What the meltdown means to me, a Gen X parent in NYC
Filed under: Kids and Money, Retire, Saving Money, Recession, Investing
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It's been scary reading the headlines. It's been scarier reading my family's investment reports from Fidelity. A nice little nest egg that my husband's parents diligently built up through the course of his lifetime has lost 20% of its value in 2008 alone. Thankfully, we own our apartment and are mortgage-free so we are, in some ways, better off than most these days. Just two years ago, we too had an adjustable mortgage but luckily paid that off before the seven-year deadline. I also paid off my college loans before I married, and we try to live within our means. I still wear my pregnancy jeans three years after my daughter's birth because they're in good shape.But that doesn't mean we don't worry about the future. My husband and I both work in print journalism, which, if you read the stories, is a dying industry. I haven't had a cost of living raise in six years. We are also raising our daughter in Manhattan, one of the most expensive cities in the world. With more and more families staying in the Big Apple, competition for spots at good public schools is tough and will only get tougher when she reaches kindergarten age. And the idea of private school is frankly nightmare-inducing. We're talking some $30,000 a year.
So what to do? My brother's friend, a financial adviser in New York State, says people like us, those in their late 30s with two modest incomes and little debt, should sit tight and ride things out. In fact, he says that now is the time to invest in mutual funds and bond funds that provide quarterly dividends. These dividends can be used to buy more shares at today's basement prices. When the market rebounds and share prices go up, we will have made money. He also recommends participating in our employers' 401K plans, opening or putting money into our IRAs and setting up an education fund for our daughter. "Buy low, sell high, those are the basics," he adds. "Pulling your money out now means you'll suffer losses. And too often, people wait too long to get back into the market and lose out on the gains when the market does come back."To ease the pain, he recommends investing systematically. Set aside $50 a month for investing, and treat it like a bill. That way, we're slowly building up our retirement fund and don't feel the loss of income as much.
Still, who are we kidding? I wake up worried about our jobs and whether we'll have enough for retirement. I'm anxious about my parents, who in their 70s rely on their children for part of their income. I worry that this bailout plan that President Bush just signed into law will cripple our generation and those younger than us Gen Xers. I fear we will not be able to financially help our daughter when she is older.
Reader Comments (Page 1 of 1)
10-08-2008 @ 12:17AM
Pam said...
This meltdown has put me as well as allot of people I know doing things that we would never do. I just took a loan out of my 401k just to put in a cd so I can be sure of the return, I am sitting on this check. I have been an employee for Wachovia for over 25 years & have seen almost my entire portfolio diminish. I was told to return the check to put back in & I am at a frenzy as to what to do now. I always thought if it was just a loan, not a withdrawal that I am not pulling funds from my investments. My Wachovia representative told me different. Others tell me I am correct in my thinking with regard to it not pulling from my investments. Although I know now I should have just left it alone & put it in a stable fund. What I did is for fear that I would lose everything. I think allot of people are just not educated enough as to what to do. Myself being one of them. I am at a panic state now along as well as allot of people out there. Is this part of the reason the economy is falling??? I wonder.
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10-08-2008 @ 10:30AM
perry said...
Pam,
You should put the money back into the 401k. The interest on the cd is not going to offset the loss in the 401k if the value goes down, (you can never tell).
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10-09-2008 @ 7:39AM
robin said...
I remember my mother talking about the great depression and how my grandfather, a farmer lost everything that they had. My mother talked about the rations of sugar, bread and flour and how all this effected that generation. They, my Mom's generation always knew the value of a dollar and what that meant.
It burns me up to see that my Mom who has saved over the years is once again seeing the effects when the great depression hit.
I am saddened by the greed, of company exc's walking off with millions of dollars while other good people, families and the like are being bled to death.
I now see that families are losing everything and are going to the Food Banks in droves, these are families that once were considered middle class raising familes and working two jobs with investments and 401k's and portfolios.
My situation is different, along time ago, I had cancer and lost all of my savings, 401k and everything to pay off medical bills and just other bills. I don't have money,and am on disablity, but it hurts me to see so many people out there suffering so much.
its so sad and my heart and prayers go out to all, that are trying to put the pieces togetether. I just read yesterday that the exec's of AIG that were testifiying before congress, once finished up flew out to a spa with their families for the tune of $4400.00. How can someone live with themselves, where is honestly, intregity, and compassion. these exc's should have their millions taken away and pay for the hurt that they have caused.
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10-09-2008 @ 7:44AM
robin said...
Oh, I misspoke the Aig exec's left after being questioned by congress the tag for their flying out and perks was $440,000.00.
How many families out there could have been helped by that money. Greed, one of the 7 deadly sins.
What goes around comes around.
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10-09-2008 @ 10:06AM
rae1973 said...
I too am in print journalism which today is a very sad state of affairs. Thousands being laid off across the country at hundreds of newspapers. Currently unemployed due to the slowdown in ad revenues and the rising costs of production my home value has dropped almost 20%, my 401K about 14%, my retirement and education investments by 15%, one child in college, and I will have to relocate to for my next position.
The setback has been devastating to us, both in our mid-fifties. It pains me to think of this rescue plan and those who spent more than they can afford being bailed out of their debts. We have never missed a payment, not even on a utility bill. We just recieved notice from my mortgage holder that our taxes went up as did our homeowners insurance. All in a time when our home value has dropped by almost 20%. 11 of the past 13 home sales in our area have been foreclosures dragging down prices dramatically. Where's the help for those of us who have kept our bargains, been responsible? Instead, we are rewarded with higher propoerty taxes and increased costs to stay in our home.
We have worked over 35 years to save and scrimp for retirement and to give our kids the same kind of education we were fortunate enough to enjoy. In the end, this will all turn around, however our plans to retire and pay for our children's education have gone up in smoke.
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