My dad lost some of his retirement money in the past year's market crash -- which I hope is now behind us, but I'm as much in the dark as anyone. I was silently critical of him, at first, when he told me about his situation. He had left money in stocks -- probably too much for his age (77) and what the financial advisers call his tolerance for risk. After his loss, he moved more money into bonds. He kept some in stocks to try to capture the "upside" -- more investment jargon -- as the economy recovers.
But I would soon discover more sympathy for my dad's investment strategy.
Our college savings eroded last year too, even though it was in a slow-growing fund. I was looking at the numbers online last week and wondering why we seemed to have the worst of both worlds: neither the security of bond investments, nor the growth of stocks. I should say here that we have two of those 529 plans -- one for each daughter -- which are run (in most cases, I think) by the chief financial officers of the states where they're available. So, I hadn't had much involvement with choosing where the money was invested, beyond typing in my daughters' expected dates of graduation, 2015 and 2017, and then crossing my fingers and hoping the money will be there.
But as I was tooling around on the 529 site, I looked at the range of investment options. One aggressive fund is paying much better than the two I had. So, I moved the money. I can't even believe I'm admitting this -- I am so not a gambler, especially with precious dollars we're setting aside for our kids' future. I was nervous, but not so nervous that it stopped me. I kept thinking about how we're just paying our bills every month, just kind of matching the income and out-go. We're making sacrifices here and there -- cutting down on dinners out and music lessons in the summer. Why should I let this investment fund rob us of what amount we're able to set aside? As I see it, my savings were far worse off than if I had tucked them into a shoebox and stuck it in the back of the closet.
I wanted to risk a little reward.
So far, the new investment is working. I haven't quite recovered our losses, but almost. I'm checking the numbers daily, and it's kind of fun to feel that I've made a good decision, and to look forward to a better total tomorrow. It's addictive. You might say I'm hooked.
So, now I'm telling myself that I'll leave the money in the aggressive fund just until I cover our losses. I guess I'm betting that the world economy has bottomed out.
Thursday, July 16, 2009
The lure of money for nothing
Wednesday, April 15, 2009
Anxious all the time
This economy is making me anxious all the time. It doesn't seem as though it should -- my husband and I are two of the lucky ones who have jobs, and our employers seem to be doing OK. No, it's not really my personal situation that has me anxious. It seems like something in the air.
First of all, the sheer number of people laid off is astounding -- 663,000 people lost jobs in March alone, and 3.3 million since October. Those are U.S. Bureau of Labor Statistics numbers, so they're probably an under-count. The BLS tends to miss informal work arrangements, people who are discouraged and have stopped looking for work, those who would work more hours if they could, and people who used to have higher-paying jobs.
Every time I think of that number -- 663,000 -- I try to picture all of those people out of work. I really can't. First I come up with a vague image of a tractor rusting in a Midwestern field. Then I picture empty Long Island Rail Road seats as Wall Streeters stay home instead of commuting into NYC. And then I think of how hard it is to be home when you want to work, how much tension it creates.
The other cause of my anxiety is that I feel poorer because of what has happened to my retirement and college savings. We are still shoveling money into these funds, and I have no idea whether that's a foolish thing or not. One theory is that we are "buying low" right now. But is my 401(k) administrator really purchasing stocks? The last time I looked, much of the money had been shifted into bonds. Doesn't this mean that I have "locked in my losses?" I know that I should be more diligent, and maybe take over control of this account myself. But I really don't have any expertise in that. I just signed up to be a journalist in this life. Now, I'm supposed to be picking stocks? Or what? No retirement for me! It's overwhelming.
I can't even get into the college savings stuff. Each of my daughters' accounts has lost about $3,000. What happened to the "magic of compound interest" theory that I was raised on? It's not there any more! There is no more magic. I keep wondering how much debt I will be saddling my children with -- and here's the really crazy part. They are both still in grade school.
Like I said, this anxiety thing is insidious.
Wednesday, March 11, 2009
The times they are a changin'
When I first began this blog, in May 2008, I had a hard time finding anyone else out there who was writing about layoffs or the hardships of unemployment. It's hard to believe now. It seems that any day we could wake up and our country will have fallen over some precipice -- a precipice that we can't really anticipate or imagine but that we sense is there anyway. It would be some place from which there would be no return to the comforts of the old days -- i.e., 10 months ago.
Here's the New York Times writing about how many recession blogs have sprung up. Seeing this story in the paper is what got me ruminating on how quickly our economy has nose-dived.
I find that I'm nostalgic. I picked up a copy of "On the Road" by Jack Kerouac last week. I want to drift back in my imagination to the days before I was born. In the 1950s, every expectation was that each generation would out-do the last. We're an immigrant nation, for the most part, and that's what immigrant families do.
But now, the only person I know who has any hope to restore that kind of generational progress is Barack Obama, and he's pretty much paid to appear hopeful. Or he was elected to appear that way. He can't really get up in front of the American public and present any kind of alternative view. He's the optimist-in-chief.
Wednesday, January 21, 2009
Working more: the legacy of layoffs
I apologize for being absent. The truth is that I am writing another blog, one that is work-related. And the reason is that the blogger before me was laid off. So, now I'm doing my old job plus hers.
Those of us who remain at work after the "downsizing" often work much harder. I'm not working so many more hours -- maybe a few more -- so much as that my mental capacity is drained for anything outside of work. I spend several hours a day burning the battery on high wattage. And when I come home, there's very little left. I'm putting most of what's left toward making sure my kids are on track -- school papers signed, tests prepared for, etc. Seeing them happy gives me a lot of pleasure.
If the women of the 19th century and earlier were often too burdened with housework and field work to write, maybe we women of the 21st century are the same, only bound by a different sort of work. I had always dreamed of hours and energy enough to write something really good. Now I feel that this will happen only if/when I retire. And by then, I might not be up to it. Who knows?
I'm sorry to be self-pitying. These thoughts make me very sad.
Sunday, January 11, 2009
Doubting the breadwinner
Today, I read this very honest essay from a woman whose live-in boyfriend has been laid off. He's pursuing his "big dreams" and living on his severance -- while she's wondering if he's ever going to bring in a paycheck again. She's trying not to be "ugly," while at the same time revisiting her hopes for a house and kids some day. The writer, Esther Martinez, concludes:
I hope our relationship makes it through this recession. I wonder how many won't. My boyfriend's layoff has stirred up scary notions about love - that it really might be conditional, and that the conditions are not always pretty.
My first reaction was admiration for Ms. Martinez for her courage in exposing her feelings like this. I remember being so ashamed about how much of my regard for my husband was tied to his bread-winning. Of course, we weren't just dreaming about kids when his joblessness started, we had a 3-year-old and an 18-month-old, as well as a mortgage. So, perhaps I can be forgiven for my anxiety over how we were going to hold this house of cards together. I was freelancing at the time, and shortly went back to full-time work. But my salary didn't come close to covering our expenses.
My second reaction to the Martinez essay was how hard it is to convey these fears to people who have not been through it. I will sometimes tell people that many "social ills" can arise because of a layoff. But that's a euphemistic mask I'm placing over what we went through. Ms. Martinez says it better. By social ills, I mean to hint at domestic violence, divorce, substance abuse, depression, suicide, crime. Those things seemed a lot more possible during the layoffs. A middle-class, Catholic, law-abider, I had never expected the wings of those problems to brush me.
I wasn't the only one who assumed my husband's status as a spouse was diminished, though. I told one man that Dan had just been laid off for a second time, and this man seemed to view it as a come-on, and as an invitation to move in and pursue me. I guess he thought that if my husband wasn't fulfilling his bread-winner duties that we would soon be divorced. Those assumptions run deep in American culture.
Sunday, January 4, 2009
I consume, therefore I am
It shocks me how the imperative to consume is worming its way into our intellectual life in America. When I first observed it, I laughed and thought it was passing. I suppose that's how every insidious idea begins. As I watch the discussion now about how to "stimulate" America into better economic health -- a defibrillator metaphor, it seems -- many of our smartest commentators seem to assume that what will lead to long-term health is Americans spending our very last dime.
Here's the New York Times' editorial board today, writing about President-elect Barack Obama's economic agenda:
That argument starts with the correct premise that a stalled economy needs all the juice it can get, hence the need for the roughly $800 billion recovery package to spur consumption and create jobs, taking shape in Congress and championed by Mr. Obama.
The need to "spur consumption" is so assumed by these writers that it doesn't even bear explaining. The American economy runs on consumption, I guess, like America runs on Dunkin'. Nobody is questioning the premise that we need to spend in order to maintain the health of our economy.
And here is the New Yorker in "Talk of The Town" this past week, written by Adam Gopnik, with a similarly embedded value that consumption is good:
Consumers have stopped consuming, the papers say, for the same reason that the child has decided to cry: I’m really damaged, we want the world to know; attention must be paid.
As though we, as Americans, don't have a right to be royally pissed off that our retirement and college savings have declined precipitously along with the hogwash that is the investment banking business-as-usual -- a high-risk gambit with the Big Hamptons Home in sight.
So, we American consumers want to save a little money now, as a hedge toward the future, and Mr. Gopnik believes that we are crying babies.
If I'm reading Mr. Gopnik's essay correctly, he is attempting to convey to us uninitiated masses that economics is an emotional venture, as well as a social science. It's lovely of him to explain this to us, and I do applaud it as a student of economics myself, who has understood this concept all along. But then, would it not also make sense that we consumers here in America would react to tough economic times, emotionally, by socking a little something under the mattress? This could be expected. And it could be accommodated in econometric models. Disatrous times = people getting frightened and stashing money away. Don't begin to tell me that this is irrational, or worse, unpatriotic.
Which leads us, of course, to the very worst of the worst pleas for Americans to act as consumers, as opposed to something larger. It was the call by President George W. Bush for us to "spend money" as a way to respond to the Sept. 11 terrorist attacks. We women know what it is to be objectified -- to be wanted for our bodies or our body parts. Imagine the leader of the Free World calling on Americans to respond to the murder of nearly 3,000 of our fellow citizens by advising a shopping trip to K-Mart. Lost is any sense of what we are as humans.
I admit that this Sept. 11 complaint is a long-ago irritation by now. I assumed that, in the interim, it had been identified and observed as completely insane; but now I see that the New York Times and the New Yorker are echoing Mr. Bush's views that we are consumers first, consumers uber alles. Second, maybe we will have to send our sons and daughters to be killed in Iraq.
It's insanity, in the George Orwell "1984" sense, to believe that "consumption" can make us what we need to be. I can get behind railroads buying American steel. But I can't think that I have to have a dazzling new blouse at work every week for our economy to remain vibrant. It's not that I believe that our economy is not organized to need continuous injections of consumer dollars. It may be. It's that I think that it's wrong to set us on a treadmill where everything we own must be new or "the latest" for us to survive as a nation.
When I lived in Togo, in West Africa, people owned so much less. They had one or two sets of clothes. And yet they knew how to find happiness, perhaps in a way that we have forgotten here. Their happiness was based on family and community. Granted, it's an easier task to be happy when the goal is simply survival, not superlative success, as it has become in the U.S., and especially in New York.
I wish that we could use this economic crisis to re-evaluate what's right in our lives, and what we hope to live for. That would be a far better lesson, I think, than getting a hybrid Hyundai or an Ann Taylor jacket on the cheap. A crisis is a terrible thing to waste.
Monday, December 29, 2008
Living with less
I used to wonder how the people around me could afford the lifestyles they were living -- two new cars in the drive, often Lexis or BMW or Mercedes brand. Kids wearing designer clothes and cashing out with the newest X-Box or Wii systems each holiday. Disney World trips, European vacations. I decided that I just had to ignore it and live my life my way. I made up a fantasy in which everyone else was overextended on car leases and home equity lines of credit with huge penalties for early repayment. And who knows? Maybe the fantasy was true.
I had to laugh when gas prices soared and it looked for a while as though flashy SUVs would be impossible to re-sell. My 11-year-old minivan might not impress anyone at the village intersection, but it sure got better gas mileage.
The world has changed since those heady luxury days -- which were the norm just a year ago, really, although the warning signs were upon us by then. I don't believe that we are now in a cyclical downturn. It's more permanent. I don't think we'll ever forget the pain from the risky mortgages that has essentially gutted our financial system in these past few months. We won't return to the long extensions of credit, not in our lifetimes, anyway. This weekend, writing for the New York Times, Peter S. Goodman has uttered the unthinkable for people who are holding out for the return of the good times. He quotes Peter Schiff, president of Euro Pacific Capital, a Connecticut-based trading house.
Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base. Only by swallowing this tough medicine now will our sick economy ever recover.
Reckless consumption, as Schiff points out, is only half the problem. For the other half, we need to return to my good friend Larry Summers, who is now director of President-elect Barack Obama's National Economic Council. Summers likes to point out that globalization lifts the standard of living for people in poor but industrializing countries. He also says that means that rich countries' living standards will fall. This frankness is part of what makes Larry Summers so unpopular -- but of course, he is right. If he would only temper his doomsaying for the Pittsburgh steelworker a little, he might be heard by more people instead of infuriating them.
In any case. Off the Summers soapbox. Our standard of living has been falling for decades, we have just been in denial about it. We have been able to deny it because...
1. It has been happening to specific industries -- manufacturing, mostly -- of which many of us are not members.
2. Spouses have entered the workforce since the 1970s, so the drop in the living standard doesn't seem so severe. Household income has been maintained, more or less.
3. We've been living on credit, like home equity loans, and higher home values to finance retirements and college expenses.
Now the pain is spreading and eroding 1 and 2. The loss of one job in most households makes the lifestyle unsustainable. And the bubble has burst for No. 3. I can't see any way out but to embrace a new way of life.
Friday, December 12, 2008
Spared the axe
Dan's company let go more than 5,000 people worldwide yesterday. He was spared. I can't say for sure that this is the first time he's kept his job when others have lost theirs. But in the past when a big layoff has been announced, he has been one of the ones let go.
So, surviving is a whole new experience for us.
One thing that's different is that several people told him, before yesterday's big announcement, that he was safe. That must be how it works on the non-job-loser side.
Another thing is that he's spent a lot of time puzzling about the people who were let go. A "very nice" woman who had worked there for 20 years. A young woman who was very sharp and was running his counterpart division in another country. It probably really never makes sense except to the bean-counters on the inside.
I suggested that maybe the 20-year veteran was making a high salary, so it saved the company a lot of money to cut her. But Dan says that's not right, because her rank was still pretty low. She was called out of a meeting he was in, then came back teary, grabbed her things and left the room. She could have been any of us.
