# How has the recession/economic climate affected you?



## Wonka (Mar 1, 2009)

My wife was just required to take a 25% salary cut, our retirement saving are 1/2 of what they used to be, and our home value is 40% less than what we paid just two years ago.  It seems like a "black cloud" is following us.


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## Rose Pink (Mar 1, 2009)

The 401K has taken a major hit. 

We have some recreational property that we put up for sale when the market was booming and then sales just died. We had planned to use the money from the sale to remodel our kitchen which is very poor shape. Just signed the extension for the realtor again. So, if we needed to sell our home, we would have to take a major hit since the kitchen is horrid. Gladly, we are not in need of selling our home.

DH bought a new truck last year and put his Grand Cherokee up for sale--you guessed it, the Cherokee has not sold.  Few people want an SUV in this economy.

My husband's salary has not been cut. We do depend on commission supplements to his basic salary and that has me a little nervous. Time will tell.

I keep telling myself I need to be more prudent with my discretionary spending but habit dies hard. I scrimped for so many of the early years and in recent years have been able to ease up a bit and it's hard to rein it back in.

Still, we have a roof over our heads, clothes on our backs and food in the pantry. We have enough income coming in to pay the basic bills. I am grateful for what we have and don't want to jinx it by complaining. 

If I start to feel sorry for myself I can always watch Slumdog or some Iranian film to bring me back to reality.


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## Glynda (Mar 1, 2009)

*Mainly...*

Mainly the market.  The company stock fell from $36.00 a share to $6.00. At $36.00 it had doubled for us and I asked hubby to at least sell half but as an officer in his company he is required to own a certain amount and some of that stock is in options. We have also been hit hard with other investments we had in mutual funds.


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## Big Matt (Mar 1, 2009)

Same, but without the salary reduction.  

Time to accumulate some cash and pay off the house.



Wonka said:


> My wife was just required to take a 25% salary cut, our retirement saving are 1/2 of what they used to be, and our home value is 40% less than what we paid just two years ago.  It seems like a "black cloud" is following us.


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## Janie (Mar 1, 2009)

401Ks are down 40% from their peak.  Our home has declined 12% in value over the last two years, but we bought it 13 years ago so have still seen significant gains, at least on paper.  Fortunately we have no plans to sell for another 10 years or so. 

DH and I feel fairly secure in our jobs.  No outright salary cuts, but no increases this year either, and the bonus plan at my company was cancelled for the last half of this year.  With two kids in college, our cash flow feels pretty tight.  But both of us have watched friends and colleagues lose jobs over the past six months, and we feel lucky to be where we are.  

We had thought we might retire in another 10 years, but that does not look very likely now.


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## suesam (Mar 1, 2009)

We have lost about half in our retirement and college savings accounts. Ouch. 
We went to Cancun for a week, just returned last sunday. We were with my sister and her husband and her husbands sister and her husband. (Brain teaser?) Anyway... my sisters husband got laid off two days before we went, masters degree, worked with the agency for 30 years and the other male in the group got laid off 2 days after we got back after having worked at his company about 25 years. Neither expected it. Wow.DH and I are feeling lucky we have our jobs, today. 

Sue


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## shagnut (Mar 1, 2009)

I am trying to live on under 1700 per month (disability)  Altho it's a cut at least I don't have to worry about bad weeks on comssion. I feel very fortunate as I sold my CC stock b4 they went under.  I am thinking of using my ts's instead of trading. Last night I had a nightmare that I sold them all and just rent or use little hotels. Kelli said NO WAY!!  That's not us.   Boy, have I got her spoiled. I am trying to cook more at home.  shaggy


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## Glynda (Mar 1, 2009)

*Paying off...*



Big Matt said:


> Time to accumulate some cash and pay off the house.



That's my move this week.  Pay off our second home in Charleston.  Then both will be paid off.  We wanted to add on to Charleston for moving in upon retirement and this would be a good time to do it, but a very influential member of the BAR was shown a sketch of our plan and said she absolutely would not approve the size of the addition we had in mind and the size she would approve would only give us about a 12X14 space for a master bed, bath, closet and washer and dryer.  Drat.

So we will be watching for another house.  Fortunately if we decide to sell, downtown Charleston has held its value pretty well.  Homes are staying on market longer, some are reducing prices and others taking more off asking prices than in the past but those are mainly people who had unrealistic expectations to begin with.  Prices are fairly stable down there.  The other side of the sword though is that we haven't seen any great bargains to buy yet.


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## pwrshift (Mar 1, 2009)

I take an annual 4 week trip to FL from Toronto every year at this time, and while Canadians have been a little isolated from the US economic woes, exposure to the depressing US news sources like CNBC, CNN, business papers, etc., does make you fearful of tomorrow. The mind is powerful.

While it did seem less travelled this year, Interstate 75 is the artery I use to drive this trip, 3 nights on the road from snow to sun, for 4 weeks of eating breakfast on my TS balcony. I expected the worst and fully expected to see signs of economic stress, but the 3 large Marriotts on the way down (Covington, Atlanta, and Orlando) all seemed very busy to me. In fact, at the JW Grande Lakes (Orlando) on Friday night we couldn't get in their 'Primo' restaurant until the 9 pm sitting, even as a guest in the hotel. And, yes, they were actively selling (and building) their new TS!

In Fort Lauderdale, the first week, we went to Ruth's Chris, Primavera, PF Changs, Bravo, and Southport Raw Bar. All were packed with customers. We went to the Tourneau watch company in Miami to change the battery in my watch and their customers were buying, not just looking at their expensive watches. We drove up Southbeach - the bars and restaurants on a Thurs afternoon were all busy and we had to navigate bumper to bumper amongst all the new Bentley convertibles. The Marriott TS garage is filled with huge SUV's probably because gas in the US is about half what we pay in Canada. 

My main company is in the b2b advertising field and we ended 2008 about 6% ahead of the previous year. I really don't know how to judge 2009 because I'm not sure how our buyers will be affected by the US economy. Like everyone else, Canadian's can think themselves into problems and the daily newscasts are very depressing. It's tough to sell anything if your buyers think there are problems ahead. The glass is half empty, not half full. We need to focus on the road ahead and make sure we get there.

Brian


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## Liz Wolf-Spada (Mar 1, 2009)

My hubby retired this year, so that was a big hit financially of about $1800 a month net loss, our school district is cutting the 5-6 days we get paid for parent conferences and prep time, so that will be a cut, they are freezing step raises (which doesn't affect me because I'm at the top anyway) and we've had no COLA this year, or next or probably 2010 either. My 403b lost over 40% and of course our house is down in value too. With my son possibly going to grad school next year and me wanting to help, I think we will do at least one year of only local timesharing where we can drive and not pay car rentals, airfare etc.
Liz


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## funtime (Mar 1, 2009)

I am self employed and the finances have been quite iffy for about four or five years so I am already economizing.  On the timeshare side, my sister and I are learning how to better use our timeshares including renting some of them for a slight profit. I have slowed down my timeshare ebay purchases and  I have several timeshares for sale as I am trying to "trim" the herd.  We love timesharing and in a down economy it is the way to travel.  This last year we used II getaways to great advantage as well. Funitme


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## DEROS (Mar 1, 2009)

*Nothing Changed*

Nothing has changed for me.  I have no fear of losing my job and my pay will always be the same.  It would take an act of Congress to lower my pay; which would be a political malestrom.  My pension, which is not tied to any market, is secured, along with medical.

The only thing is my investments have tanked by 50%.  Thats ok, because I still have 20-30 years before I will need the money.  Actucally this is a great time to start buying those company that will weather through this crash.  Only if I knew what those companies are???


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## Passepartout (Mar 1, 2009)

Like most folks, our 401(k)'s have taken a good hit. In some cases nearly back to cost basis. Makes the ol' mattress look good. I've been thinking retirement in about 3 years, but that looks a little iffy at the moment. We bought our house almost 10 years ago. It's lost some paper value from it's paper peak, but is still worth way more than we have in it, and we've upgraded and prepared the house to be able to age in-place. It will be paid off before I retire.

On the work front, a couple of years ago there were 3 columns of help wanted ads in our small town classifieds for my line of work, now just a couple of ads for places no one would consider acceptable employment. Talk around the shop is, keep quiet, do your job, because this isn't the time for jumping ship.

A significant portion of DW's law practice is consumer bankruptcy representation, so that looks like full employment as long as she wants to work.

We've traveled internationally 3 times within the last year to timeshares and cruises as well as 2 in the US and have a couple more on the books for this year.

We are postponing major purchases. No new pickup for me. No NEW developer timeshares, no major construction projects. So far we are keeping up the infrequent visits of the housekeeper and gardeners, because they have families and need work, too.

Our area's economic base is largely agriculture. Crop prices are down some and that will affect the area more than the closure of the few manufacturing concerns that exist. So if you nice folks will just continue ordering french fries, we'll be fine.

Jim Ricks


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## mamiecarter (Mar 1, 2009)

*I worry a lot and have cut back on vacations*

So instead of planning a spring/winter trip I stayed home and cleaned house. But I did spend some money redecorating. Not nearly as much as going somewhere however.


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## DebBrown (Mar 1, 2009)

Like most of you, our 401k has lost a considerable amount.  Otherwise, however, we are pretty stable.  Our house is almost paid for and we have no other debt. 

I am a contractor so my jobs are always in jeopardy.  The only difference now is if I lose a contract, it won't be as easy to find something new.  Still, we can survive if I'm not working and I'd probably be happier.

Deb


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## Cathyb (Mar 1, 2009)

Have two sons who work for GM, so worried there.  Daughter's Anthem Blue Cross medical insurance has skyrocketed (she is unemployed so we are paying for it).  Retired so cannot replace lost value in future years 

However we are in pretty good health


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## Pardytime (Mar 1, 2009)

I think the Canadian equivalent to the 401K is the RRSP. (?)  For years we had been socking away everything we could for our retirement years into RRSPs.  Now having seen them lose 30-40% of their value, we are rethinking that strategy.  I am thankful that (although it was tough at the time), over the past 10 yrs we doubled up on mortgage payments when the salaries were good and we paid off the house, which for now is holding it's value.  

However, I had to force my poor DH back out of retirement last month into a temp job.  We only have so many years left to get back on track. I had so hoped to travel a lot in our later years, but that is looking less possible now.
As for vacations, we will be taking fewer, but longer, since it costs so much just to get there from here.

_From the Capital of Canada_


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## rosebud5 (Mar 1, 2009)

*Economy*

What has happened to you, has happened to everyone else. My 401K is now a 201K, my house has taken a 30% hit. Fortunately, it's still 50% higher than what I paid. My stocks have lost 40%. The stock market is down this year 19%. We can only hope Obama pulls us out of this mess. We will get out, but I think it will be a good 2-3 years before we see that happen. 

Be glad for the good things that life has to offer, irrespective of your financial  situation. Hopefully, your family is healthy, you haven't lost your job or house and have enough sense to understand that this is temporary, not permanent. Remember: Everybody else is in the same boat as you are.


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## SueDonJ (Mar 1, 2009)

Our investments tanked along with everyone else's, but other than that we are okay.  Don's career is safe, my work will probably shift from custom clothing to alterations but my earnings are pin money anyway.  Our home is mortgage-free and we don't carry credit card debt, so we're fortunate so far.  <knock on wood>  It's really heart-breaking to see others around us who have worked just as hard, suffer some unlucky breaks.

One thing gives us pause.  Down the line we're hoping to retire to the Hilton Head area but the real estate market makes us wonder if we shouldn't try to take advantage of it now.  We fluctuate day-to-day between sit tight, buy land, sit tight, check the foreclosures and short sales for a super bargain, sit tight, we don't have vacation time to spare for a second home, sit tight....  We just don't know.

We have good health, our two children are fresh out of college and gainfully employed with good prospects for the future, and we're enjoying life.  Can't ask for more, I guess.


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## Kal (Mar 2, 2009)

Good News/Bad News:

The Bad - In late 2006 I went to cash on 80% of my entire investment portfolio.  Had to pay a boatload of capital gains taxes.

The Good - At that time the Dow was north of 12,000.  I haven't lost any of that value.


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## jlr10 (Mar 2, 2009)

401k became a 401a. But then lot my job, and took 3 months finding a replacement for 25% less pay and 2/3 less vacation.  The job offerred was part time hours, part time pay, and full time work.  If I didn't want it there were others who waiting to snap at the chance to take it.  Luckily for us we have always been frugal with our spending, so it basically means less being put away for savings, retirement and vacations.   We found out we can live on DH's salary (we don't like it but we can do it.)  I really like my new employer better than my old one, as well as the people that I work with.  So the economy has had an effect, but it also woke us up to what was important:  Family and trips to Hawaii.


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## JoAnn (Mar 2, 2009)

DH retired in '93 and we have always watched our pennies, but more so now.  Our IRA's & stock have taken a hit just like others, but we live on our 2 SS (mine is small) checks and his pension, and our IRA distributions, and small income from a small farm we own.  

Last July our middle daughter moved in with us because she just couldn't afford to live in Key West any more.  Now she is working for about $9 through a temp agency.  We have had to help her out quite a bit since then...but she is a BIG help to us now working in the garden, since DH can't right now (just had a pace maker implanted) and doing a lot of the cooking.  DD & DH planted a large garden, so we are eating lots of fresh veggies right now  

We use the Farmer's market in Immokalee and can buy those nice red Florida potatoes right from the grower.   We look around for ways to save any way we can.


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## lprstn (Mar 2, 2009)

Well my renters in both my rental properties lost their jobs, they pay most of their rent but are late all the time.  Both me and DH had to get 2nd jobs to compensate.  My house I bought 2.5 yrs ago has lost 20% of its value.  We no longer eat out as often, and although we need a new car, we are getting a used car instead so our payments are no more than $300 a month.  We took one of our kids out of extended care, now we take turns meeting them at the bus, and lastly the kids will be going to no camps this summer.  They'll be home bored with grandma.

On a good note, we are still taking mini vacations to driving locations monthly, along with 3 weeklong vacations a year.  The part-time jobs both me and DH allow us to work mostly from home and we only work 3 days a month each.  Lastly, we are still able to save some money, and pay all mortgages on time.

Hopefully now I can refinance my home that lost 20% of its value, with the new stimulus package.


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## jwq387 (Mar 2, 2009)

*how has the recession affected you?*

Thrift Savings Plan, the Gov't version of 401k, has lost 35% since September 2008. No job layoff, thank God. However, working at the Post Office, we find that many days the mail volume is down so far, that we have open routes every day, that we have to help deliver once our route is done. Post Office doesn't fill positions any more in our office; they just remain vacant and we pick up the slack- but without working overtime. Own a home outside Hilton Head, that has decreased in value about 20%. Fortunately, we have a very steady renter in the home, for now.

Wife's job is very busy, as she is in the insurance business. Annuities, long term care, etc. it seems when the economy goes south people gravitate towards insurance needs.

Overall, I feel very blessed to have the job I have, and my heart goes out to all who have either been cut boack or laid off.


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## DonM (Mar 2, 2009)

Kal said:


> Good News/Bad News:
> 
> The Bad - In late 2006 I went to cash on 80% of my entire investment portfolio.  Had to pay a boatload of capital gains taxes.
> 
> The Good - At that time the Dow was north of 12,000.  I haven't lost any of that value.




I don't see any bad news- You're blessed. I bet anyone on this thread would trade places with you and be thrilled to pay the 15% tax.

don


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## AwayWeGo (Mar 2, 2009)

*Bailout.*

I keep watching the mailbox every day, waiting for my _Bailout Check_. 

No luck so far. 

It'll be a shame if I have to keep on paying my own mortgage.  

So it goes. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## stmartinfan (Mar 2, 2009)

While we've been OK so far, living with the uncertainty is hard for everyone, I think.

My husband's job has become iffy because of a reorganization.  He's got an interview with another company, and working on positioning himself for a slot in his current company's new structure.  He has strong experience, but his age - late 50s - will work against him.

I lost my job two years ago in a reorganization, and have enjoyed more time with my kids in their last years at home after too many years of long, stressful work days. I grew up with little, so have been comfortable cutting spending to one salary, cooking at home for almost all meals and generally being frugal.  Eliminating travel has been the hardest, although we've held on to our annual spring break trip.

Next on the agenda is likely a return to part time or temporary work for me, if I can find something.  I miss the social interaction of a job and haven't plunged into volunteer work knowing I might need to get a real job.  I don't expect to replace my former salary but want to add some cushion to offset decline in 401(k) and house value.  Just need to find something that doesn't cost us money, in terms of too long a commute, need for more clothes, take out meals, etc.


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## 1950bing (Mar 2, 2009)

I read the newspaper online. Sold a 4WD ranger that only got 16 MPG. Cut out soda pop. Buy items on sale, use coupons. Buy less chocolate and nuts and only on sale. Will go back to mowing my own yard again this year. May start walking to church this summer. Recycle more stuff. Use the AC less this year. Get haircuts @ home.


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## Kal (Mar 2, 2009)

DonM said:


> I don't see any bad news- You're blessed. I bet anyone on this thread would trade places with you and be thrilled to pay the 15% tax.
> 
> don


 
Just remembering having to write a 5-digit check to the IRS is not good karma!


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## teepeeca (Mar 2, 2009)

*AwayWeGo !!!*

I don't think you "understand" the "bailout/stimulus" check.  "YOU" don't get one---You are supposed to write one and send it to the government !!!

Tony


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## Fern Modena (Mar 2, 2009)

We're very lucky.  We are both retired, on fixed incomes, but they had enough "wiggle room" that we're OK.  I had a 457 account that I am taking a 10 year distribution from.  When I retired, I changed it from having all of it in growth to fixed income.  It wasn't the smartest thing to do (this was 2002) but it was the safest, and that was my concern.  I'm not big on risk.

Has our house lost value.  Yes, "on paper." But we're not selling, and we haven't used our house as an ATM, so we don't worry about it.

I can't say that it hasn't touched us, though.  Besides seeing good friends struggle, we see more and more open storefronts, where businesses large and small have closed.  Its really sad.

I read the papers, and we talk about the ads.  Some companies "get it," and some don't.  I respect companies who have become realistic and have lowered prices or give discounts to get business.  That's the reality of things today.  We've gone to places we were "somewhat interested in" because they had coupons and specials, and skipped others.

We don't go to expensive shows (and there are a lot of them here).  We go out, but we watch our pennies.  South Point has $3. movies for seniors, and that's the only way we go to the movies.  We go to live shows at South Point ($50. or less, and 2 for 1) or Orleans.  

I've found that we don't really *need* much.  

Fern


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## Zac495 (Mar 2, 2009)

I'm a teacher - secure job. My husband is the HR director of his division, so he's sure he's secure. Of course our 401K's took a huge hit - though pension is what matters most to me and I just hope that's still there upon retirement.

We'll still vacation, but not as much. This summer we're doing 2 weeks in Hawaii and one week in Williamsburg - all planned and paid for (well - with timeshare weeks and FF miles) prior to the tanking. 

Next summer we'll have to be much more careful. Looks good that Marriott found a buyer for one of our timeshares - that will help!

Child support ends in JUNE. That is a huge relief as well - we were paying as much as our mortgage payment for one kid because DH's ex-wife doesn't work (disability - don't get me started...).

I refused to go to my Vanguard account and look. It's got to come back. If not, I guess we'll all be in the same leaky boat together - row row row our boat - gently to our timeshares.


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## lll1929 (Mar 2, 2009)

My job is on shaky grounds.  I find out on Mar 13 if I am safe.  If not, I at least get 1 yr severance.  I also have a part time job to provide extra income.  I am far from retirement so I don't look at my 401k.  Additionally, my ESPP is staying put since it's worthless right now.

As far as travel, I have 3 trips planned this year.  I don't know yet about next year.  

I wish the economy would bounce back, but I know it will be many years before I feel comfortable again.


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## pittle (Mar 2, 2009)

Gosh, you guys sound like us.  We retired in 2002 and the IRA investments were doing great and life has been good, BUT now our portfolio is about 1/2 what it was just last June and has been falling like a brick for the past several months.  We bought a foreclosure house that was listed for about 1/2 it's original value last summer and it is worth even less now.  I am glad that Grupo Mayan is not charging mf unless you go this year.  We are not going there, because are taking vacations to places that we already made plans for before the markets tanked. On the upside, at least we are still taking a vacation, just not as many weeks.


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## pgnewarkboy (Mar 2, 2009)

The destruction of the U.S economy is making me cut back in many areas.  My wife and I watch basically everything we spend very carefully.  We will not be taking trips requiring expensive airfare.  We will be avoiding car rentals if possible.

IMHO the economy will re-bound in a dramatic fashion. The American will to improve and succeed has no peer in the rest of the world. The rest of the world has a long history of people thinking they must accept their status and lot in society.  Americans think the exact opposite.

Furthermore, unlike Europe and Japan we still are a nation of young people. The greying baby boomers have behind them several other baby booms.  We don't have to look elsewhere for the demand that will fuel the economy with the need for goods and services.  It is right here in the United States.


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## AwayWeGo (Mar 2, 2009)

*Doh !*




teepeeca said:


> I don't think you "understand" the "bailout/stimulus" check.  "YOU" don't get one---You are supposed to write one and send it to the government !!!
> 
> Tony


Shux, next I suppose you'll be telling me I _do_ have to keep on paying my own mortgage.  

One of these days I might even have to go out & get a job. 

Wouldn't that be something ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## Icc5 (Mar 2, 2009)

*Down 70%*

I was invested big time in the stock market including my 401k's (both mine and wifes), IRA's, Roth IRA and a huge stock portfolio.  We also are selling a house starting in two weeks with an asking price of 1.2 million.  We'll see!
Bart


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## swift (Mar 2, 2009)

We have been very fortunate. The transportation department in our school district actually doubled in size this year. I am now #6 out of 23 on the seniority list. My hours have increased and I now only have to pay 10% toward my benefits our district picks up the rest. Our Superintendent has done well in planning ahead for rain. We will still have to make adjustments in our district but not as bad as some. We will not have to have mid year cuts and we do not expect to loose any classified employees. Some on the bottom end of the seniority list may have less hours next year but in our department that is still to be seen. Since Special Ed transportation is mandatory there is a little bit more security there. My husband, who is self-employed, is still steady. He is in the telecom business and has a reliable reputation. People still need their phones/voice mail systems to be fixed when broken and there are even a few new installs. Looks like we still get to travel this year. Whoo-Hoo! I get very grumpy when we don't.


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## MelBay (Mar 2, 2009)

Lora, I'm guessing you work for a major cell phone company?    I have several friends there who are also on pins & needles.  That is going to be a huge blow to the Kansas City economy.

As for me & mine, our economic turmoil started about a year before everyone elses.  Both my parents died in the past year and my father's "retirement plan" was flipping houses.  My inheritance was eight (8) promissory notes that he held on houses he rehabbed and sold to - you guesed it - subprime borrowers.  I, like Alan, am waiting for my bailout.  I hold a tidy batch of toxic assets.  The worst of the bunch is 7 months behind.  One always pays on time, the others are all in varying stages of tardiness.  Thank heaven I don't owe anything on any of them.  I cannot and do not want to foreclose on any of them.  I just can't throw people out in this economy, not to mention the stress & expense of foreclosure.  I saw my folks go through it many times, and it's nothing but sleepless nights.

My husband took forced early retirement from GM on 10/31, which was about a 50% cut in take home pay.  5 days later he was diagnosed with Non-hodgkins lymphoma and his last chemo is this Friday.  Right now I'm busier than a cat in a litter box at work, and I can only pray that means job security.  Trying to replace health insurance with a cancer diagnosis would be impossible.  Each chemo has been $15,000, so really all I want is to keep my health insurance at this point.  They announced no raises for the next 6 months, but they haven't suspended our 401(k) matches yet.  Again, just leave my health insurance alone, please....

Our 401(k)'s are down 35%, and our 529(c) college plans fared much better.  I'm 52, he's 55, so I'm hoping our 401(k) plans will come back in the next 10-12 years.  Our oldest graduates in May & is off the payroll, and the youngest has 3 years of college left.  

Honestly, I'm not complaining.  I have much to be thankful for, and all in all we're very, very blessed.  Just watching the meltdown around us is depressing, and then listening to NPR all day doesn't help matters at all.

I just pray things don't get worse.  Literally, I mean I pray....  Phew, this got too long!  I should write a book.

pgnewarkboy, I like your thinking!  We need some optimism!


> IMHO the economy will re-bound in a dramatic fashion. The American will to improve and succeed has no peer in the rest of the world. The rest of the world has a long history of people thinking they must accept their status and lot in society. Americans think the exact opposite.


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## bogey21 (Mar 2, 2009)

I live on Pension and Social Security.  I have cut down on trips this year and try to spend next to nothing between trips.  My Son just got laid off so I'm sure I'll have to chip in (along with my ex-wife) to help keep his mortgage current.

When I retired I had the choice between a lump sum and an anuity.  Eleven of us retired at the same time; ten took large lump sums; I took the anuity; you wouldn't believe the horror stories I hear from those who took the lump sum.  

I also have taken the opportunity to open 529 Education Funds for my two grandsons, ages 3 and 3 months.  I figure it is a great time to start making monthly contributions to their funds.

George


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## lll1929 (Mar 3, 2009)

MelBay said:


> Lora, I'm guessing you work for a major cell phone company?    I have several friends there who are also on pins & needles.  That is going to be a huge blow to the Kansas City economy.



You are correct!!


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## donnaval (Mar 3, 2009)

Fortunately, we've been in cash and real estate all along.  Our area in Western PA never had the big upward surge in real estate prices, and right now prices are holding steady for the types of properties we own--most of the devaluation seems to be centered around the "mcMansions" that were built over the past five or so years.  A recent newspaper article said our area continues to enjoy a 3-4% annual increase in value.  Nothing great but since all of our places were bought years ago and are paid for, we'll do okay when we sell. 

We had a nice exciting time when it seemed like an oil and gas company was going to pay us big $$$ to lease Marcellus gas rights from us--but that fell through due to the economy.  It had always seemed to be too good to be true to us, so we never quite believed we'd get that money anyway.

Our big problem right now is health insurance.  We have continually changed plans and coverage to keep it at least bearable (it is not affordable) but even with high deductible plans it's costing us over $1,000 a month.  I wonder how any Obama plan will affect people like us--we are fortunately healthy and have not really used our insurance much, but we scrimp and struggle to pay for our health care because we have a lot to lose if something happens.  So if the system is revamped, will we be excluded from any benefits because we are managing to pay for it?  We have given up a lot to maintain our health insurance.

We have delayed our retirement plans by a few years, since it all revolved around liquidating and developing our real estate holdings.  Right now if we sold our rental properties, we'd have nowhere to put the proceeds that would pay us anything reasonable in return.  And the nice land we intend to develop--well, it's paid for and doesn't cost much to keep as-is, so we'll just hang onto it for a while longer and hope things pick up again.

As for traveling, we have a couple of trips lined up and already paid for that involve airfare and car rentals, but otherwise we're going to take driving trips.


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## laura1957 (Mar 3, 2009)

My job is fairly secure, and my yearly raise has just been approved.  My husband is owner-operator of a small contracting firm, this is his slow time of the year - but he does have some jobs lined up.  Our 401's have been hit along with everyone else's, but my company is still matching 5%.  Our house is completely paid off and while the last year it may have gone down in value - it is still worth 5 times what my husband paid for it 20+ years ago.

He has just purchased a "fixer-upper" to keep him busy this winter, so we do have a very small loan for that.  He can do all the needed work himself so he should make a good profit with it - except that at the moment my daughter and her family have moved into the trailer that is on the property.  (her fiancee is not working at the moment - so we are helping my daughther out with their bills) So at the moment it is not rented out even though we have had rental offers.  But luckily we did have it there sitting empty.  Hopefully as soon as they get on their feet again, we can rent the trailer and use the income to fix up the house on the property - which is an absolutely beautiful old, old home which has NOT been taken care of, although structurally it is very sound.


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## AwayWeGo (Mar 3, 2009)

*Managing The Personal Economy.*

Click here for a web site devoted to making smarter personal money decisions. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## geekette (Mar 3, 2009)

Pretty much the same story - investments have tanked, cutting back.

We've always lived below our means but I'm doing more couponing, seeking out the 'triple double coupon' days at Marsh, using Costco.  We don't generally eat out a lot, anyway, so we're just doing it even less (unless we have a coupon!)

No plans to trade our paid-for vehicles.

It will be a while before I need my retirement nest egg, so in a much better position than many.  I don't fear looking at my accounts as I like to see how my repositioning plan last spring has held up.  not so bad, I could be down a lot more.

Stockpiling cash, will pick up a few more distressed stocks that I believe in over the long haul.  I buy and hold, so have no realized losses, just paper.  

Home value?  Don't care, we have no plans to sell.  

The job was creepy for a bit.  they are really freaking out over the downturn, but business remains strong (which I thought it would - the panic was overreacting).   One of our key players changed jobs and they were gonna dump all of her job on me, so I thought I might have to flee.  I'm not interested in backtracking a decade in my career, and I know there are IT jobs here, and I wasn't going to take on a bunch of non-tech stuff, cuz, well, I don't have to.  So they re-wrote my job and it's ok.  they threw a few extremely ill-advised things in there, but not as bad as I thought, I'll stay.  Since I am a perfect fit for my job, I didn't want to leave anyway, but, they could have made the job a really Bad Fit.  

I remain one of the luckiest people I know.


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## Sandy VDH (Mar 3, 2009)

I work for myself.  I had a good contract for 2006 and most of 2007.  It got abruptly terminated, with no notice in Nov 2007.  So in 2008 I made only 25% of my 2007 income.  How low can 2009 go, I hope not 25% of my 2008 income.

I am barely treading water as it is.  I am hoping that things pick up or we may have to start "losing" things.


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## Hawaiibarb (Mar 4, 2009)

*My story*

Interesting thread....
As so many others have mentioned, my 401K took a huge hit.  I was ready tor retire but, with the economy crashing, I decided to keep working. (Duh!)
Pay my credits cards in full every month, and I'm making my last car payment this month (Yay!)

The very good news is that I have the perfect job for me, and I work with a wonderful team of people, so I consider myself very lucky.  And when I open the newspaper every day, and read of people being laid off, I'm reminded not to whine.  So I'm more frugal, would like to sell a couple of my TS's, but know I probably wouldn't have much luck.  I'm still planning my fall vacation to the Trapp Family Lodge in Vermont in September, not sure what else will be possible.

But I live in Hawaii...... I'm blessed!

Things will turn around.....hang in there, everyone!

Barb


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## PigsDad (Mar 4, 2009)

It's made me a grumpy old man (and I'm only 43!). 

It's extremely depressing to realize that I would have been better off taking the money I have put into my 401k for the last 20 years and stuffing it into a mattress.  Very depressing.  

Kurt


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## bigrick (Mar 5, 2009)

pgnewarkboy said:


> IMHO the economy will re-bound in a dramatic fashion. The American will to improve and succeed has no peer in the rest of the world. The rest of the world has a long history of people thinking they must accept their status and lot in society.  Americans think the exact opposite.
> 
> Furthermore, unlike Europe and Japan we still are a nation of young people. The greying baby boomers have behind them several other baby booms.  We don't have to look elsewhere for the demand that will fuel the economy with the need for goods and services.  It is right here in the United States.



Ditto.  Right on!


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## bigrick (Mar 5, 2009)

Maybe I'm different.  I already know I am different because I bought one timeshare and liked it so much I bought some more.  Plus, I continue to use them all.  I may be your typical TUGger but I know I am not the typical timeshare owner.

With the changing economy, I looked around and found more things I could do.  Then I started a new business to do those things and also make some additional money.

One thing I learned from Robert Kiyosaki's The CashFlow Quadrant is we tend to become addicted to the one way we know to make money.  We excel in that one way and lose track of all the other ways there are to make money.

I have vowed not to limit myself to only one way of making money.

My approach since is "how many ways can I learn to make money?"

If every thing in life is a learned skill, why not learn a new skill about making money?

Maybe I am different.  Hallelujah!  I am different!  What about you?


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## mpizza (Mar 5, 2009)

I am another person trying taking positive action.  I have a Plan B and am taking this time as a challenge to rethink everything.  I'm going back to school at night, taking cost-saving measures to save money (at home and at work), and bought two timeshares for very little cost for my personal use.  

Change is always painful, but it is a part of life, so I accept it and will make the best of it.

Maria


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## Kal (Mar 5, 2009)

I would not look for the housing prices to restore and maintain a steady increase in the future.  As baby boomers continue to retire there will be pressures to downsize.  Larger homes will be in vast oversupply and will continue that way.  The following generation not only has fewer people but the family size is smaller.  Thus there will be an additional lower demand for the large homes.  The economy will also continue to take a toll on large homes.


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## AwayWeGo (Mar 5, 2009)

*G. M. Might Go Down The Tubes Anyway.*

What they didn't figure on, either from the corporate management side or from the government bailout side, is that customers might not care to buy products from a company in such bad shape that only a big bailout can keep it going.  

No bailout no matter how many zeroes it has can keep'm in business if too many of their customers remain former customers. 

I'm no economist, but I'm guessing it's that quirky _Law Of Unintended Consequences_ popping up again. 

And, shux, I used to drive nothing but Chevrolets.  (They were all _used-used-used_ except 1, so I wasn't getting'm from GM anyway.) 

So it goes. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## Kal (Mar 5, 2009)

I keep asking myself, "*what do we manufacture in the US"?*  The first things that come to mind are airplanes and automobiles.  The next is grain (wheat, corn, beans, etc).  What else do we make that can't be transferred to an off-shore facility?

If we have any hope to maintain labor intensive manufacturing jobs, don't we have to do everything possible to support the airplane and automobile industry??

*******
disclaimer - I'm not tied to the automobile or airplane industry so my interests are that of a taxpayer and consumer (although I am fresh out of owning any airplanes at the moment).


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## bigrick (Mar 5, 2009)

Kal said:


> I keep asking myself, "*what do we manufacture in the US"?*  The first things that come to mind are airplanes and automobiles.  The next is grain (wheat, corn, beans, etc).  What else do we make that can't be transferred to an off-shore facility?
> 
> If we have any hope to maintain labor intensive manufacturing jobs, don't we have to do everything possible to support the airplane and automobile industry??



Does the US wants to maintain labor intensive manufacturing jobs seems to be the question.

I keep looking at the Walmart model.  They are the biggest company in the world and they manufacture nothing.  It seems to me, the US economy is continuing to shift out of a manufacturing economy and into an information economy.  That's why Google can be worth more than GM.  As with any major shift, there are major upheavals.

Why not shift on your own terms rather than be shifted by someone else?


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## AwayWeGo (Mar 5, 2009)

*The Terminology Of Economic Analysis.*




bigrick said:


> Why not shift on your own terms rather than be shifted by someone else?


Shifted by somebody else is 1 thing. 

_Shafted_ is something else again. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## donnaval (Mar 5, 2009)

Speaking of what products we make in this country--I had a long round-trip drive this month (10+ hours each way), and I was driving alone.  I amused myself while driving by noting the types of cars I passed or was passed by as I drove (I had the cruise control on to make sure I was going the speed limit )

Anyway, it surprised me very much to realize that I was seeing three to four "foreign" cars for every American car.  What I mean is--Honda, Toyota, Hyundai etc  outnumbered Fords, Chevys etc by enormous margins.  

Now admittedly, the observations made during two long trips don't prove anything, BUT, it made wonder exactly how big our "big three" are.  And whether all that money we are giving them is totally going down the toilet I know for myself, I'm a loyal Honda customer after bad experiences with Fords and Chevys and I doubt there is anything the big three can do to lure me back.  Judging by the numbers of foreign-car drivers who surrounded me from North Carolina to Pennsylvania, the big three has a big big problem.


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## Carol C (Mar 5, 2009)

I lost big $ in stocks with 9/11 and didn't want to go down that road again. So I moved the 401K to cash in Jan 2008, except for about $10K in a value stocks mutual fund. Our job situations have been iffy, as hubby is a contractor and I freelance. I liquidated a cash account to buy a fixer uppper foreclosure in Aug 07, spent 9 months as general contractor completely renovating it. Except for some $ still owned on a 1 year Home Depot interest-free credit card charge, the house and rehab work (and the scratch & dent appliances) are all paid for. We have two other houses, one was being bought via lease/purchase and our gal in there is having trouble financially, so we're renegotiating her terms for 6 mos so she can afford to stay in the house. Our other house has our highest mortgage, and our tenants moved over Christmas because of a job offer they couldn't refuse in TX. So I've been looking for a renter and just found one last evening...whew...I have a deposit and she'll be reviewing/signing lease this weekend. Wish me luck! And I wish you all luck as well as the stock market continues to hemorrhage.


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## AwayWeGo (Mar 5, 2009)

*Billions Here & Billions There -- Before Long You're Talking Real Money.*

Click here for help getting in your mind around what a trillion dollars looks like. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## ricoba (Mar 5, 2009)

AwayWeGo said:


> Click here for help getting in your mind around what a trillion dollars looks like.
> 
> -- Alan Cole, McLean (Fairfax County), Virginia, USA.​



If it's like "Let's Make a Deal"

I choose the final door for my take home pile!


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## Big Matt (Mar 5, 2009)

Just remember that many of the "foreign" cars are built right here in the U.S.

The real reasons GM and others are in trouble are related to poor product development decisions over the last 40 years, the inability to buy labor and supplies at a reasonable price, and the inability to capture the small car market.  The cars now are incredibly well made.



donnaval said:


> Anyway, it surprised me very much to realize that I was seeing three to four "foreign" cars for every American car.  What I mean is--Honda, Toyota, Hyundai etc  outnumbered Fords, Chevys etc by enormous margins.
> 
> Now admittedly, the observations made during two long trips don't prove anything, BUT, it made wonder exactly how big our "big three" are.  And whether all that money we are giving them is totally going down the toilet I know for myself, I'm a loyal Honda customer after bad experiences with Fords and Chevys and I doubt there is anything the big three can do to lure me back.  Judging by the numbers of foreign-car drivers who surrounded me from North Carolina to Pennsylvania, the big three has a big big problem.


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## normab (Mar 5, 2009)

To answer the original post:

We were planning to start semiretirment in the next year or so in a warmer climate.  But with our accounts at 40-50% losses, and only a small pension and no medical coverage, we are staying put because our earning power is right where we are.  DH was laid off in October but he was blessed to get a job in January.  So far my job appears to be secure.  So we are saving any new money in CDs but the IRAs and 401Ks, well, they are where they are and we pray they will come back at some point in the next few years.

So, the situation has burst our dreams, but we are thankful that we have what we have.  

One thing we are doing based on the overall economy is cutting back on our "entertainment" spending. We do NOTHING full price.  We now buy last-minute tickets for shows and concerts both in NJ and NYC, and we are seeing shows we may not have chosen at full price but for $5 to $30 we are trying new things.  We also are using coupons when we go out for dinner, and sometimes we go midweek when they have special.s  The food tastes just as good. :whoopie:


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## AwayWeGo (Mar 7, 2009)

*New Car Buying Dilemma.*

With things the way they are now, not to mention the way they seem to be headed, I'm not sure which new model to buy. 

On the 1 hand, there's the snappy new Chevrolet _Bailout._ 





-- hotlinked --​
Then on the other hand there's also the classy new Chrysler _Stimulus._ 





-- hotlinked --​
Hard to make up my mind. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## NTHC (Mar 7, 2009)

We are working harder and spending smarter.

As owners of a small business, we have had to kick it up a notch and go from the 45-50 hours a week to 60.  But with other families relying on the success of our company it is necesary.  We have always coached our employees on living within their means, not acquiring credit card debt and saving for a rainy day.  That is a recipe for success regardless of the economic times. 

Hard times make you sharper and also more creative.  As Americans we still have the ability to write our own ticket.  As we constantly tell our kids, its not about what you "want" to do, it is about what you need to do in order to make things work.

Anyone can be successful when things are easy, it is what you do when things are tough that makes the difference.

JMHO,
Cindy


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## JeffW (Mar 7, 2009)

In terms of US car manufacturers, it's obvious there's still quite a lot of people willing to buy them.  Will it be at the same level as years/decades ago, probably not.

In terms of automobile manufacturing jobs in the US, I'd take a guess that they've stayed more or less constant.  Has Ford/GM/Chrysler let go of workers, absolutely.  But Honda/Toyota/Nissan, even BMW assemble their cars in the US, and employ US workers.  Probably not as good a situation, but better than nothing.

To some degree USA jobs are like medical patents on pharmacetical companies.  If you create a new drug, you have I think 17 years of exclusivity with it, where you can charge (to some degree) as much as you want.  After that, it can become generic, where other companies can produce and sell it for pennies on the dollar compared to the brand name.

I'd submit that the USA is no different:
- we were big on steel production, but then it went to Asia
- what was originally Japanese competition for automobiles has moved on to 2nd-tier Asian countries like Korea
- we used to produce all our intergrated circuits in the US, now most probably come from Korea
- we have software development done out of Ireland and India
- we have remote medical diagnostics done out of India.
- Boeing, Lockheed, McDonnel-Douglas used to be THE airplane manufacturers; now it's more a less a tie between Boeing and Airbus (a European company)

To some degree that's the price of progress.  Maybe originally only the USA had the equipment and knowledge to product integrated circuits, but ~20 years later, it doesn't take 'a superpower' to do it (so Korea can do it at a fraction of the cost).  Similiarly, it doesn't take a US garment worker to sew a jacket together at $10/hr, when a worker in Southeast Asia will gladly do it for 1c a piece.  

Walmart enploys so many US people because they HAVE to be here (in the US).  Similarly, you'll always have nurses in hospitals, because they need to physically take your blook pressure, and hand you your medication.  But the doctor analyzing your xray or MRI, they can easily be around the world.

Despite how high oil has gone recently, it's still pretter apparent that even with potentially higher shipping costs, it's still overall much cheaper to product something overseas and ship it here, than to make it here.  

I was looking thru my food ad for next week, and seedless grapes are 99c/lb.  They're coming from CHILE!  Even when USA ones are in season (and they could be coming ~1000 miles from Florida, vs ~5000 miles from Chile), I still don't think they are any less.

Once transportation and communcations barriers were broken down, the USA got stuck with so many poorer countries of the world willing to do our work (manufacturing) for so much less money.  I'm not really sure how we'll turn that around.

Jeff


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## Kal (Mar 8, 2009)

To me it seems we have been a service and financial industry for quite some time.  Hopefully we can survive by taking care of one another's needs (including medical/dental) and managing other people's money.  But if the foundation starts with the ability to pay for those services it becomes a very slippery slope.


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## Elan (Mar 8, 2009)

JeffW said:


> In terms of US car manufacturers, it's obvious there's still quite a lot of people willing to buy them.  Will it be at the same level as years/decades ago, probably not.
> 
> In terms of automobile manufacturing jobs in the US, I'd take a guess that they've stayed more or less constant.  Has Ford/GM/Chrysler let go of workers, absolutely.  But Honda/Toyota/Nissan, even BMW assemble their cars in the US, and employ US workers.  Probably not as good a situation, but better than nothing.
> 
> ...



  Excellent post!  There will be other new industries where America will lead the development, but the time to transition to foreign manufacture is diminishing continually.  As Kal points out, the US is largely becoming (or has become) a service based economy.


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## Icc5 (Mar 8, 2009)

*Brother's worries*



Icc5 said:


> I was invested big time in the stock market including my 401k's (both mine and wifes), IRA's, Roth IRA and a huge stock portfolio.  We also are selling a house starting in two weeks with an asking price of 1.2 million.  We'll see!
> Bart



I feel bad enough about my losses above but today heard that my brother's wife's car (8yrs old, 35,000 miles) is getting totaled and they will get $10,000 for it.  This is after a person backed out of their driveway and rammed it.  The sister n law is fine but now will need a new car at the same time my brother was told he might only have his job for 2 more weeks.
He worked his way up to a position right below VP and has generated contracts for his company worth millions of dollars and now they say they only want people in sales.
Bart


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## Kal (Mar 8, 2009)

Icc5 said:


> I feel bad enough about my losses above but today heard that my brother's wife's car (8yrs old, 35,000 miles) is getting totaled and they will get $10,000 for it. This is after a person backed out of their driveway and rammed it. The sister n law is fine but now will need a new car at the same time my brother was told he might only have his job for 2 more weeks....


 
Wow, have I got the perfect ride for your BIL!


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## Passepartout (Mar 8, 2009)

Is that Lincoln the 1- or 2 bedroom model?

Jim


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## timeos2 (Mar 8, 2009)

*Both are SO nice*



Passepartout said:


> Is that Lincoln the 1- or 2 bedroom model?
> 
> Jim



Oh, the Lincoln was the offer? I thought it was the camper pickup in the background!


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## pcgirl54 (Mar 8, 2009)

I do not totally agree with all Dave Ramsey says but I listen to him on XM daily on the long commute home.

I am totally focused more than normal on paying off all debt except the mortgage by the end of 2010. Never been one to blow money but this has me on a mission to be in the best shape possible.

2009 Strategy
Stage one done-Paid off Marriott Visa 
Stage two- very close to paying off one car loan 2 years early
Stage three-save as much as I can in case DH gets laid off.

Don't touch the 6 month emergency fund.

Don't eat out unless it's a two for one type deal or restaurant.com certificate.

Lost a great deal of money on the 401k early 90's and can't believe we now just lost almost as much. We are in our mid 50's and won't have enough to retire when we thought we could. Our funds are managed but the market is nuts. We'll have lots of company. Sometimes I wonder if I should stop or reduce the 401k for this year and focus that money on step 3 baring in mind the loss of tax advantage and buying funds low.

I decided not to fly to the Carribean or a destination that would be quite costly but I can fly to Florida really cheap and have enough FF miles to get one ticket free. Got FF tixs for our HH trip. I consider myself lucky to be able to travel when others can't thanks to owing timeshares.


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## Carol C (Mar 8, 2009)

timeos2 said:


> Oh, the Lincoln was the offer? I thought it was the camper pickup in the background!



And I thought it was the cozy-looking "cottage" in that photo!


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## dioxide45 (Mar 8, 2009)

*We did our part*

Well we did our part to help boost the economy and GM. Yesterday we purchased a new car, trading in a 2004 Malibu for a 2009. Sure you are supposed to never buy a new car, but with the economy hurting the way it is, the car companies are making it hard to say no since a new car is only a few thousand more than used and you get the full waranty insteady of a 12 month certified car waranty. They paid off our still upside down loan on our 2004 by offering (with persuasion  ) enough for it to cover its loan balance. The 0% on the new loan was also great. If you are in the market for a car, new or used, this is definitly the time to buy.


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## Vacation Dude (Mar 8, 2009)

Kal said:


> Just remembering having to write a 5-digit check to the IRS is not good karma!



Why not?

What if you had to pay a 6 or 7 digit check?


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## Pat H (Mar 8, 2009)

I was planning on retiring in 9 months, 23 days and bought a retirement home in SC in November. The price was so good I couldn't pass it up. Now I have 2 mortgages. I knew I could do that for 18 mos-2 yrs but with the economy and my 401K tanking, it might be longer than that. I doubt I could sell either home at this point so I'll just hang in there as long as I can and hope things turn around. 

I work for a major bank so it was very iffy for a few months. I have a job and they are actually planning on hiring MORE people in our department so I'm safe there. Now if all you people would just start buying bank stocks again, I might be able to retire before I'm too old to enjoy it!


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## Rose Pink (Mar 8, 2009)

pcgirl54 said:


> ...
> Stage three-save as much as I can in case DH gets laid off.
> 
> Don't touch the 6 month emergency fund.
> ...


 
Could you channel all of your new contributions to your 401K into a secure fund--one that is guaranteed?  They usually have the lowest returns in good times but at least don't lose in the bad times (unless you factor in inflation).  That way, you are building cash but still keeping the tax advantages unless you really do need to draw it out.  You will lose out on buying cheap stock, as you pointed out, but I am beginning to wonder if the market will ever come back.  After you've built up a balance in that fund to a level that you feel comfortable with, then you can shunt all future contributions to something more risky with a greater chance of soaring when the market rebounds.  

I am wondering what other tuggers consider a 6-month emergency fund?  How much would you need to live for 6 months without an income?  Do think 6 months is a reasonable time period?  Longer?  Shorter?


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## dioxide45 (Mar 8, 2009)

Rose Pink said:


> I am wondering what other tuggers consider a 6-month emergency fund?  How much would you need to live for 6 months without an income?  Do think 6 months is a reasonable time period?  Longer?  Shorter?



In this economy if you think it will take you 9-12 months to find a new job if you loose yours then you really should have a 12 month emergency fund. With unemployment the way it is I think 12 months is a good idea, 6 is probably too little as 6 months can pass by real fast.

If you normally make $6000 a month but put $2000 in to savings then you really only need to have 12x$4000 not 12x$6000 as when you are living off of savings you won't be taking money out to just put back in. Your numbers should also be based on bringhome pay not gross since you won't be paying much in income taxes.


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## JeffW (Mar 8, 2009)

Rose Pink said:


> Could you channel all of your new contributions to your 401K into a secure fund--one that is guaranteed?  They usually have the lowest returns in good times but at least don't lose in the bad times (unless you factor in inflation)...You will lose out on buying cheap stock, as you pointed out, but I am beginning to wonder if the market will ever come back. ?



Two observations:

1.  If a company doesn't fold, then it's a great time to buy stock, as it's priced so low.  It won't take nearly as much increase in the stock prices now to have significant returns.

2. The catch-22 of this entire mess is that because people have lost so much in retirement and 401 income, one could argue you need to be even more agresssive in your selections to help offset those losses.  If you're retiring in a few years, then low-paying CD's or bonds might be good choices.  However, trying to make up what's probably a decade worth of investments I'm not sure is doable with typical 'safe' investments.

2a. Complicating this is that those winding up their working careers now need to work longer to make up for lost money.  That will contribute to the unemployment problem because there are that many more people trying to vie for fewer and fewer jobs.

Jeff


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## Rose Pink (Mar 8, 2009)

JeffW said:


> Two observations:
> 
> 1. If a company doesn't fold, then it's a great time to buy stock, as it's priced so low. It won't take nearly as much increase in the stock prices now to have significant returns.
> 
> ...


 
I agree with what you have said.  What makes me nervous is your first observation, "if a company doesn't fold" now is a great time to buy their stock.  I don't know who is and who isn't going under so I don't know what stock to buy.  Our 401k (like many others) has funds of mixed stock, etc supposedly based on how long before we need the money.  The funds are geared to the year of retirement.  So, a 2020 fund will have more risk and potentially greater returns than the 2010 fund.  All of them have been losing money, however except the guaranteed fund--which may only be making 1 or 2% (doesn't keep up with inflation but doesn't lose principal).  

Because I'm such a timid investor, I've had about half our money in that fund so we didn't lose as much percentage-wise as more aggressive risk takers.  OTOH, because our money wasn't earning as much, we had a lower balance to start with before the market tanked.  If an aggressive investor had managed to build up 500k and lost 50% value they'd still have 250k.  If one had 300k (due to timid investing) and lost only 25% they'd have 225K--still less than the more aggressive investor even though they only lost half as much percentage as the other.  Then there is the very possible scenario of the investor whose portfolio tanks and doesn't get it back because the companies go under and the stock is worthless and can't rebound.  I don't mind buying cheap stocks if I know the company is going to rebound. 

I agree one isn't going to make up loses with safe investments.  One is merely trying to build up a reserve of what they feel they can't afford to lose before throwing money into riskier investments.


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## MelBay (Mar 8, 2009)

> Well we did our part to help boost the economy and GM. Yesterday we purchased a new car, trading in a 2004 Malibu for a 2009. Sure you are supposed to never buy a new car, but with the economy hurting the way it is, the car companies are making it hard to say no since a new car is only a few thousand more than used and you get the full waranty insteady of a 12 month certified car waranty. They paid off our still upside down loan on our 2004 by offering (with persuasion  ) enough for it to cover its loan balance. The 0% on the new loan was also great. If you are in the market for a car, new or used, this is definitly the time to buy.



Dioxide, as the wife of a GM pensioner, I would like to personally thank you.


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## JeffW (Mar 8, 2009)

MelBay said:


> Dioxide, as the wife of a GM pensioner, I would like to personally thank you.



While buying a GM vehicle certainly seems like a good guesture, I'm wondering if in actualility if it will make any difference.  If there's a sudden burst of auto sales, will that really change what happens with the company?  GM figuratively is such a huge boat that I think it's course (bankruptcy or not) is close to being set.  From what I know, about the only thing that could change that would be negotiations with the UAW and perhaps pension benefits.

Jeff


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## Kal (Mar 8, 2009)

A serious issue with the automotive industry (both domestic and foreign) is the GIGANTIC inventory of unsold cars. When I visited the Port of Tacoma, WA last week there were parked cars as far as the eye could see. The cars are stuck at the port because individual dealers also have a huge inventory and no place to put more vehicles. Of course these cars which have arrived at this major receiving terminal are all foreign makes, one can only assume there is a similar inventory of domestic cars.

Given this glut, it will take considerable time to sell off this inventory without the need to ramp up new manufacturing (i.e. put people back to work).

With regard to buying stock I would definitely not want to GUESS which stocks will advance. This is one of those cases where I will be perfectly happy to watch the front runners break out of the starting blocks and take all the risks.


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## dioxide45 (Mar 8, 2009)

My FIL is also a GM pensioner. So it definitly will be tough times ahead for those pensioners who thought they were set in retirement with only their GM retirement. They have already lost a lot with their medical coverage and I am sure they will see drastic changes if GM were to enter chapter 11. There is a serious problem with the corporate pension system, regulation allows companies to consitently underfund their plans and then when they cancel those plans under bankruptcy they are covered at pennies on the dollar by the PBGC.

At the dealership yesterday they definitly had a lot of inventory sitting on the lot. I don't see how they can move it. There was a lot of heavy dutyl pickups that one can only imagine how long they will be there. I was suprised to see though that there were several people out shopping for cars, though they were eager for the sale as our sales rep and finance person stayed two hours past closing to complete our paperwork for delivery.


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## ricoba (Mar 8, 2009)

Kal said:


> A serious issue with the automotive industry (both domestic and foreign) is the GIGANTIC inventory of unsold cars. When I visited the Port of Tacoma, WA last week there were parked cars as far as the eye could see. The cars are stuck at the port because individual dealers also have a huge inventory and no place to put more vehicles. Of course these cars which have arrived at this major receiving terminal are all foreign makes, one can only assume there is a similar inventory of domestic cars.
> 
> Given this glut, it will take considerable time to sell off this inventory without the need to ramp up new manufacturing (i.e. put people back to work).
> 
> With regard to buying stock I would definitely not want to GUESS which stocks will advance. This is one of those cases where I will be perfectly happy to watch the front runners break out of the starting blocks and take all the risks.



I drive by the Port of Los Angeles and Long Beach frequently, and the parking lots are stuffed full of cars.

The Nissan/Infinity storage lot in Willmington, is full of shiny new cars waiting to be shipped out.  This lot has always had cars in it but it cleared out and then filled up, but now it is exceptionally full, and it is staying full.  

I think Toyota had to lease/rent another 10 acres or so recently to store inventory in Long Beach.


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## caribbeansun (Mar 9, 2009)

Read an article in the  Globe and Mail  this morning announcing that GM and the CAW had reached concessions - I was stunned to learn that they had agreed on a wage reduction of $7 and hour and that the average is now only $63 an hour.

That little bit of information kinda clarified why they've got the issues they've got.



JeffW said:


> From what I know, about the only thing that could change that would be negotiations with the UAW and perhaps pension benefits.
> 
> Jeff


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## ladycody (Mar 9, 2009)

Answering the OP:

My family had a slew of not-so-great stuff going on...and this economy slump was merely the cherry on top.    I'm frankly too old to be in this situation.  My middle-aged self needs to be building something to retire on (which I _used_ to have) and have some security in life (also used to _think _I had _that_.) 

Long story short I'm back in school and going for my RN.  It will allow me to work til I cant anymore and is pretty close to recession proof.  I can travel with it almost anywhere as well.  

As for short term affects:  I find I want to travel more (denial) to alleviate income associated depression and am actually doing ok as far as getting away goes...close to home of course and not alot...but it's alot considering where our finances are right now.  I am truly happy that I own my timeshare.  I _am_, however, far less reasonable about waiting for the day of departure.


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## dioxide45 (Mar 9, 2009)

caribbeansun said:


> Read an article in the  Globe and Mail  this morning announcing that GM and the CAW had reached concessions - I was stunned to learn that they had agreed on a wage reduction of $7 and hour and that the average is now only $63 an hour.
> 
> That little bit of information kinda clarified why they've got the issues they've got.



I don't know if the $140MM a year concession is really going to help GM. They are hemorrhaging billions of dollars each quarter.


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## JeffW (Mar 9, 2009)

Kal said:


> ... Given this glut, it will take considerable time to sell off this inventory without the need to ramp up new manufacturing (i.e. put people back to work)...



Not wanting to turn this into a political discussion, but in a simple supply/demand situation, you have to ask why any of the automotible plants are still running.  If I'm the manager of automobile manufacturer ABC, why am I paying employees to come in and continue to build new cars when ones they've built from Nov/Dec are still sitting in lots (and as mentioned here, maybe not even _dealer _lots, but large-scale storage lots).

I don't know how easy it is to stop and start the assembling line, but I'd think at a minimum unpaid vacation of 1 week per month might be a good start.  That keeps employees basically with still a job (and healthcare), but cuts the salary (not counting benefits) 25%, at least a start (in a time when they could probably stop production for all of Spring, and still have inventory).

Jeff


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## Kal (Mar 9, 2009)

caribbeansun said:


> ..I was stunned to learn that they had agreed on a wage reduction of $7 and hour and that the average is now only $63 an hour...


 
Please be aware the $63 is wage AND BENEFITS. The benefits include paid holidays, sick leave, vacation, medical insurance, dental insurance, optical insurance and most importantly provisions for retirement. The average hourly pure salary is about $20-30 per hour. This of course is a salary in the range of $40K to $60K per year.

Most workers don't have a clue about the value of their benefits. As an example, many government employees enjoy a huge retirement benefit for life. Do the numbers and the value of that benefit on an hourly basis is extremely large.  When you just consider the premium an individual would pay for health insurance that alone could be substantial.


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## Kal (Mar 9, 2009)

JeffW said:


> Not wanting to turn this into a political discussion, but in a simple supply/demand situation, you have to ask why any of the automotible plants are still running. If I'm the manager of automobile manufacturer ABC, why am I paying employees to come in and continue to build new cars when ones they've built from Nov/Dec are still sitting in lots (and as mentioned here, maybe not even _dealer _lots, but large-scale storage lots).
> 
> I don't know how easy it is to stop and start the assembling line, but I'd think at a minimum unpaid vacation of 1 week per month might be a good start. That keeps employees basically with still a job (and healthcare), but cuts the salary (not counting benefits) 25%, at least a start (in a time when they could probably stop production for all of Spring, and still have inventory).
> 
> Jeff


 
Jeff - If we could begin to count the number of vehicles in the inventory then make some assumptions on daily sales of US made vehicles (in a severe economy) we could probably shut US manufacturing for many months. Then go into a program of "just in time" manufacturing with a very limited inventory. Right now, the supply and demand curves don't work. The sales price of an inventory vehicle should eventually become pennies. Then once that pricing scheme becomes common, nobody will want to pay "retail" prices again. What does that mean for manufacturing in the US at US labor and utility rates???


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## Vacation Dude (Mar 9, 2009)

Kal said:


> Please be aware the $63 is wage AND BENEFITS. The benefits include paid holidays, sick leave, vacation, medical insurance, dental insurance, optical insurance and most importantly provisions for retirement. The average hourly pure salary is about $20-30 per hour. This of course is a salary in the range of $40K to $60K per year.
> 
> Most workers don't have a clue about the value of their benefits. As an example, many government employees enjoy a huge retirement benefit for life. Do the numbers and the value of that benefit on an hourly basis is extremely large.  When you just consider the premium an individual would pay for health insurance that alone could be substantial.



That is still a nice paycheck in today's world. 

I read over 700 people applied for 1 job as an Ohio janitor job that paid $12 per hour.


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## JeffW (Mar 9, 2009)

Vacation Dude said:


> ...I read over 700 people applied for 1 job as an Ohio janitor job that paid $12 per hour.



Funny, during my local morning show, they reported it as 400 @ $15/hr?  I'm sure it's just misreporting by someone, but it would be funny of the Ohio job dropped their salary 20% because they had some many responses.

Jeff


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## Vacation Dude (Mar 9, 2009)

oops, the pay is $15-16 per hour...my mistake

MASSILON, Ohio – Evidence of the slumping economy is stacking up at an Ohio school which has nearly 700 applications for one open janitorial job.

Officials at Perry Local Schools near Canton in northeast Ohio say they've extended the deadline until Monday to accommodate the overwhelming response to the week-old posting.

The full-time position at Edison Junior High School pays $15 to $16 an hour plus benefits.

Superintendent John Richard says many applicants are laid-off workers with heart-wrenching stories about the tough economic times.


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## caribbeansun (Mar 10, 2009)

Yup - and given that the "average" benefit cost for the rest of us tends to be in the 15-20% of base range compared to their 100+% again there's no secret about why they are in such bad shape.

For the first time in 25 years we had to lay people off - it was the most difficult thing we've ever had to do and was terribly painful for all involved, particularly for those that lost their jobs.  These people's average wage and benefits are in the $20-$22 range.  We are considered to be paying at the high end of our industry as well.

GM = $63 - they need to get their house in order and bring their wages back to a competitive level.



Kal said:


> Please be aware the $63 is wage AND BENEFITS. The benefits include paid holidays, sick leave, vacation, medical insurance, dental insurance, optical insurance and most importantly provisions for retirement. The average hourly pure salary is about $20-30 per hour. This of course is a salary in the range of $40K to $60K per year.
> 
> Most workers don't have a clue about the value of their benefits. As an example, many government employees enjoy a huge retirement benefit for life. Do the numbers and the value of that benefit on an hourly basis is extremely large.  When you just consider the premium an individual would pay for health insurance that alone could be substantial.


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## caribbeansun (Mar 10, 2009)

Toyota's been doing exactly that all around the world.  They have a new plant about an hour away from me that was supposed to open with 3 shifts/7 days a week - it opened with one shift working 3-4 days a week.



JeffW said:


> you have to ask why any of the automotible plants are still running.
> 
> Jeff


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## Kal (Mar 10, 2009)

caribbeansun said:


> ...the "average" benefit cost for the rest of us tends to be in the 15-20% of base range...


 
A 15-20% benefit program is extremely weak.  I would feel pretty bad if my benefits were in that range.  Health insurance, 2 weeks sick leave/yr, and 3 weeks vacation/year come to more than 30% of a $20/hr pay rate.


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## timeos2 (Mar 10, 2009)

*Lets get real - not every job is worth $30/hour*



Kal said:


> A 15-20% benefit program is extremely weak.  I would feel pretty bad if my benefits were in that range.  Health insurance, 2 weeks sick leave/yr, and 3 weeks vacation/year come to more than 30% of a $20/hr pay rate.



Which unfortunately points out how completely out of hand the 100%+ benefits of the auto industry was/is to the real world. A few others were also that bad and, not surprisingly, those industries also have suffered huge reductions in US operations with the majority moved out of the country. I'm all for high paying jobs with good benefits for everyone - but they have to be within a range that represents value to the eventual consumers. When they get out of line the resulting costs cannot be sustained for long and the jobs, which should have been a comfortable living for life, instead are a short term windfall then cease to exist. Short sighted and ultimately a ruinous approach to the much needed manufacturing base.  It may be far too late to reverse that without a really deep recession/depression that will hurt even more than what we've seen so far. I'm not optimistic that the "powers" really grasp how bad this is or what a house of cards the last few booms have been based on.


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## JeffW (Mar 10, 2009)

Related to benefits, there's been a lot of talk recently in Philadelphia about trying to get a budget together, I think the city is looking at a $1B+ deficit.  Some of the benefits that various city unions get:

- paid holiday for your birthday
- guaranteed vacation period between May & Sept (requiring overtime to cover for those out)
- minimal to no health copays

For sanitation workers, it always seemed strange that they would get a holiday (paid of course), but then have to work overtime or Saturdays to complete the weekly pickup cycle.  Given that the city floated a $5/week trash pickup fee (since withdrawn), I'd rather just see people hold onto their trash until the next week's pickup.   Probably one of the reasons you hear about some sanitation workers making $60k-$80k (after overtime), a d*mn good wage for a job requiring probably nothing more than a high school diploma.

Jeff


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## Kal (Mar 10, 2009)

I'm not saying a auto industry $30/hr benefits package is acceptable. Rather, I'm saying we need to properly evaluate the VALUE of a person's benefits. 

There has been a continuous trend to reduce a person's compensation to 24 hours/week. Although it might take more employees to make up for that reduction in hours, the gigantic advantage to the employer is to eliminate any benefits. In so doing this shifts the burden of health care costs to others...most importantly to the overall cost of health care services and insurance premiums.

It's interesting to note that we rarely if ever see any change to the benefit programs for state and federal employees. Yes, we do see some token decrease in the number of paid hours worked, but no change to the benefit burden. I would like to see a comparison of the total cost of benefits between US automotive workers and federal/state employees. My guess is the benefit value for US automotive workers is less than federal workers.

Then there are the private sector salaried employees who are expected to put in 60-70 hours per week when paid for 40 hours. All the while the cost of medical insurance (and co-pays) is increasing and employers are playing games with treatment of vacation/sick/holiday numbers.


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## JeffW (Mar 10, 2009)

Kal said:


> ...so doing this shifts the burden of health care costs to others...most importantly to the overall cost of health care services and insurance premiums...



Wasn't this an issue with Walmart a year or so ago?  None of their less than fulltime jobs had any healthcare benefits, so they were telling their employees "apply for medicare" (or something like that).  Basically what Kal said, shifting benefits away from them.  

The ironic thing is you'd think being 'Walmart', if anyone would be able to negotiate down their costs, it would be them.  Maybe even they aren't able to manage healthcare costs.

Jeff


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## wilma (Mar 10, 2009)

Kal said:


> My guess is the benefit value for US automotive workers is less than federal workers.



Not true, the benefits for most federal employees currently under the FERS system amounts to about 40-45% of their pay compared to the near 100% for autoworkers. Yes, everyone loves to bash the govt workers, but much of the bashing is often misinformed.


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## Kal (Mar 10, 2009)

The 40-50% number sounds very low when you consider:

the number of paid holidays
the amount of sick leave
the vast amount of vacation time
lifetime retirement pay
An apples to oranges issue is how the benefits number is calculated.  I'm not sure we know if the employer's payment of FICA and FUTA are included or not.


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## wilma (Mar 10, 2009)

Kal, I challenge you to find a credible source indicating that federal employee benefits are higher than autoworkers.


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## AwayWeGo (Mar 10, 2009)

*Free Medical Care.*




wilma said:


> Kal, I challenge you to find a credible source indicating that federal employee benefits are higher than autoworkers.


I don't know from Detroit or the UAW or any of that. 

However, as a retired U.S. federal civil service bureaucrat fully covered by the Federal Employee Health Benefits Plan, what I pay is the same monthly premium the working stiffs pay even though all I get by way of benefits is "medi-gap" coverage -- reimbursement of co-pay fees plus coverage for the difference between what Medicare pays & what the health care provider charges. 

Not only that, my full-freight FEHP plan doesn't pay _anything_ unless the charge & the amount of the charge are OK with Medicare -- i.e., having big-bux health coverage doesn't get me out from under the limits of what the Medicare bureaucrats consider reasonable & appropriate & customary. 

If I don't like it, I can always go to Canada or England & try to get an appointment there. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## Kal (Mar 10, 2009)

Wilma, I agree, we need to find a credible source indicating that federal employee benefits are not higher than autoworkers.


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## The Conch Man (Mar 10, 2009)

Wilma & Kal, that's not really correct, it really depends on what grade/rank/highest position you held & how long you worked for Federal Civil Service in any given consecutive three year period. I retired over fifteen years ago with the grade of GM as did my wife who was a GS. I'm not saying you are incorrect but the retired scale for pensions are probably a little higher than auto workers cause I know a few of them up North & lots on the forums.

If you compare the Post Office pensions to auto workers, you are probably correct as they are Civil Service but on a different scale. State, County, City pensions could be the same as the percentage is lower as well compared to Federal, altho the past twenty years there are a lot of Federal retiree's, over 2 & 1/2 million. There is website I have to make this comparison but I don't get into that & consider the benefits as of this year, I understand GM retiree's lost some of their Health Benefits.


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## geekette (Mar 10, 2009)

Kal said:


> A 15-20% benefit program is extremely weak.  I would feel pretty bad if my benefits were in that range.  Health insurance, 2 weeks sick leave/yr, and 3 weeks vacation/year come to more than 30% of a $20/hr pay rate.



How much of your health insurance are they picking up?  Depending on your company, that can shift wildly.  I also don't think 2 weeks sick + 3 weeks vacation is the norm, especially assuming that Holiday is above and beyond that.  

Where I work, it's reasonably generous, and starts at 25 days Paid Time Off that includes holiday, sick and vacation.  After 5 years, it's 30 days.


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## Kal (Mar 10, 2009)

Geekette - My assertion is basically a "15-20% benefit program" doesn't add up. I use Health insurance, 2 weeks sick leave/yr, and 3 weeks vacation/year to show that such a program is more than 30% of a $20/hr pay rate. That number is very conservative as it doesn't include any holidays, retirement features or the employer payment of FICA and FUTA.

A 2-week sick leave program is probably a reasonable expectation while 3-weeks vacation would vary depending on years of employment. The employer health insurance costs would vary depending on the size of the group and the average age AND the quality of the plan. I would estimate the employer may pay somewhere around $500/month per employee for health/dental/vision insurance.

At least for FICA the number is fixed at 6.2% of wages.


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## beanie (Mar 10, 2009)

*I work for the Post office*

and my retirement when I retire at age 62 would be about 27k a year based on 36 years service . so I would get 1.1 pecent for each year or 39.6 percent of my " average top 3 " which I hope would be about 70k a year . with 11 years to go I am at 56k a year . I could retire in 5 years with 30 years service but then I would get 1 percent a yr or 30 percent of my average top 3 or about 18k a year plus a FERS supplement of 5-7k a year till I'm elgible for SS at which time I would lose the supplement . we get 10 paid holidays , 13 sick days ( which I hardly use ) and because I have over 15 years (25 with mil. time ) I recieve 26 vacation days a year .  the big thing towards our retirment is the utilization of our thrift savings plan and the matching funds for the first 5% 

edited to add that our civil service employees that are still left will recieve about 2% per year for their retirement but no SS benefit unless earned elswhere and those benefits would be cut almost in half due to the double dipping law for federal employees


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## Twinkstarr (Mar 10, 2009)

dioxide45 said:


> My FIL is also a GM pensioner. So it definitly will be tough times ahead for those pensioners who thought they were set in retirement with only their GM retirement. They have already lost a lot with their medical coverage and I am sure they will see drastic changes if GM were to enter chapter 11. There is a serious problem with the corporate pension system, regulation allows companies to consitently underfund their plans and then when they cancel those plans under bankruptcy they are covered at pennies on the dollar by the PBGC.
> 
> At the dealership yesterday they definitly had a lot of inventory sitting on the lot. I don't see how they can move it. There was a lot of heavy dutyl pickups that one can only imagine how long they will be there. I was suprised to see though that there were several people out shopping for cars, though they were eager for the sale as our sales rep and finance person stayed two hours past closing to complete our paperwork for delivery.



In the WSJ today, an article stated the car companies were running with about 90 days of inventory!


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## Kal (Mar 10, 2009)

beanie said:


> and my retirement when I retire at age 62 would be about 27k a year based on 36 years service . so I would get 1.1 pecent for each year or 39.6 percent of my " average top 3 " which I hope would be about 70k a year...


 
Some very rough numbers indicate your retirement benefit (thru age 90) equates to a benefit value of 14% of your wage.

That's just one component of the benefit package.  Add in the 49 holiday/sick/vacation days plus the thrift savings match and the health insurance value and the total benefit really starts to get heavy.

DO NOT QUIT YOUR DAY JOB!!!!!


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## beanie (Mar 10, 2009)

Kal said:


> Some very rough numbers indicate your retirement benefit (thru age 90) equates to a benefit value of 14% of your wage.
> 
> 
> DO NOT QUIT YOUR DAY JOB!!!!!




while I do have a DAY JOB  alot of employees in the PO do not have day jobs . they work either the second or third shifts . I am thankful for my job esp. in these tough economic times .


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## caribbeansun (Mar 11, 2009)

I live in Canada - much lower health care costs.  Company pays for LTD and AD&D, employees pay the rest.  On the vacation side of things people get what's mandated - roughly 4-6% of gross depending on seniority.  No paid sick days.  No pension plan.

Most companies in our industry have NO benefits whatsoever meaning health or dental as vacation is required by law to be at least 4% of gross.



Kal said:


> A 15-20% benefit program is extremely weak.  I would feel pretty bad if my benefits were in that range.  Health insurance, 2 weeks sick leave/yr, and 3 weeks vacation/year come to more than 30% of a $20/hr pay rate.


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## Kal (Mar 11, 2009)

caribbeansun- Indeed, it would appear the cost of labor and benefits in Canada is very much lower than that of the US.  Am I correct in reading that in Canada the employer pays nothing for employee Health/ Life/ Vision/ Dental insurance?  Not even thru direct taxes?  How is the socialized health care funded?

For vacation an employee would receive not more than 15 days per year and 0 sick days pay?  How about holiday pay?

If Canadian companys do not provide any pension program, what about the equivalent of US Social Security?  What about unemployment benefits? 

By way of comparison, the cost of labor and benefits in the US are factors higher than your number of 15-20%, which is astounding.  My guess is the true cost of benefits is buried in the tax structure paid by the employer.  The employee just doesn't see those costs directly.


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## T_R_Oglodyte (Mar 11, 2009)

Kal said:


> Geekette - My assertion is basically a "15-20% benefit program" doesn't add up. I use Health insurance, 2 weeks sick leave/yr, and 3 weeks vacation/year to show that such a program is more than 30% of a $20/hr pay rate. That number is very conservative as it doesn't include any holidays, retirement features or the employer payment of FICA and FUTA.
> 
> A 2-week sick leave program is probably a reasonable expectation while 3-weeks vacation would vary depending on years of employment. The employer health insurance costs would vary depending on the size of the group and the average age AND the quality of the plan. I would estimate the employer may pay somewhere around $500/month per employee for health/dental/vision insurance.
> 
> At least for FICA the number is fixed at 6.2% of wages.



In my experience in the engineering consulting business, total labor cost (gross wages + employer contribution to insurance (health/AD&D) + employer OALDI contribution + 401(k) match + workers comp) ran about 130% to 140% of gross wages.  

That was on a company-wide basis. Since some of those costs don't vary with salary, that means that on a percentage the burden is higher for lower earnings employees.

Since we were operating an office of relatively well paid professional staff, our average salaries were well above the norm for all companies.  For companies employing larger number of lower paid worker, the burden would be even greater. In addition, as soon as you get outside the professional services industry workers comp rates also balloon.

*******

This is a point that I think many people don't realize.  If you are running a company where fringe benefits + payroll taxes are half or more of gross wages, those added labor costs loom large.

If you want to create incentives to put people to work you do it by decreasing labor burdens, not by increasing labor burdens.


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## Wonka (Mar 11, 2009)

*GM $70 Hour Misrepresented?*

I won't offer my opinion.  But, here's an article that might provide a better understanding of the $70-$80 hourly rates we've read about for auto workers:

http://www.tnr.com/politics/story.html?id=1026e955-541c-4aa6-bcf2-56dfc3323682

One thing I remember was the neighbor of my first home (the only one with an inground pool), spent his summers lounging around the pool receiving 80% of more of his pay while laid off.  He sure looked forward to summer each year.

I think this sub-pay situation may have been terminated in the last goverrnment negotiations, but I'm not sure.


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## geekette (Mar 11, 2009)

I located my last "comprehensive benefits statement" which says they kick in an additional 20.13%.  I would be considered "highly compensated" here (I'm in IT).

Included in this statement:
Health plan (their cost/my cost)
Life & ADD (no cost to me, I think it's 1.5 or 2 x salary with a limit of I think 200k but it's not clear if that's the salary limit or payout limit)
Long term disability (no cost to me)
organization membership (not of real value to me but for some, sure)
Short term disability (no cost to me)
retirement plan match (says no cost to me, but I do have to contribute to get the match!)
Fed Medicare employer (employer tax, no cost to me - why is this a benefit to me?)
Fed Soc Sec Employer (employer tax, no cost to me - why is this a benefit to me?)

They do not include Paid Time Off, and I'm now at 30 days.  

They don't include the bi-annual 'kick in' to my retirement plan, which is now at 4% of salary.  

They don't include the bonus, $600 max, based on 3 criteria that most of us have no control over - visitation numbers, customer service (hard to quantify!) and financials.  We are making bonus this year, last year was partial ($400).

Since this is their first go at creating these, I think they will be changing what they include/exclude as far as "benefits"  received as part of total compensation.

thanks for nudging me to dig this out.


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## Kal (Mar 11, 2009)

geekette said:


> I located my last "comprehensive benefits statement" which says they kick in an additional 20.13%. I would be considered "highly compensated" here (I'm in IT).
> 
> Included in this statement:
> .
> ...


 
The 20.13% is a good start, but far from the actual benefit value.  I don't know why the company doesn't lay it all out, but that's probably the way HR does business rather than the accounting P&L statment approach.

Adding in Paid Time-off equates to a 12% addition.
4% kick-in to retirement = +4% addition
Medicare = +1.45%
Social Security = +6.2%
Unemployment = +varies
Bonus = +varies

Why is Medicare/Social Security a benefit value????  For SS you pay 6.2% (FICA) and the Company pays 6.2%.  Taken together these payments "pay for" the money you get as Social Security benefits once you reach at least age 62.  Medicare payments pay for your health care benefit once you reach age 65.  You'll find out the true value of that later on.

So with these additions the total benefit at least doubles the 20.13% number.


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## Kal (Mar 11, 2009)

T_R_Oglodyte said:


> ...This is a point that I think many people don't realize. If you are running a company where fringe benefits + payroll taxes are half or more of gross wages, those added labor costs loom large.
> 
> If you want to create incentives to put people to work you do it by decreasing labor burdens, not by increasing labor burdens.


 
A company has no control over payroll taxes so the only options are to either eliminate employees or reduce (or eliminate) benefits. Today, the option of choice is to eliminate employees. However, short of that is the _Wally World_ approach to hold hours to 24/week. That way the employee is part time where no benefits are required to be paid.

Is it possible that when (and if) the job market recovers we will hire twice the labor staff, but each person will only work 24 hours/week??? That will definitely boost the corporate bottom line!


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## geekette (Mar 11, 2009)

Kal said:


> The 20.13% is a good start, but far from the actual benefit value.  I don't know why the company doesn't lay it all out, but that's probably the way HR does business rather than the accounting P&L statment approach.
> 
> Adding in Paid Time-off equates to a 12% addition.
> 4% kick-in to retirement = +4% addition
> ...



Thanks for the analysis!

Risking edit due to political nature, but I don't believe SS will be there for me (I'm in my early 40s).  I get what you're saying, but I still don't see it as A BENEFIT - it's Law.  They HAVE to do that, and they aren't subtracting the extra I have to pay for being "highly compensated" (Group Term Life, $4/pay).  Any company I work for, I'll have the SS/Medicare taken out, but I've never seen the GTL come out before (I'm at a non-profit now).

Mind you, I have no problem paying into the SS system/Medicare, as my own mother is receiving these and maybe I will, too, I just think it's whacked to call them An Employee Benefit.  It may be An American Benefit, however.  They aren't calling fed and state taxes a benefit.

Are these things being figured in for the other employment groups discussed on this thread?  I don't recall seeing it, but, there's so much data, I could have glossed over.


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## Kal (Mar 11, 2009)

A concern expressed in this thread was what appeared to be a very high benefit package provided to US automotive workers. The political spinsters erroneously identified the total wage/benefit package at something like $70. Since we really don't know what numbers were used to gin-up that figure we have to assume it includes ALL the costs and labor burdens associated with keeping one person employed.

Many people only see the very tangible $$$ which constitute their benefits but don't understand the broad scope of what the employer actually pays to keep a person on staff. We're trying to get our arms around the total costs beyond actual gross wages for each employee.

The general rule-of-thumb is the labor burden is about 100-150% of the actual wage paid. Everyone's situation is unique so we're trying to at least lay out all the items which are included. Benefits are one piece but payroll taxes are a major component which the employee never sees. We do see those line items called FICA, Medi, & L&I on our pay stubb and just grumble that we pay for something we never receive. 

However, after age 65 you are "scheduled" to receive medicare health insurance at a cost to you of about $100-$130/month for just about 99% full coverage. That in itself is a gigantic benefit compared to how much you pay today for paltry HI coverage. The medicare trust fund is scheduled to run out of money in 19 years. Believe me, it will have to be fixed or today's economic issues will comparatively become minor.


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## caribbeansun (Mar 12, 2009)

No that's not true - it depends entirely on the company.  That's how GM is at something >100% and we are between 15-20%.  The issue is more that some companies (most notably our public sector for that matter) have benefit plans that are so out of touch with the "average" that they struggle to be competitive in the global marketplace. 

Many companies have drug/disability/life/vision and dental plans - on average the coverages have been declining though as the costs have been escalating beyond what companies can afford to pay.

Vacation, sick days and pensions depend on the company as well - again affordability is the issue.

Health care is funded predominately through personal and corporate income taxes.

We have the Canada Pension Plan = SS, we also have Employment Insurance = unemployment benefits, Workers Comp = income replacement for injuries while on work related activities - all gov't based levies which I included in the 15-20%.

As a broad generalization - unskilled labour in Canada tends to be overpaid relative to US whereas skilled tends to be underpaid relative to the US once all the costs of wages and benefits are included.



Kal said:


> caribbeansun- Indeed, it would appear the cost of labor and benefits in Canada is very much lower than that of the US.  Am I correct in reading that in Canada the employer pays nothing for employee Health/ Life/ Vision/ Dental insurance?  Not even thru direct taxes?  How is the socialized health care funded?
> 
> For vacation an employee would receive not more than 15 days per year and 0 sick days pay?  How about holiday pay?
> 
> ...


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## Kal (Mar 12, 2009)

Clearly, comparing the Canadian system to the US system is apples to oranges.  Since the 15-20% number does not include all kinds of elements any reference to GM >100% is a non-starter.


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## Rose Pink (Mar 12, 2009)

*Less Billionaires*

I heard on NPR that there are less billionaires this year than before the recession.   Bill Gates lost something like 18 _billion_ dollars.  Guess I shouldn't complain.  :hysterical:


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## PigsDad (Mar 12, 2009)

Rose Pink said:


> I heard on NPR that there are less billionaires this year than before the recession.   Bill Gates lost something like 18 _billion_ dollars.  Guess I shouldn't complain.  :hysterical:



Yeah, I wish I had 18 billion to lose!    

Kurt


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## Kal (Mar 12, 2009)

A billion here and a billion there.  Pretty soon it's like real money!


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## Timeshare Von (Mar 12, 2009)

geekette said:


> I located my last "comprehensive benefits statement" which says they kick in an additional 20.13%.  I would be considered "highly compensated" here (I'm in IT).
> 
> Included in this statement:
> Health plan (their cost/my cost)
> ...



I prepare those pie chart benefit documents for our staff and the range of additional benefit cost of the total compensation for my folks is between 25 and 30%.  Includes paid time off (sick, vacation & holidays) as well as the others Geekette mentions, including the SS and Med (which are standard "mandated federal benefits" which is why most employers count them in the total compensation calculations.


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## greenjean (Mar 19, 2009)

*Oregon...*

I'm in my 27th year working at a major bank....experiencing 401K pains as most of you. I also live with my nearly 89-year old mother (and caregive tho she is still in good shape) on a 200 acre farm. So, I have a second life as an organic flower and vegetable grower. I sell bouquets and vegetables at farmers markets on the weekend. The farm is a comforting hedge against my bank job, should there be mergers or cuts. I originally started the farm side to gain some peace of mind, being a single parent (my husband died while my children were young)...to have a backup plan should the bottom fall out. I believe I could expand my operations and make a comfortable living if I have the time (i.e. layoffs).  I am thankful that my three children are still gainfully employed. I can't count the number of times I have said to my children, over the years  "when times get hard we can always live on the farm"...


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## Tia (Apr 4, 2009)

Friends at lunch today were telling about someones credit card rate going up to 21% out of the blue even though they always paid ontime. I told them I had been reading about such here and credit available being cut down also. Bad news is my other half works for our school district and they are cutting big budget $, they cut his 3 year old program completely
  he got the news yesterday and we are in shock.


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