riding out the storm - r u battening down the hatches?

[ST in London]

Uhhhh, I use "expect the best" for optimism and "no idea of what I speak" for hope.

Trans-Atlantic thingy maybe.
ST

 

[Hamlet]

Agreed. I'm just saying that the deflation we see short term is likely to be outweighed down the road by the inflationary effects of the vast amounts of money being pumped into the system.

It is interesting to watch the hedge fund selling crush the commodities and related stocks. I suspect that there will be an opportunity there at some point soon.

Inflation will occur. But not in the immediate future! It's well established that pumping money into the system while the private sector is going through a credit crisis/deleveraging like crazy is NOT inflationary.

Two, three, five years from now? Maybe.

Audrey

 

[audreyh1]

Agreed. I'm just saying that the deflation we see short term is likely to be outweighed down the road by the inflationary effects of the vast amounts of money being pumped into the system.

I'm not sure about the "outweigh" argument.

1. We have to survive the next year or two first.
2. Money/Liquidity can be removed from the system.

Seriously, until we are back at a global expansion again, we can only "hope" for inflation.

Audrey

 

[template]

My wife and I are driving less due to the increased price of gasoline, but haven't made changes due to the recession at this point. We have been pretty frugal all along.

As I posted a few years ago, I confess to being more risk averse than most forum members. I reduced my stock mutual fund holdings to about 13% back about 2005 and have slept better since then.

Most of our portfolio is in US government insured assets.

My net worth (excl. house, cars, etc.) is down about 2.6% from its peak in May 2008 because stock mutual funds lost money, but my main concern is inflation.

 

[Gearhead Jim]

...
Seriously, until we are back at a global expansion again, we can only "hope" for inflation.

Audrey

Well, the 1970's managed to have stagflation, we could do the same again now. Somewhat different causes but same results?

 

[Hamlet]

I just bought an old comic book for $300. That probably won't win me any frugality awards.

 

[audreyh1]

Well, the 1970's managed to have stagflation, we could do the same again now. Somewhat different causes but same results?

In the 1970s, we had forces (strong unions, etc.) that created a "wage inflation spiral". No such forces now.

Even though we had strong commodity inflation from the past two years, that did not translate into wage inflation at all. And now with a commodity bubble burst, that force is gone. We'll start to see disinflation on that front. And with the massive deleveraging going on now there are strong deflationary forces at work. In this kind of environment government pumping money into the system does not contribute to inflation.

Not saying it's going to be a cake walk - not by any means. But rampant inflation in the near future is not one of them.

Audrey

 

[dex]

Not saying it's going to be a cake walk - not by any means. But rampant inflation in the near future is not one of them.
Audrey

I have to agree. Those with cash will be able to get great deals on everything in the near future.

 

[ziggy29]

In the 1970s, we had forces (strong unions, etc.) that created a "wage inflation spiral". No such forces now.

There still is in the public sector -- not so much huge increases in wages but huge increases in the cost of retiree health insurance and pensions. More and more cities and states could get Vallejo'd if they don't adapt.

 

[Zoocat]

Lazy, all your plans/what you're doing sound entirely sane and prescient, given the current econ climate. Today DOW was down 800 points at one moment. Things don't look good. I think it's wise to have Plan B, plan C, and plan D.

As for battening down the hatches

1. Mortage: I can't get rid of the mortgage until I sell and if I try to in this market, I'd lose money. So that's out for now, to be revisited in the spring when I see how things look.
2. Health Insurance: I can't go without health insurance and even if I got a job w/bennies, I doubt I'd feel certain that I would keep that job. So it's better that I keep my expensive individual health insurance.
3. Travel: that's out now. I'm glad I took some savings and earnings from my investments and did a lot of traveling last year.
4. Work: will be making further attempts to earn more money $$$. All of it will be saved. But it really makes me ill to think of taking a full-time, desk job and give up my freedom. The idea of having a boss again makes me nauseous.
5. Little savings: reduce restaurant meals, no clothing purchases, watch out for incidentals. All these can add up to a few hundred a month.


In the worst case scenario; sell the townhome, move to a cheaper location, take a job at Target. Well, it could be a lot worse. There could be no Target stores anymore, or jobs.

 

[walkinwood]

I ER'd in May 08 and so far, I'm worried, but have not panicked.

We were traveling in the UK and Germany over the past 3 weeks and just returned home. This is all over the news there too, and many editorials are lauding our "decisive" efforts at handling the crisis. (O.T. The trip was great and I highly recommend the Lake District in the UK for people who like to hike, and Hamburg is a really cool city.)

My asset allocation is sliding out of balance, but I can't get myself to balance right now. I need to really think this through. Maybe the current asset allocation is in my "safety zone" rather than my previously determined one.

We'll probably be a little more thrifty, but already have travel plans through Feb of next year that I don't plan on changing.

We ER'd for a trial one year period, so we may just go back to work for a few more years if this mess continues. Hopefully, we'll be able to find jobs if we take that path.

Till then, I'm going to enjoy TODAY.

 

[Freeatlast47]

Squirreling away for the upcoming recession

I ER'd in 2006 at 46, and have seen 40% loss in my account of equities. I am in the process of doing the following :
1.Set aside enough cash for the next five years
2. Cutting back on groceries like processed food and eating out.
3. Cut the clothing bugdet
4. Cut , travel.
5. Leave enough in the equities market until the rebound possibly 2013.

This leaves just enough for the basics. My lifestyle will be completely different than it was last year. My husband still works, but the thought of me going back to work in IT business and working 12 hours a day is out of the question. My husband however has decided to delay his retirement for a few years However in hindsight I wish I took out more cash sooner a year ago.

 

[ziggy29]

5. Leave enough in the equities market until the rebound possibly 2013.

This is teaching me some things. Once the market recovers -- and it will eventually -- I'll probably be reducing my allocation to stocks from 70% to somewhere in the 50-60% range. Looking over the numbers again, I probably had been taking more risk than I needed in order to accumulate what I think we need, when we need it.

Now that's blown up, and all we can do is hope for enough of a recovery to start reducing my allocation to equities, knowing that now is a terrible time to do it...

 

[Freeatlast47]

Last downturn in 1999 to 2002 I recovered all my losses. 2002-2006 I finally saw the gains. This downturn I am not so sure will be that quick. 5 years set aside for now and if a short term trend of upward movement arises in stocks I will take the opportunity and cash out some more cash to either increase my 5 year budget or extend the spartan living for another few years. Wont' really know until first quarter of 2009 to see how this mess unwinds.

 

[lazygood4nothinbum]

meeting with sil on friday for lunch and to check out the ranch. i'll do a trial week or two later this month. they've set me up with some bits of furniture. turns out it is just a 2/1 so i will rethink the roommate, but i still might like to have one. ranch has well water, not city, but there's a water softener and sil says she never noticed a sulfer smell. i drink bottled anyway but the softener will make showering pleasant.

the kangaroo peed all over the carpet so bro & sil tore that out, installing new. i'll be paying elec & cable & internet. so by renting out my house, all housing costs will zero out. a roommate brings in additional $500/month. i'm still very nervous about leaving my house but talking myself into it. would be hard to become a vagabond if i can never leave my house so i'm considering the ranch to be the first stop on my world tour. i've been in this house for 14 years. wow. (i'm still such a freaking homebody, any bets that the next stop on this world tour is to move in with my cousins on maui?)

with just the housing savings, my expenditures are reduced by about 30%. with the income of a roommate and, if i want, with some line item cuts (clothing, book/cd budget, etc) i can easily reduce by another 20% while keeping some luxuries like the gym, restaurants and the like. then, of course, if i get a job, well, the income's just gonna be gravy.

sil takes care of horses when i want a vacation. with this economy, i don't foresee anything other than my usual 3-4 day roadtrips locally. (after i return from leaf peeping, of course.) now all i have to do is train the horses to sleep late and i'm set.

The one action I am seriously contemplating is starting my SS benefits in a couple of months when I turn 62.

just a little over ten years behind ya. though i suspect the time will go a little faster once i secure a job.

DH and I are in about the same situation as Cyclinginvestor.

i could have lived similarly overseas and would've been having fun today had i not gotten caught with all this real estate around my ankles. live and learn.

The only changes I've made is to ratchet down the remodeling to only necessary items . My tile from h--- will be staying covered by a new area rug . We've also cut back on travel , instead of a New England cruise we are doing a trip to Savannah .

cutting my autumn 2008 trip in half timewise. also i'm going at very end of season when mountain hotels drop their prices by half. hopefully there will still be some color left to the leaves. i figure it will likely be very end of autumn in the high elevations of the blue ridge parkway where it's fun to drive but looking down might make for some colorful views (also will be doing skyline drive in virginia). i'm lucking out with gas prices. since i started planning this trip, prices have dropped enough to pay for a night at a hotel.

Maybe we are going to get a depression, but unless it is a really really bad one, a lot of these stocks seem like they are already there.

i handle knowing bad news better than i handle not knowing not so bad news. spoke with my uncle/accountant over weekend. i've never seen this guy with so little to say. he still works in the industry at age 70something. very well connected, lost friends to 911, blablabla. i could not get out of him what he thought was happening or where we might be headed.

he commented only on his surprise that i was considering going back to work. he seemed happy but only because he thinks everyone should always work. i did not get a sense that he thought i needed to work. but his silence on specifics even when asked directly was unnerving. these guys just don't know and not knowing spooks me.

One of my friends has had four of her friends die recently, all about our age. She tells me repeatedly that DH and I made the right decision to live frugally, ER and enjoy our lives. I agree with her.

i'm all for frugal but this sure does highlight the danger of retiring (not you specifically, speaking generally) on a shoestring. there has to be something that can be cut from a budget in bad times--gym, restaurants, clothing, whatever. on another thread, a poster was describing his idea of a future life overseas on a $13k/year budget. it sounds just beautiful, bohemian in a certain light. only in this economy, i couldn't sleep at night.

Uhhhh, I use "expect the best" for optimism and "no idea of what I speak" for hope.

Trans-Atlantic thingy maybe.
ST

hey, i speak english too, ya know. of course, i learned most of it from monty python, coupling and series 1-5 (not six) of my hero.

 

[lazygood4nothinbum]

a photogram: "in lieu of thailand"

(again, pardon poor pic quality, camera works only on occasion--just have to snap enough shots--will send to shop after upcoming roadtrip.)

did my orientation yesterday. fed all the horses. really enjoyed it very much. very fun. some of them are sooo pushy though, especially for that tasty grain. before feeding i aquainted myself with my new neighbors. one young'n went to kick me (missed, nya nya); gotta little too frisky, i guess. lesson of the day: don't play with horses like when i used to wrestle with wolfpuppy.

welcome to lazy acres

my new little house on the prairie

depression era housing

i've a feeling there's a theme here but i can't quite put my finger on it.

my new office (tough day at the office, dear?)

hdtv country style

new little knee high friend

niece's horse was getting a pedicure while i was there...

rescue horse gets a bath. my sil took her in at about 6 months. abused and neglected, the baby horse was totally skittish on arrival. but with sil's good work, she has developed into a gorgeous, gentle, incredibly friendly beast of burden.

 

[Zoocat]

Wow, Lazy! You've got it made! That's a really lovely ranch with some great horses too. And a kangaroo? Wow. Paradise for an animal lover. Do they have any llamas? Lucky you. Just watch out for that frisky young'n.

 

[Dawg52]

Do you have to shovel poop?

 

[redduck]

I have to agree. Those with cash will be able to get great deals on everything in the near future.

Dex: When the near future is almost here, would you let me know?

Thanks.

 

[toofrugalformycat]

Lazy: I had to pry myself away from my house when DH and I traveled for a year and rented it out. I had lots of misgivings. After a couple of weeks I wondered how I could have possibly gotten so emotionally attached to one place. Maybe it'll be the same with you.
What a lovely new home you have! And I'll bet all those critters will find your political and other opinions to be completely correct, or at least they will not talk back to you in English. But keep clear of the kick zone! That's my entire horse expertise.

 

[happy2bretired]

Oh, Lazy...sooo nice! Sounds like a dream job really.

 

[lazygood4nothinbum]

Wow, Lazy! You've got it made! That's a really lovely ranch with some great horses too. And a kangaroo? Wow. Paradise for an animal lover. Do they have any llamas? Lucky you. Just watch out for that frisky young'n.

i don't know if i've got it made or making do with what i've got. i'd really rather have already sold out and been off touring the world by now. it's so hard to seriously plan for a worldwide economic collapse. this is a very good deal for brother and for me. plus this brings me just minutes to them so i get more family time which i enjoy. niece will be there everyday jumping and mucking her stall and nephew will be there because he enjoys all the tractor work. my ulterior motive: bond with the kids now so they'll take care of me in my old age.

as to the kick, that was kinda my fault. i was horsing around too rough with a horse who didn't know me. must remember: horse much bigger than dog. i used to rough up my nephew before his parents tried putting him down to bed too (the annoying uncle).

kangaroo is gone. actually a bit exaggerated. was a baby wallaby (kangaroo sounds funnier). idiot past ranch manager let it free range in the house. kangaroo pee everywhere had to be cleaned. carpets torn out. etc.

fortunately for my brother, i would never do such a thing. though you shouldn't be surprised to see me lying on the floor watching tv with the miniature horse in the house.

no llamas though that would be fun. i'd really love to have a giraffe but i guess i'd have to build higher fences.

Do you have to shovel poop?

um, only in trying to find my way around here, apparently. i actually have no problem with manure. it's not like when i was cleaning up dog crap three times a day for over a decade when i had wolfpuppy. finally i have found my calling in life.

the horse owners muck their own stalls & corrals. my job is to play with their horses. also i feed them which is way fun. i have to sweep the stable center aisle but owners have to sweep in front of their stalls. also i'll do some landscaping. i want to grow grass in the corrals, guess i'll cordon sections off at a time. i want to plant some shade making plants because there's only palms there now. maybe intermingle some poinciana (about the fastest growing tree alive) & jacaranda trees. also of course bamboo. i'll have to protect the shoots which i'm sure the horses will try to eat.

Lazy: I had to pry myself away from my house when DH and I traveled for a year and rented it out. I had lots of misgivings. After a couple of weeks I wondered how I could have possibly gotten so emotionally attached to one place. Maybe it'll be the same with you.
What a lovely new home you have! And I'll bet all those critters will find your political and other opinions to be completely correct.

thanx for that input. feeling very much the same. when i spent the other day on the ranch i was completely comfortable and happy while i was there. i didn't get nervous again until after i got back home. there is security here but also i know it is a trap setting me in my ways. i think this is a good move. i just have to finish talking myself into it.

so right about the animals. in fact, i understand they are they are totally not totalitarians.


i don't think the minihorse is gay but with that braided mane, he seems to be a bit of a hetero cross-dresser. what, me judge?

Oh, Lazy...sooo nice! Sounds like a dream job really.

this part is the dream job. but also the ranch is not too far from two hospitals and a medical center so i thought there's a good recession proof place to find a clerk position or something during the day. maybe i'll meet a cute doctor who will wisk me away from my drab existence.

 

[In-control]

Before I was FIRE I read allot of books on asset allocation and the history of the market. I came to the conclusion that 5 years of living expenses in cash was my comfort zone and that I could weather any financial storm. Funny how this turned into a 40%stock/40%bond/20%cash position. I build a laddered CD and am now building my 2013 budget. All of by earnings for this year are designed to fund my 2013 budget. I also have no debt.

I sleep well with this approach - the real litmus test!

 

[REWahoo]

I came to the conclusion that 5 years of living expenses in cash was my comfort zone and that I could weather any financial storm. Funny how this turned into a 40%stock/40%bond/20%cash position.

I came up with essentially the same allocation but would not go so far as to say it will weather any financial storm. I'm just hoping it will weather this one.

 

[toofrugalformycat]

i don't think the minihorse is gay but with that braided mane, he seems to be a bit of a hetero cross-dresser. what, me judge?

Maybe he's metrosexual? Or just a hippy born too late.