What is your family’s State of the Union?
I don’t want to get political (and don’t want you guys to get political) but the State of the Union always seems like an appropriate time to evaluate how your family is doing in comparison to the rest of the nation. (Here is a preview story about the official State of the Union.)
Supposedly the economy is rebounding. We are officially, according to the government, out of the recession. But what are you seeing at home? Are you better off than you were a year ago? What about two years ago? Do you feel more positively about your money and have confidence you will have money in the future? (Christmas spending seemed to indicate some confidence. Online spending was up.)
(A news story on how some people are spending now and some numbers on spending.)
I definitely think that certain segments of the economy get hit before others and then are on the front-end of the recovery. For example, we have a friend with a trucking company and then my dad who is engineer selling HVAC –types systems to large buildings. Our friends’ trucking business always seems to get hit first and is starting to recover by the time my dad’s company gets hit. Our friend’s trucking business seems to be doing well now. My dad’s business finally seems to be picking back up.
This is just what we have observed. Any economists out there I would love to hear your thoughts on how the recession moved through different industries and who was affected first and then last.
I think Michael and I were both on the back-end of the recession. I feel like we are worse off than we were two years ago despite increasing saving and reducing spending at the front-end when we saw friends hurting. (Also saving and not spending now.) I have definitely said things in the last two years that I didn’t say much before: “We can’t afford that. Mommy doesn’t have money for that. We can’t eat out. We can’t go to the beach.” (It kind of makes life easier just always saying no and they’ve definitely gotten on board with it. Their Christmas lists were so tiny and sweet. And Walsh didn’t want to get his hair cut to help the family save money. I told him I could buy him a hair cut.)
So where are you in the cycle? Are you completely out of the recession? Are you still in it? Are you just plain gun shy now? Or are you so tired of being good and are ready to spend? Will you continue your saving ways as things improve around you?
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67 comments Add your comment
Anne
January 25th, 2011
12:30 pm
Many of the mortgages/homes bought were in the past ten years. Lots of people moving around the country or moving up locally. Probably only about 25 percent of the people I know have been in their house over 10 years. The housing boom, and now bust, is alot bigger than most realize.
Warrior Woman, our family feels blessed too. I think we would all be shocked to discover just how many families are barely hanging on, afterall personal fiances are still a private matter to so many people. I am glad my kids are at an age that (hopefully) they are learning from this horrible economy. We try to find teaching moments whenever we can without scarring the children to death. Hubby & I are still afraid even though we don’t let the kids see it. We are trying to continue to think positive and do the right things. However, something deep inside us tells us that we are in for a very long recovery that will never be the same.
justmy2cents
January 25th, 2011
12:33 pm
Regarding vacations…not sure what your thoughts are on cruising, but on MSC cruises, kids are free, except taxes and 1/2 gratuities!!!
Roswell Jeff
January 25th, 2011
12:35 pm
Anne is right – Zillow is not the end all authority but it’s trends tend to be fairly accurate. There’s alot of things that go into it and Zillow may not be picking up on all the the variables in timely fashion – foreclosures, short sales, etc…
You also have to look at the info they have listed for your home. Our square footage is way off and they use that in their equation.
justmy2cents
January 25th, 2011
12:38 pm
oh, regarding Zillow…it was off on our house by about 80K!!!!
Photius
January 25th, 2011
12:42 pm
I am very negative about the world, because I think that what caused the crisis in 2008 was excessive credit growth, excessive leverage in the system, and now the private sector is deleveraging, but governments are printing money, and through huge fiscal deficits are creating even more debt growth. So in other words, what killed the economy is now being applied to revive the economy, and I think this will lead to a disaster. But if you think it through and you believe in the disaster scenario I’m envisioning, then you will be better off in stocks and in commodities than in government bonds and cash. I feel that if the stock market in the US declines 10% or 20%, we would have QE3, in other words more money printing. We would have Quantitative Easing Part Three and that will again boost stock prices, but not necessarily the economy of the man on the street. The entire global economy came dangerously close to collapsing in the fall of 2008 and we are barely economically stable here in the United States and there is a sizable percentage of odds stating that another contraction is very possible and a slight few who are predicting total collapse. Simply read the New York Times and the Wall Street Journal every day for one month about current economic conditions and you will discover the true condition of our economy and the world’s. We are not even at the half way point of the Great Recession.
I would save more money and not take a vacation this year.
Wayne
January 25th, 2011
12:42 pm
Thanks JATL. I have a little experience with 1099’s as I receive some from some of clients, and have issued them. Small time to be sure, but I get nervous every time I issued one! I haven’t had to do so in a while so I’m good, but if it gets any busier, I’ll have to hire a per diem employee. That way, I should be covered. I hope.
JJ
January 25th, 2011
12:49 pm
I’m not selling my house for at least 5 years. I want my daughter to be out of school and on her own before I downsize. She still needs a “home base” and I’m not moving for awhile.
Anne
January 25th, 2011
12:57 pm
Photius – I am picking up on some of what you are saying because you sound like my hubby. I let him worry about the larger scale stuff like global markets and economies why I worry about trying to find additional ways to shave here and their to go into savings!
One thing I think is going on as well is that people are tiring of saving and worrying, so they are spending a bit more but certainly not at the same pace. Another thing I glazed over was actually taklking about finances even with close frinds or familiy, often times you know you are getting a rosier picture. I also find it difficult to talk about how we have gone relatively unscathed, because most people probably don’t want to hear it. Here on this blog for example, most sound like they are doing okay. It’s easy to talk about the good, but the bad is a different story.
You probably only know someone is in real financial trouble when they have lost a job, been kicked out of their home, or the sheriff keeps showing up at their door.
DB
January 25th, 2011
1:04 pm
Zillow is HORRIBLE when it comes to estimate of market prices — only use it as a VERY rough indicator. Its idea of “comparables” and appraisers ideas of comparables are two very, very different things, and takes no account of regional differences of the value of a sun room, finished basement, etc.
Life is pretty much same-ol’ same-ol’ — we keep doing what we do, and as we are both self-employed we have the same issues we had 5 years ago — most clients pay, a few don’t. Kids are in college, expenses are met — not a lot left over the last few years for luxury extras, but we have all of what we need, some of what we want, we are healthy and have our future ahead of us. That’s about all anyone can ask. :-)
motherjanegoose
January 25th, 2011
2:37 pm
@JATL, aside from the free nights I get at hotels, we always rent a condo. I do not need extravagant accommodations to be on vacation. We rent the same beach house every summer…you walk over the dunes to the beach. It is not fancy but less than $800 per week for 2 bedrooms and 2 baths. You would pay more for a one room hotel with taxes! We suggested it to our neighbors and while they liked it, they prefer something oceanfront and a bit more swanky. To each their own. NO, I am not telling anyone where we stay :).
CC
January 25th, 2011
2:48 pm
JATL, my thoughts are the transition of forms (W-2 to 1099) for the same people will raise a red flag with IRS, and I hope it does. We’re expected to be here on time for 8 hours a day 5 days a week…doesn’t sound like a contractor to me. Our boss did give us a raise to supplement some of our losses, but when you use write offs to offset the taxes, your bottom line looks like you make little or nothing and it’s hopeless to refi or get a new loan from a bank. He had to pay 70k in federal this year and if things had remained as was, he would have only had to pay around 20k. Doesn’t make a lot of sense to me.
JATL
January 25th, 2011
3:38 pm
@MJG -we always rent a condo for the beach too, and usually you can find something for less than a hotel on VRBO, but if you’re willing and you really want to go -sometimes you can find motel (not hotel) room for less than condos at the beach. Of course you’re usually giving up a kitchen and any separate bed rooms.
@CC -that’s the common thing I’ve found -these places treat everyone like employees when it comes to THEIR benefit (time on site, etc.), but not when it comes to what they’re supposed to do tax-wise. So many companies are doing this now that it’s becoming a big issue to the IRS and the litigation attorneys out there. Many large corporations are seeing the error of their ways and their HR heads have told them they must institute firm guidelines in reference to contractors, but start-ups and small businesses are doing this all over the place. It’s going to take a big crack-down from the IRS for it to change, and then that throws us all into a precarious position. I had much rather retain my current job as is than not have it at all! So many of the places that do this would completely fold if caught and made to pay the back-taxes and fines. Places like your office where they’re going to see a huge group of W-2 to 1099 transition very well may set off IRS alarms. I’m not sure what your boss’s reasoning was behind the move. I know where I am, we are small and growing, but very new. We’ve been around for 3 years, but initially there were about 5 people, then 30 and now over 50. Evidently it’s when companies move into the over 50 category that they get in trouble. Because only about 6 people here have ever been on W-2 status, they can keep flying under the radar for awhile. I’m interested to see if they’re going to gamble and try it.
deidre_NC
January 25th, 2011
3:50 pm
photius-you are right on.
as for vacations….i usually have to take a vacation day if im sick as we are not allowed to use a sick day on the first day out…crazy. i did take some days to visit my sister in atl as she was recovering from a horrendous (is there any other kind?) cancer treatment. so vacations are not on my list. if they were though i would definately get a place with a kitchen. or camp. i love camping. i have to say-right this minute- i would take 1 night in a very nice hotel and restaurant in place of 3 or 4 days of camping. these days i feel in need of some luxury and pampering….not gonna happen anytime soon tho!!
deidre_NC
January 25th, 2011
3:53 pm
lol—oh woe is me….really things are ok. i still have my job. willl be finished with part of my degree in the summer. hopefully that will lead to something better!!! my kids are all alive and well. i have a home. i could go on and on…sometimes you just have to waller for a minute (as my mom used to say) and then just get over it.
CC
January 25th, 2011
4:00 pm
JATL – We’re actually a very small company of 5 and we’ve all been here 20 years. His reasoning was behind the health insurance reform and small businesses having to provide for “employees”. Although he paid our health insurance, he doesn’t want to be forced to do so, hence, having no employees now. The funny part is that he’s a democrat through and through and even served as state representative for 26 years.
Anne
January 25th, 2011
4:11 pm
CC – your last comment regarding health insurance is a huge part of why our economy is not recovering. Many people that you would think would be on both sides of this issue are scared to death of it’s impact, and rightfully so. Sounds like your boss might know what he is talking about!
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January 27th, 2011
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[...] What is your familyâs State of the Union? – Atlanta Journal Constitution (blog) I donât want to get political (and donât want you guys to get political) but the State of the Union always seems like an appropriate time to evaluate how your family is doing in comparison to the rest of the nation. ( Here is a preview story about the … Jan 20, 2011 2:37am [...]