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Friday, October 10, 2008

Keeping Perspective about the Economy

With all the doom and gloom out there right now it’s hard to keep perspective when it comes to dealing with finances. For me, it’s important to tune out the larger issues and sensationalist headlines (Banks in Danger of Collapse! Government Bailout! Stocks Plummet!), and instead focus on what actually affects me.

In terms of my own personal little economy, things really are not that dire. In fact, things are better for us now than this time last year. I know that seems like a crazy thing to say in this charged climate, but it’s true. My mountain of debt has been obliterated (Halleluiah!) and Cute Man actually got a significant raise. I also did recently get a car, something that is both good and bad (mostly bad in terms of spending more money but good in the flexibility it’s affording me). But even with buying expensive gas and dealing with increasing food costs, we aren’t being hit as hard as we otherwise would have been. If I was still making those debt payments and Cute Man was still at his “I’m struggling but it’s worth it” salary, we’d be screwed.

Moving forward I’m not content to count myself among the fortunate and just go on as business as usual, though. I am working on bringing my B of A savings account up to $1000 (it’s at $200 right now), to keep on hand for emergencies that cannot wait for money to be transferred from ING. I’ve decided that forgoing that interest is worth it if I have ready access to emergency funds when I need them. Having the car makes this more important than ever. The ING account will stay at $1000 until after the holidays at which time I’ll switch my automatic savings back over to go to that account since the B of A one will be funded by then.

Also, I am not freaking out about my 401k. In fact, I’ve recently upped my contributions to be a total of 15% (including employer match). I mean, I’ve got more than 30 years to retirement. As far as I’m concerned, stocks are on sale baby! And it’s also a time to give to others more, if I possibly can. I realize that I’m fortunate not to be struggling too badly right now and am sad to think about how many charities and nonprofits will see a drop in contributions because people are too broke or afraid of being broke to give. Not to mention all the corporate money not flowing out of the financial sector.

So I think it’s worth taking a moment to count my blessings (and knock on wood!) We are by no means rich or even anywhere near where we’d like to be financially, but the combination of the payoff of hard work, good choices, and a fair amount of luck has conspired to allow us to not freak out. Continuing to stay in our low rent apartment has been the absolute backbone of our situation. It’s hard to comprehend that people in our same income bracket often spend more than twice what we do on rent.

I think the key is trying to be as prepared as possible without driving myself crazy is the key to riding this out. I hope all of you are doing OK and doing what you need to do to make it through this slump.

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"People will tell you where they've gone, They'll tell you where to go, But till you get there yourself you never really know, Where some have found their paradise, Other's just come to harm, Oh, Amelia it was just a false alarm." - Joni Mitchell