coincided with this nice bull market we've been having. Now we are 55/45 allocated with a good helping of TIPS and only one individual stock (held since 1994). Was down about 2.5% last week but I can take that kind of decline.

I keep stress testing our portfolio and looking at FIRECalc spreadsheets to make sure I can emotionally handle a severe decline when and if it comes. The real test will be rebalancing into stocks after taking big equity losses.

 

[crispus]

My worst period was 1989-1993. I owned a printing company and that marked the beginning of stiff competition and slowly eroding business due to DTP. Up until that, time business just came in and we were busy 90% of the time.

I ended up divorced and having to drop out of country club. I am stronger today because of those bad days.

 

[Rich_by_the_Bay]

Ignorance is bliss. Went through the 70s, 80s, 2002, etc. without even realizing that stocks were down. After all, it only matters when you have to sell them, right? Just went on with my life and didn't even have a retirement plan until age 42 or so (anything extra went into debt payoff), just an old TSA not worth much.

I'm paying a little more attention now.

 

[W2R]

Want2Retire, that picture (of you?) looks really nice -- too bad I'm already hitched and besides who likes blue bunnies? You sound like you've discovered the right allocation, took me a little longer in my investing experiences.

lsbcal, I love that picture too, but it's not me. It is a model/actress named Eva Habermann. That avatar was one of the defaults on the old message board, so I brought it along to this one. It's fun "being" somebody that stunning, and I think the photo does look like someone dreaming of retirement.

I read several books, including Larry Swedloe's "The Only Guide to a Winning Investment Strategy You'll Ever Need" while figuring out my allocation, and these smaller market blips provide me with a good opportunity to experience how this allocation feels during a downturn and to "tune" it a bit. So far, so good.

 

[cute fuzzy bunny]

who likes blue bunnies

Oh sumbeotch! I go put in a new sprinkler timer and take my family out to lunch and someone tries hijacking my persona.

See you in court!

(yes, NFS, I owe you two dollars)

 

[Lsbcal]

Want2retire - do you think Eva likes blue bunnies? I'm using Swedroe's Appendix B approach on TIPS (from his latest bond book).

CFB - I painted that picture before you were even cute and besides bunnies don't go to court .

Les

 

[cute fuzzy bunny]

bunnies don't go to court

Eh, I usually just had my lawyer go and call me afterwards to tell me about any funny parts.

 

[Moemg]

During the early 80's I was a single Mom with two young children .I worked like crazy just to pay for the basics and I did overtime for summer camps ,etc..It was hard but it was during this time that I realized I had to figure out how to pay for two college educations so I started saving and I never stopped . The second scarey point was 2000-2001 I was widowed and lost in a day as much as I lost last week .It came back but slowly .

 

[Orchidflower]

1982: Having made the brilliant decision to move from Chicago where I had a growing business, a 2 flat where the tenant almost paid the entire mortgage and all, to move to Houston the month the oil patch dived downwards until it hit 10.5% unemployment about 1-1/2 yrs. later.
And the house I bought plummeted within a year and a half about 23% or more, but I kept the house and just kept going. I figured we had to live somewhere, and Texas was at that time more progressive in their educational system than Chicago was (have no idea about now), so the son benefited.
My sister is married to a surgeon there, and they lost EVERYTHING including their house, their cars, everything about 1985-86. That was pretty common then. People don't elect to have elective surgery when they aren't sure they will have the insurance to carry them, and nobody felt secure about their jobs then hardly.
It was nothing in Houston in about 1983-85 to meet teachers, business owners, nurses, policemen and so forth who simply walked away from their houses because they now OWED more than the house was worth. People were declaring bankruptcy right and left. It was horrible.
In fact, credit agency people would tell you that "before" the crash in Texas if you declared bankruptcy it was a stigma on you, but during that 1980's time if you declared bankruptcy it was no big deal anymore. It was THAT common...and that was only 10.5% unemployment. How BAD WAS IT during the Depression? I surely hope I never have to find out on a personal level.

 

[rockyj]

Didn't really start investiing til the 90's. 2000-2002 was frustrating watching my balances continue to drop despite dollar cost averaging new 403b contributions at or near the max allowed. But the last few years offered rewards for staying the course through that stretch. Now there's more on the table and I have to admit that the absolute value (as opposed to percentage) of (hopefully) short term account gyrations like last week *is* a bit more unnerving. Still staying the course and even did a *little* extra buying last week.

 

[twaddle]

I painted that picture

You painted that picture? All this time I've been trying to figure out why you had a picture of Thunder Bunny....