Since about 30, I've been saving, scrimping and hoarding pennies, working 2 jobs, 3 sometimes, all so that I could retire at 55.

Everything ... mortgage, debt, housing amenities, shop, tools ... everything was set up on this idea that I could retire with reasonable comfort and then work as I wanted, when I needed and do what I liked.

The last year has seen that dream slowly dwindle into the reality that I will have to work at this stinking job till I'm a hundred and 55.

My job is great ... been there since March of 1982. I really like what I do. Unfortunately it comes with it's share of migraine headaches, mostly with the title of Manager attached somewhere.

I was talking with a very good friend yesterday and he made some really good sense. Might as well pull all the money from market accounts and buy a new car. The drop in value couldn't be any worse.

Oh well, just thought I'd rant a while ... kind of feeling sorry for myself. So I want all of you to feel bad, too.

Amigo, I feel bad with you. Don't buy a new car, buy one a couple years old that has already taken the depreciation hit.

Besides, I love a good rant.

ps - I still have the 69 Camaro I bought in 1985; I think it's up in value.

I know how you feel on a smaller scale. Sat the motor went once again on the 3rd lap of the race, along with 3rd place for the year(maybe 2nd).

My view of the situation is simple, unless you are with in 5 years of your retirement age, this market drop is a good thing.

Yes, it sucks in the short term and we are going to have a nice chunk of stagflation to deal with. The flip side is that the stocks you need to invest for retirement, those core companies that are not going out of business regardless of the economy, are all on sale right now. The average blue chipper is down nearly 10%, the dollar is gaining strength against the rest of the world in leaps and bounds, and every investment house on the planet is tripping over itself to get you to trade through them for less and less per transaction.

The current economy has it's downside, but it is all short term(2-3 years) With the bail out, the economy is going to be priming itself once for a big come back as soon as the banks get done buying each other(that will last another year or so).

The moral of the story, if you have a few extra pennies around, your investment strategy should be BUY BUY BUY.

-Tim

Thanks Tim ... you just deepened my depression.



Damn this single story home ... no windows to jump out of.

Dude!
You got to be kidding me! That soooo sucks.
Hate to kick you when you are down, but you are putting the LT1 on the endangered species list.

You can try it, if you're lucky you might twist an ankle.

Yea, I'm wanting out of here too and I'm stuck in a job I now hate with a house I can't give away. Guess that's life. I've actually been back thinking about selling the Camaro (again), this time it would come with an Alan Blaine cage kit (unless it gets here and I get it installed soon). I'm feeling the urge for a change, not sure when and where, but I'm thinking it may involve a new job and a new city. Of course the job market sucks right now too....

...damn you are hard on motors......

Sorry to hear of your plight Mitch.....this year has been really tough! I was out of work for 4 1/2 months, and just recently found new work. The prospects were bleak while I was looking I CAN TELL YOU....so at least you have the "job you love" thing going for you....don't knock that!

Hope it all turns around.....for ALL OF US!

I'll toss in a change up here. (note tongue firmly in cheek here)

Im thinking about changing my race car back into a street car...its more fun & gets better mileage and its way cooler than a pick up truck. Plus the insurance and upkeep is way cheaper. Premium Gas is dropping like a rock so I can even go fast sometimes if I want.

Then Im going to pack a big bag, as big a bag that will fit in the Camaro, and just move from one declining real estate investment to another. They are in really cool places, and I can deduct the whole trip as a business expense from my nonexistent salary this year and next....making me eligible for welfare, and food stamps. And for a change...I'll be eligible for the earned income credit instead of the AMT. Uncle Sam to the rescue again.

When my trip is over, maybe the real estate market will have bottomed out and I can retire and sell everything at huge loss and report it over the next 14 years of McDonalds paychecks so that I wont owe any taxes at all.

Then I can retire on social security at age 65 just like everybody else... just me and my 96 Camaro.

Call me nuts....but this sounds good to me

bock

Hang in there Mitch! Your dream hasn't disintegrated, it may need a minor adjustment however.

From where I sit you have and have had a life to be proud of. Don't let all the doom and gloom in the media change who you are.

The ray of sunshine about the whole situation? At least the market tanked before you pulled the pin and you still have a job while your investments are in the crapper.

Need a little pick me up? I've got 37 years, 4 months, and 14 days left until I can collect my pension assuming the Republicans don't kill Unionized labor before then and 42+ years left until I can collect SS even though it'll already be broke and gone by the time I get there.

"Load the wagons, boys, the mule is blind."

I think we are all having a crappy year. As for me: My business went out of business under my wife's expert management in the spring. We sold our house on a short sale in the summer. Got tax audited a month ago (a bit of back taxes there). The wife is divorcing me (that one might be a financial improvement) and my employment contract at my day job is expiring in December. At this point it can only get better.

As someone who is just starting his career in January (finally graduating with PhD in Mechanical Engineering in December), I really feel for you guys close to retirement. I don't have a house or a retirement fund, when you have nothing you lose nothing. Both of my parents retired this year, my dad fully retired and mom is working a side job. My mom is counting on pulling Social Security in 7 years which I don't think is going to be around or at least not in any real form. I think we are just at the beginning of this economic down turn and if it gets much worse I think she will have to move in with my wife and I. I'm sure many families are going to be in the same boat, I think this is what my generation is going to have to do to cover the Social Security my parents aren't going to get and help the government control it's spending to get out of debt.

The housing market had to deflate. Prices were running out of control and the only thing that could stop it was people not being able to pay, and that's where we are now. Most of my friends that didn't buy a house before 2004 have moved far away from DC or to other states to be able to afford to live. These are people making over $100,000 combined that can't afford to buy even a crappy 70 year old house in this area.

Mitch, if you wanted to retire at 55 you were looking at an uphill battle to stay retired anyway. The inflationary course that the country was on was increasing costs out of scale with traditional inflation. Retiring at 55 and living to an average age of about 80, your expenses would have more than quadrupled by the time you were "done being retired: anyway. Sorry to say it, but it is rare to find a professional financial planner that can properly plan beyond expenses doubling, much less tripling or more.

You said you like your job for the most part, you have your health, a cool hobby, and some pretty cool friends from the looks of things. Doesn't sound to me like you are really doing too bad.

-Tim

When one door closes another one opens. Sorry Mitch, only thing I got. Knowing that it could be worse isnt much consolation I know, but hang in there and enjoy life now instead of waiting to enjoy it later.

Social security will be around as long as there are working people paying FICA taxes. With the baby boomers bubble, the funds may be spread thin, but there will be something.

That said, I would not plan for it when doing your retirement planning, rather accepting it as icing on the cake.

The good and the bad:

The world economy is in the crapper, no doubt about it.

Stock prices are meaningless until the end of the year at least. There's a lot of institutions being forced to sell whether they want to or not. Until that's done, who knows what the real values are. They certainly aren't based on the business fundamentals. Those fundamentals are declining, but not as fast as the prices.

My employer decided a few years ago that pensions were out of style. So, the only pension I have is my invested savings. Watching those savings plummet a month's pay per day is getting painful. It's going to take a long time to get out of this hole.

Chuck...I hope it is there....but I am like you, I certainly do not even consider it in my retirement planning. Could be my Corvette money though.

After talking with Mitch a few days ago... I decided to look at my 401k and IRA and it really scary to see the drop in the last 3 months since I looked at it last, but I still have a minimum of 15 years to work so it should come around by then.

I feel for you Mitch. Two years ago I was racing a Corvette that rode safe and sound in a 30ft. enclosed trailer, pulled by a motorhome, now I am piecing together a $5000 Trans Am that has to fight the elements on a open trailer behind a pickup.

At least your situation can be fixed, I am knee-deep in dirty diapers and screaming kids.

Listen to this horror story: 4month old, 3 year old, 5 year old and the best of all 12 year old girl!

I have 18 years before I can even think about quiet in house, financial prosperity or retirement seems like a pipe dream for me.

Let's see, I'm 35, so in 18 years when my youngest is going to college, I will be 53.

Score for me too!!

How about you throw me out the window first, and then you can go.

With my luck, I will just have to go back to work with a broken leg and a demotion because I can't work as hard because I have a broken leg

Hang in there. From some point, the only way left to go is up.

401K ....
January 08 - $650K+ across fixed, US and International funds.
As of October 3rd - $480K across the same funds

When all my stock was purchased after the buy-out 2 years ago, I placed 40% in a fixed fund and spread the remainder across domestic and international funds.
3% return looks pretty damn good now.

Rayman, I already have a bad knee, so with my luck, they would call it a pre-existing condition and give me nothing.

Ouch. The amount of wealth that is simply evaporating is staggering.

I'll be 58 when my daughter starts college.

Percentage wise you and I are about the same year to date. I just looked and as of yesterday I'm down 27% for the year, yippie! I know it's going to come back but the question of the century is when and how much. I'm 45 years old and running the numbers I know that I will not be able to retire until at least my mid 60's.

The market is in a natural cycle, this time it is just a bit more dramatic than in the past.

I give it a year of everything being down, then the banks will be the first to come back. Really the only thing that he economy will be lacking in the 2 months or so until all of the bail out money is done flying around, is some investor confidence.

The problem with that is that people in America, is that there is little to no education of how to handle money and live with in ones means. Look at our educational system, it teaches people that good enough will get you by, but then bombards our young people with images of extravagance and bling. Most school districts do not even require home economics in this country!!! How the F can I expect people to know how not to over spend themselves when they can't even balance a check book?

Sorry, education is a massive rant of mine, I see the current US educational system as one of the biggest problems at the root of damn near every problem the country faces, economics, crime, politics, all of it is rooted in the problem this nation has applying the massive amount of information that we all have at our fingertips.


-Tim

I think there's a bigger problem than that. The US and global economies depend on deficit spending by Americans. How often have you heard on the news in the last year that we need to get people spending again, and then that those same people need to get out of debt (and I'm not even talking about housing)? That house of cards is collapsing.

Any one read or watch Richard Fuld being grilled over his "severance" from Lehman?

"It is reported you took in excess of $500M when you left."

"That isn't correct, sir. My salary was $60M and my stock option package was $250M. A big number, but not $500M."

Later on Fuld got a little "testy" ...

"Where was the government's bailout when my company needed it?"

The arrogance of these CEOs ...

I know of people who were literally only months from retiring, but had their eggs in the wrong basket (Lucent). went from 2M to almost zero in no time. Enron was the same deal.

This is why the financial planners tell you to move from growth and income to more fixed and safe. We all get greedy until the bottom falls out.

At least your 40% fixed should stay level... give it a few years and the rest will come back too.

Fixed income hasn't proven to be very safe either. I'll admit that I'm a lot less worried about the portion of my savings that's managed by Bill Gross, though.

I would use a coffee can burried in the back yard.

At least you won't lose any money.

Yep... I am in the 20-25% down. I am 41, so I have a minimum of 15 years left and realistically about 20 years left to work.

Not until inflation takes off and that $100 you put in the coffee can that could have bought food for the week can now only buy food for 2 days.

That is exactly the problem. People, CEO's included are taught to buy buy buy and live right now, never thinking about the long term. CEO's and sales people live for bonus' without regard for what the future holds. Hell, if you were a CEO and you got 20+ million in bonus' a year AND if you did mess up enough to get fire you had to walk away with "only" his $250mill, what would your plan be?

99.9999% of us would take the money and run.

It is the financial version of the run and shoot offense. Get it moving, get what you can, get out.

-Tim

Funny you mention the coffee can. We went to a party recently and were talking with some of our neighbors, The were telling me a story about the old guy who just left the party. He got into his little motor boat and headed off into the darkness across the lake toward home. As he left, one of the neighbors told me he did some work for the old guy, who tried to pay him for the work - with a handful of 1930's hundred dollar bills. When and where would someone get a handful of 1930's hundred dollar bills? In the 1930's, of course!!!!!

The guy told the old man that if his house ever caught fire, he'd better throw that mattress out the window before he did anything else!

(True Story....)

Of course, you could be like a friend of the family who died today from pancreatic cancer.

he was 54.

So, buck up men! it could be worse.

Another day, another month's pay gone

OK ... now THAT'S funny, I don't care what income bracket yer in.

There's always someone in a worse boat!

I am retired, with a kid in college, living on a pension and investment savings. My investments are worth 40% less today than a month ago. That being said, Matt's point is very well taken. If you have your health intact and your family and/or children are safe and happy you have things of greater value than most CEOs dare dream of. For better or worse, most of us share the same economic liabilities living in this current circumstance. However, having survived stage IV cancer, I know the difference between losing some wealth and losing more concrete assets. Preserving wealth is one thing. Preserving the fabric of one's family is something else entirely. As a society we need to keep what really matters most in sight.

Yeah my 401K is down about 25% or so on the year, bummer because it had just hit 6-figures . I try not to look at it that much, though. I did just increase my contribution, I figure if everything is that far down I want to buy more. Luckily I have plenty of time for it to grow (I'm 34). I really do think that perception will settle down and improve after we get the damn election over with, whoever wins.

Mitch:

Wait for some good heavy rains, climb up onto the roof of the shop, and take the plunge straight through the land surface and into the septic tank...

We're all in the same shitter 401k fund-wise at the moment =(.

Sorry, gotta dive into the rant ... both anecdotally and otherwise ...

My parents and in-laws were "depression babies". My father-in-law literally DID have coffee cans full of $100 bills buried in the orchard. His similar investment strategies saved him during Enron (they "only" lost a couple hundred K), and have preserved their estate today (down 10% or so ... incredible, given the current norm). My parents never believed in the market, investing their money in cd's ... "foolish" 10 years ago, but today? Brilliant!

Education ... America's political system is BASED on the common man being educated enough to participate in government intelligently. Research Thomas Jefferson and his concerns about the new republic. That level of education (formal or informal, it doesn't matter) has risen dramatically in the last 300 years. You are not supposed to base your vote on a candidate's skin color! Nor how hot his running mate is! C'mon people, we have a responsibility, and to shoulder it we must UNDERSTAND it! Not just listen to the f*cking media! Am I biased? I don't think so, but I DO spend my days teaching college Math and Statistics ... and open my Stat students eyes to misleading media reporting of statistics every single day! An election year makes my lectures easy ... "read the paper today?, let's analyze the bullsh*t!"

What happens in America still affects the world enormously... your vote affects America ... please learn something about the issues and the candidates' positions ... please vote intelligently ... /rant

I work in the media world ... corporate now, but for a few years, I was on a weekend ENG team for KLTV in Tyler, Texas.

Everyone should spend a few days following field teams from electronic or print media. Your eyes would be opened to a world of lies, deceit, sensationalism and back stabbing. I've seen sh!t you wouldn't believe.

If it has the term "news" associated with it, chances are it's more "opinion" or "bias" than "news".

/rant

Oh and Mike ... old man Mike ... thanks for the "pick-me-up"

OK .. so lets look at this a diferent way ...

The 401K is taking a dump.

What if I were to take a loan against the 401K, short term loan (24 months), 7% interest (actual finance charges are 7% of the loan value) and pay off debt?

I am seeing this as it costing me 7% over 24 months to pay off multiple debt like a car, 2nd mortgage, small credit card, etc. This 7% doesn't appear to help much in the way of any single finance charge (but collectively it does) and it does free up cash flow.

And the 7% is a fixed amount that I'm losing, I realize, but it's a lot less than the 30% I've already lost in value. Am I seeing this wrong?

Some of you might see the market rebounding. and I do too. But not within the next 24 months. I think we are here to stay for a while.

Howdy,



I'm _far_ from a financial expert. I'm very likely wrong. But here goes anyway...

Taking a loan against your 401k turns your current shares into money... I.e. they sell them, and you actually realize the paper loss they're showing you.

Instead, if you just leave them alone, you have the exact same # of shares in whatever funds you did before, they're just currently worth less than they were. If you assume that this isn't a permanent downturn and that the economy will recover to the former level in say five years, their paper value will increase back to where it was and all you'll have lost was some hair on your head due to worry.

Mark

The Fed came out and lowered interest rates yesterday to try and free up some money for loans. It will take some time to work through the system, but it seems like you should be able to get a good rate on a short term loan assuming any bank wants to loan money to anyone. My mom just borrowed some money against her house (she has 70% equity, so it's not too risky) to pay off her car and credit cards. For her it was smart because her car loan and credit card interest rates were much higher. She is now holding onto an extra $300-400 a month, so short term it's good. However, she effectively took her short term high interest debt and traded it for a lower interest longer term one. Unless she pays it off early, I'm sure she will end up paying more $$$ to interest over the life of the long term loan. However, she has more short term cash flow. For her it was smart because she needs the cash flow to cover the raising cost of food and buy heating oil to heat her house this winter even though long term she will be worse off.

Mitch, your situation is different with a short term loan. Come up with a basic plan of how long it might take you to pay off these debts as they are and be realistic, then use some of the online loan calculators with amortization tables and compare what you pay in total interest and monthly payment to what you will pay for the short term loan. Depending on the rates you might be able to come out ahead in the short and long term, but most of the time people are trading one for the other unless they have crazy amounts of credit card debt or received really bad interest rates. Then you have to decided which is better for your circumstance. When you are armed with the rough numbers then go talk to the financial adviser at your bank. If your armed with the numbers they can't push you into a loan that hurts you and gives them the cash flow. It's just like buying a car, you do your research before you go to the dealer.

I'm 29 (young and stupid), FWIW and no financial adviser. But, I don't see how doing your homework and being armed with information of your own can be bad as long as you are realistic about how much you can pay toward your debt each month. It's how I figured out what I needed to do to buy my Camaro (started saving in 99 while in College) and it's how I figured out what debts to pay off first so my wife and I can buy a house next year when the market should be low. I like using http://www.bankrate.com/brm/mortgage-calculator.asp for a loan calculator. You can change the interest and term to what ever you want, so it can be used for credit cards, car loans, etc. The only difference is that the default numbers are set up for home mortgages, but they are easily changed.

Re the media, on any situation in which I've had inside knowledge, the biased or inaccurate reporting has been astounding.

My acid test is to apply my belief that NOTHING is black and white. Regardless of my own biases, if I'm not hearing "both" (at least) sides of a story, and some apparently conflicting information, then I'm not hearing the whole story.

I'm no expert either ...

But I thought they were just taken out of play ... in other words, you were getting no dividend or growth from them.

I'm a little closer to this than most of you; be glad to add some color in person. Waxman put up a slide that showed his annual earnings over the last several years. Fuld's testimony was that the majority of his compensation was in Lehman stock. Fuld is a self admitted "Lehman Lifer" having started at the company in the late 60s. Helped build a formidable company until the company's actions and the weight of market dysfunction around mortgage lending blew it up.

Astronauts, surgeons, quarterbacks and CEOs typically are "big" personalities; it is part of what makes them great. Doesn't mean they're not worth what they're paid. Do they make more than you or I? Probably. Anything wrong with that? Probably and usually not.




Certainly a generalization, but probably fair.

In the late 1920s on a few percent of houses had mortgages on them, today only a few percent don't. Your great grandparents probably would not have borrowed money for anything. Today's college graduates will use credit for fast food.

You are dead on that people are taught to consume and use debt to do so. It is a great failure of our public education system and our society. It is our collective fault for putting legislators in office (PTA, school boards, city, state, federal) that perpetuate deficit spending.

Everybody comes to their own decisions; I'm a saver by nature and have sacrificed other lifestyle choices to make contributions for my retirement. My current DD has 173k on it and will be on the road for several more years. Only debt the wife and I have is the house.

I didn't get there overnight and I ain't going back.

What's funny is part of the market issue is the concept of "mark to market." The reason you know the value of your 401(k) or any other investment is that there is a closing price to value it. As long as there is a bid/ask you can ascribe value.

Borrowing within your 401(k) reduces the amount investable but also creates other issues. If you separate from the company with an outstanding balance and can't pay the loan back, I believe it's treated as an early withdrawal subject to ordinary income tax as well as a penalty. Should be very low on your list of ways to raise capital; should probably get more familiar with Ebay first.

Yes, a 401k loan simply takes the money out of the market. The funds "borrowed" will not grow or shrink in value. The interest goes back into your account.

When things are good, a 401k loan is not the best plan IMO. When the market sucks, well.... I believe the money I yanked from my brokerage account 2 weeks ago and bought an M3 with is better invested now than then. Even if I overpaid 10% for the M3, I already broke even.

YMMV