October 09, 2007

One more life question for ya... If you lost your job today (like our REIC friends), would you be OK? Are you prepared?

Are you one of the millions of no-savings debt-monkeys running around America and Europe tonight, maxed out to the teeth, living beyond your means, and assuming the good times will last forever?

Or are you an HP'er?


Anonymous said...

YES, but of course I would not be happy about it.

~200k in retirement savings

~70k in savings, checking & CDs

Car is paid off

I rent so my housing costs are much lower that the modern FB home"owners"

I am a reservist & can opt for an active duty tour to cover me in the short term with income or just stay part time and volunteer for more temporary duty.

Anonymous said...

No i am not

Anonymous said...

believe it or not, you can be both. with the decline of the dollar, job pay freezes, etc. you did not have to play atm with your house to be in trouble.

guy n. cognito said...

just attend school full time instead of part time, live off savings and try to secure a Sallie Mae loan. if things got tough, maybe cash out the 401k. no debt to start with. life goes on, Corky.

Anonymous said...

I'm set. I have Twenty months of rent banked, plus a little extra for living expenses. I could live on Starbuck's wages.

I was in this situation after 91 as well, got laid off. Actually SAVED money while on unemployment and working part-time.

Gotta be prepared. Tired of debt-slaves beeching about always being behind. That is a decision for most of us. True, some are blindsided by medical bills or something, but most of us are 'blindsided' by a taste for TOO MUCH CONSUMER CRAP!!! (Sorry fer shoutin'.)


Brian, aka B

Now shorting the US economy.

Anonymous said...

I'd be devastated for losing the job but I would have enough to live comfortably for at least two years (more than enough time to find a new job.)

I'd like to complain about something -- I keep seeing realtors say "don't think of a home as an investment" whenever I say are prices going lower. What they cannot seem to comprehend is that I am not viewing it as an investment. I am viewing it the same way I view a movie DVD that costs $30 when it comes out and $10-15 within six months. I want it now but having it now is not worth it to me if it means that much more money.

smitty said...

no, not one of those folks. no debt and $$ in bank. not rich but unemployment would cover me adequately and I could actually even save some of it.

yuccatree3 said...

I'm definitely an HP'er. I've got six months of emergency savings plus my retirement savings. The only debt I have is my mortgage and I will soon pay that off (this Christmas, in fact). The only things I don't have are "twenty acres and a mule." Looks like I need to become a survivalist but I don't have that organized--yet....

Ed said...

I have 2.5 years of income sitting in the bank. Yep I think I'm OK.

Samantha_Stephens said...

If I lost my job today, (professional broom rider) I'm quite sure I would continue in financial security.

We've always lived BELOW our means and saved all our lives. No mortgage and zero debt.

Yes, Darrin and I would be alright for years and years and years.

Anonymous said...

I'm one of the no-savings monkeys.

But I don't have crushing debt. I don't own or "own" a car. I certainly don't own or "own" any real estate. So, my assets are only going to increase and my debts are only going to decrease.

I woke up a few months ago. I am getting rid of all my credit cards and other pathetic and emabarrassing and sizeable (but thankfully not crushing) debts. Then I start saving.

In a few years I'll be able to buy real estate at a decent price when decent prices exist.

I spent all the money I had (and all the money I didn't have) chasing women, drinking booze, and smoking drugs. Oh, yes, and a few thousand more on poker.

Chasing women all the time is a very expensive activity. So is being a drug addict.

What can I say? Some of us remain as arrested adolescents for longer than others.

Love the blog. It is great stuff. Keep it up.

bush made america unsecure said...

I just watched Ron Paul LIVE on TV from the Dearborn, Michigan republican debates.

Ron kicked butt!

My friend even said yesterday, "Have you ever heard of Ron Paul?"

I told him that Ron will win. I'm ordering a few dozen yard signs and bumper stickers. I saw my very first Ron Paul yard sign last weekend while driving east of Lake Michigan. Go Ron go!

Anonymous said...

I am a RE/MAX agent and obviously am not making what I was in previous years. We are OK though because we can live off of the positive cash flow we have from our rental properties, and I started a used car lot recently. While I won't be making many commisions the next few years, it will be a great time to add to my rental portfolio when the housing market hits bottom. I am one of the few realtors that support this site. You can always make money in Real Estate. You just do it in different ways in different markets. The banks are being very open minded with values on short sales lately. I think I will wait another year however before I begin acquiring properties again. I don't feel like catching a falling knife. I'll let it hit the ground and just pick it up.
Bottom Feeder in Philly

Joel said...

I'm an HP'er but I've only been out of college for a year. So after paying off both my wife and my student loans we've only managed to save up about 12k. I feel sorry for the kids graduating 2 years from now that'll graduate straight into a full-fledged recession.

Anonymous said...

It would be a little tight, but I'd be ok.

1) I'm a public servant, so the odds of being laid off are unlikely, and if I were laid off, I'd get a really good severance package. In addition, since I've had superior performance ratings four years running (and 5 out of 6 years), and am still young and can't receive a golden handshake, I'd be one of the last people out the door.

2) I have about 9 months worth of living expenses saved.

3) I have made enough additional principal pre-payments on my house that my bank will allow me to not make a mortgage payment for a year before starting to look for me. I'd be accruing interest, of course, but if I skip a payment or two, it's not bad.

4) I have a variety of skills. In my original professional vocation, translation, there is a world shortage of qualified professionals. I'd just find some work there. Barring that, I could go into general management, or even skilled labour.

Only debt is a manageable mortgage.

Anonymous said...

This is my first year being debt free. I saved $15 k this year. Bought a bunch of precious metals. I think lots of folks will lose their jobs when this thing finally unwinds. They are still having their cake and eating it too in most cases. it doesn't matter now, when when it does- it's gonna matter a lot!

Anonymous said...

We would be okay (mom, dad and 3 elementary age kids). We have 2 years of living expenses saved and live very modestly (we live off half of our net take home and invest/save/donate the rest)

We are debt free except for a home mortgage.

We have never been into all the fancy gadgets and toys, but we do love to travel, so that would be the only thing that we would miss if unemployed.

getyourselfconnected said...

More rate cuts on the way seem to be the reading of the FOMC minutes today. Inflation is well contained was the FED's stance. Checking the Walmart and Kimberly Clarke news its my position that if you want to buy some useless china crap your kid does not need, prices are falling and we have deflation. If, however, you need to collect your kids actual crap or wipe your own butt, we have inflation running wild!


AlexA said...

Over $150K liquid and I owe $8K on a boat. Yeah, I'd be fine.

bitterLArenter said...

I wouldn't be happy about it either, but on unemployment I could totally pay my rent and probably even bank a little if I didn't spend like crazy. I have about a year's worth of net income in the bank, no credit card debt or car payment. Just waiting for prices to drop here in LA so I can buy a place. I figure I've got another year or two to go.

Anonymous said...

very little in savings, but live within my means - the wife and i are paying down the little credit debt we have (about $4k). neither of us makes a lot of money, our combined income is around $70k. if i lost my job, we would have to live a very spartan life, but we could get by. we're renting, have about $15k for a downpayment and trying to save more for when things get cheaper (we're in Pinellas County, FL).

i am in no hurry to get a house the way things seem to be headed now, she is anxious and is looking to make a nest.... i am trying to gently let her know that housing prices still have a ways to go down. i refuse to buy into negative equity.

Anonymous said...

If you're low on funds, you might consider demanding your taxes back from the IRS.


Anonymous said...

I sold my houses, one at the peak! Me and my girlfriend have 7 years income in the bank, to take us to 57 years old. Then my 401K savings kicks in (Over 600k now)By than, who knows how much it will be.

We saw this coming and did what had to be done to get ready.

During this time, when I felt all alone, I'd just click on your Blog and read. It was comforting to see that I wasn't alone.
In fact I want to thank all of you guys out there who wrote in to share your feelings thoughts. I believe they all helped me to make the right decisions that have gotten me to where I am.

Again, thanks so much!
Lee from Irvine

Anonymous said...

We don't have a huge amount saved, roughly 100K. But we have no Heloc, no car payment and a small mortgage (paid up in 9 more years ot less).

We'll survive.

Anonymous said...

In a deflationary depression environment now one is safe. The rich become poor and the poor die.

Just read John Steinberg's book, Grapes Of Wrath. The book describes some dire conditions during the great depression.

Money in the bank, or 401k's are not safe. I often ask myself what is? My grandfathers words echo in my ears, that only gold coins bought you food during the Second World War.

No, I am not prepared. I hope that the drop is very gradual over 10-15 years.

I would consider moving to Europe or to countryside.

Joe said...

Without a change in lifestyle, I could last about two years without a job. If I decided to live like I did in college, I could probably hold out for five.

I'm in my late twenties and I live in a paid off house in a cheap area of the country. Of course, if the whole financial system crashes I'm as screwed as everyone else is.

Lost Cause said...

I don't have a job.

Anonymous said...

i have 900k in the bank and rent a room.

getting canned would be a nice vacation right now.

Anonymous said...

Just got some monthly financial statements...
Cash: ........ $245K
Stocks/Funds:. $250K
401K:......... $420K

And if I got layed off, I'd receive 30 weeks' pay, although this is an unlikely outcome in my field.

Anonymous said...

Phuck no, I plan to go with the amereican dream. NEW Credit cards every 3 months, and keep the dream dreaming. The banks have sivs, and off balance sheet scheitt, why should I be any different?

Everyone knows this system is built on debt, debt, and more debt. Party like its 1999 all over again already.

Anonymous said...

No, I wouldn't be OK, if I would lose my job today. My family of four depends on my income alone now, until fall 2009. We have saved something, but not enough in dollars beyond four months (I would hate to liquidate our Euro CDs that we started for a downpayment in 2010). We will try to save more, to be able to withstand a possible downtime: no vacations outside US/Canada, no cars or big appliances (we're renters), until summer 2009.

Karen said...

Yes, I am very well prepared with about $275k in liquid assets, and another $500k in retirement funds. I have no debt, none, nada, and I am not exaggerating.

Anonymous said...

Interesting question.

I read a book called "The Millionaire Next Door" several years ago and I adopted a frugal lifestyle for myself. Interestingly enough, I don't feel at all deprived. When you take a step back and realize how much worthless stuff you buy, eliminating that really does very little to adjust your standard of living. And the natural consequence is that you are able to bank far more money.

As a result, my cash reserve alone (that's not including CDs) would allow me to survive for 9 months. If I then have to tap into my CDs, I could extend myself for a further 15 months. If I then have to dip into my stock investments, that is a further 12 months. And of course, I have a 401k to tap into as a last resort.
Oh, and I should also mention that I have been with my existing company for 15 years, so I have about a year of severance should a lay off occur.

So no, a job loss doesn't concern me. And quite frankly, I have no compunction about moving and re-locating to find new work. I doubt I would be unemployed for more than a few months at most should anything dire happen.

One thing I want to add: I do enjoy reading this blog but I wish the dialog was a little less caustic towards home owners. Let's face it folks; everybody wants to eventually own a home. I am not trying to be demeaning to anyone who owns their home or decides to buy one. It is simply a matter of degrees. If you can afford and can maintain a stable lifestyle, by all means, buy a home. If you are in one of inflated bubble zones like California or Florida, then perhaps renting is more apropos.

In the end, I will eventually buy as well.

Anonymous said...

Yes, I am prepared for any unexpected events with a cash reserve to hold me over for six months. I'm about three mortgage payments away from having my house paid off and then I will be completely debt free.

I may not be prepared for a catastrophic (apocalyptic?) event, and in that situation, I think it is important to have a network of like-minded individuals who have some sort of item or skill that can be bartered for. Can I exchange my blanket for some water? How about some silver for fixing my toilet? I'll give you some cigarettes for your bible. I can't imagine, much less prepare, 100% for that situation.

I don't expect an apocalypse, but I can see the flattening and then downturn of the market. I am not willing to short the market, but ideally that is what I'd do.

Anonymous said...

Also, I don't consider my to be an "HPer", just someone trying to make the best decisions possible with what I have available to me. What some may name as "HPer" is just another name for get rich slowly strategy.

Anonymous said...

I could survive 15 months with no income.

alex from russia said...

I am survived in a 1998 crisis in Russia. I want to share some experience.

Banks sucks in serious crisis. You simply can't receive cash when and where you want it.

Houses and apartments prices fallen to 35% of pre-crisis price.

Time to recover was between 1,5 and 2 years.

Now i have a 6 month salary in cash and no debt. I am ready? you cannot be sure. Never.

j in weho said...

I already have a plan. I got the pink slip during the dot.com bust so I'm ready. Cheap rent controlled rent, no debt, $50K in savings (not including retirement). I may have to lose my fancy car when the lease runs out but I live in an urban environment in CA so it's easy to get around on the bus if it comes to that. In fact I might be better off without it until I get a new job. I take the bus sometimes already. Anyway, I'm keeping the resume current and toying with the idea of getting an MBA in Shanghai where the cost for a top-notch school is less than 1/2 the cost of a US school. Plus I'd learn Mandarin.

Dootsen said...

Trying my best. Have 6 months of gross wages in emergency (i.e. job loss)savings plus about 5 grand on the side for unexpected non-critical needs. Have 150k in long term investments (I'm 37 and expect to retire in 30+ yrs). Both the hubby and I are life insured with written wills. We are teaching our daughter to out away half of her allowance and watch it grow. Paid off car, which we are in the process of selling because we don't use it. But we do have a mortgage. And our house is over 100 years old and needs some renovation. I feel decently secure, but I really don't know what's coming round the pike. Just trying my best not to be a sucker.

Anonymous said...

I could go about 5 years or 10 years if I had to dip into my retirement savings.

On the other hand if I couldn't work at all I'd go live in central America, SE Asia or somewhere cheaper. Could probably stretch that 5 to 10 years out to 20 to 30 or 50 with some decent investments and cheap living.

Anonymous said...

I could only survive about a week

Anonymous said...

60k Savings - Lost Job 3 Months Ago - Still Looking - This is only possible BECAUSE I RENT - if I had a big mortgage to pay - my goose would be cooked! Thanks without this blog (been reading for 3+ years now) I'd be a mess....

Anonymous said...

Everyone would be OK. As soon as you have no income you qualify for "FREE" health care from the gubermint, subsidized housing, food stamps, discouned utilities. You also have no expenses as far as gas, clothing, etc since you no longer go to work.

Losing one's job in today's socialist America is about the best thing that can happen.

Sixpercenter said...

$1.5M in liquide savings. Money begets money. I've always been a saver.

I work a second job part time that I can readily turn into a full time job should my primary employer go belly up.

LauraV said...

Both my husband and I are ready for this "Great Correction" (dubbed this by my DH), doesnt sound so depressing, so I will call it this from now on.

If we had to, we would be able to survive fine for while without jobs, and thankfully we have no debt. We have about 150k liquid money that we can get to in case of an emergency, with another 200k in CD's, IRA's and a 401K if things got really bad. We also have some silver eagles and silver 50 balboas, which would be handy to have at some point.

If my DH lost his job and couldnt find another one, at least we know we wouldnt be homeless - but things would have to be extremely dire for that to happen. I think it's wise to plan for the worst, even if it never happens.

Thought I would share what I noticed yesterday in San Francisco:

I love the city - I took Bart, then walked to a seminar in the financial district yesterday-actually, right across the street from the TransAmerican building.

When we had our lunch break, I went for a walk over to Union Square. I worked in the city for 5 years, up to 1997. I wanted to reminice that hustle and bustle feeling at lunch time in the city...well, it wasnt the same feeling. There were very few people walking around,it was strange, almost shocking.

The Square was always packed-morning, noon or night - it use to be nearly impossible to walk a few steps without getting bumped by the mobs of people rushing around. Now, it's almost deserted. And I don't think anyone even bumped into me the entire time. I also walked through the Crocker Galeria and noticed a lot of empty lunch tables up on the third floor. This place use to be so busy that people would have to eat lunch on the Galleria steps outside because all the restaurants were jamed packed. Another thing I noticed was that, most people walking on the street were not using their cell phones...they were just trying to get where they were going. Things have changed here in the city -it's nothing like during the dotcom boom, when it seemed everyone on the street were using their cell phones all at the same time, and everyone carried an arm full of department store shopping bags.

A good friend of mine who lives in SF just told me a lot of companies are laying off - I would have to say it must be true because the streets of SF look a lot more vacant these days.

cobra2411 said...

I'd be forced to have to get a job in 6 or 7 years...

Anonymous said...

If my wife and I BOTH lost our jobs at the same time at different companies in different industries and didn't scale back and lost unemployment checks, our cash reserves would last about 6 months as of now (still saving). Never mind retirement. And, yes, we bought a house in 2005 in a market where peak turned out to be late 2006 or so.

Anonymous said...

I wish I would get fired.

I'm ready.

I work 50-55 hours a week and take a lot of heat. The stress level is high. (I’m the Western Hemisphere Director for an international corporation, catering to Energy gathering and Transmission.) Although it would not be impossible to replace me, the pickings are slim to none in finding a qualified replacement who has the skill set and responsibility level to do this job.

Fortunately, I live in Phoenix, one of the best places on the planet to live, and flipped house on the side from 2000-2005. Made a killing.

I paid off everything including my primary residence, cars, vacation home, cabin, boat and credit cards.

Then I bought CD's and invested in the stock market; mostly energy and foreign stocks.

Currently we live on my wife's paycheck (56K) and bank mine. We have remodeled the houses, resurfaced the pool, installed solar electricity and have a nice garden growing in the greenhouse. I could live without any additional income for decades and still leave a sizable sum to my heirs.

We are pinching pennies and having fun even though we don't really need to.

It’s just as much fun going to a High School football game than spending 400 dollars a game to go see the Cardinals. We prefer watching the Suns on TV than the hassle of driving to the game and finding parking spaces. Vacationing at home to me is superior to hotel rooms and restaurant food. Taking out the boat is more fun than a cruise.

It’s just as much fun buying an old junked car and fixing it up on the weekends than driving my Mercedes that is now just rotting in the garage. The 1976 Harley Sportster with a little TLC, still runs like a champ.

I max out the 401K and GVUL at work, flow to my ROTH and CBA accounts and accumulate gold.

We do other fun money saving stuff like making our own laundry detergent, installing green light bulbs, over-insulating the house and installing double pane windows and zeroscape landscaping. I clean my own pool and pickup the house before the cleaning ladies arrive. I cut my own grass, trim the trees do all the repairs on the house and build my own computers from scratch.

We don't have to do these things and aren't really that carbon footprint conscience; it just is more fun to be a cheap ass miser than wasting money on unnecessary luxuries.

My employees across the boards might not agree with me because I run business the same way, however, my region generates sizable profits without spending them which makes the board members happy.

So fire me, please fire me, go right ahead. Good luck with that.

It could happen, I am hopeful.

Otherwise, I have 15 years to retirement.

Anonymous said...

I have 4 years of cash and cash investments at my current burn rate(my family lives way below our means). I could make it last 10 years if need be. This does not include my retirement savings, stock investments, apartment complexes, etc. I do have a mortgage (only because I can earn a higher rate of return in other investments) but no other debt. My business ventures do have debt but I do not personally guarantee that debt.

So, I have no worries but I do worry about the future for my children should the sh*t hit the fan. They will probably do ok due to the momentum I have built up.

A lot of people on this board work very hard to avoid debt of any kind, which is noble and not necessarily a bad thing to do. There is good debt and bad debt. Bad debt is buying leaded chinese plastic cr*p at walmart with a credit card and not paying it off. Good debt is a debt that allows you to make money off of it.

Anonymous said...

I have ~$120K in cash, PMs, ETFs. The cash is liquid, in Canadian and US savings accounts.

I actively trade options (3-6 month contracts) with another $50K. That earns me $40-45K/yr [yes, I'm a bit risk averse because a slew of times, I sell the option, months before expiration] so when I'm laid off, I plan on living from my trading income between jobs. Options are appealing mainly because the maximum loss per trade is predetermined and one can hold a larger exercisable position w/o too much cash invested.

My intention is to be able to put some 50% down, after the RE crash, and be able to pay off a slim mortgage (less than comparable rent) for a 15-20 year term.

Anonymous said...

Just read John Steinberg's book, Grapes Of Wrath.

The one by John Steinbeck is pretty good too.

Anonymous said...

Funny you should ask. I just laid off.

Going motorcycling around the world for a couple years.

Anonymous said...

Me, I am a true HPer to the core.

Currently making about 280K annually for the last 3 years. Having 200K in CD, 60K in saving at 5% earning int. rate, 50K in checking which I am about to move most of it into saving account. Two cars in the family both old and paid off. The house will be paid off in 12/2007, that is 3 more months of mortgage payment (loan amount of $100K, bought new in 1999's, 15 yrs fixed at 7.65% interest rate. It takes me 8 and 1/2 years to pay off the house instead of 15 years). I am ready for a recession, an economic depression, or a job lost for the next 5 years.

Yup, saving does help a person...

Anonymous said...

I have over 2 years of income sitting in cash. But if I did lose my job, I'd have another one in a few weeks pushing a broom if I had too.

But I guess us HPers don't care about impressing people. that's why we actually have net worths.

Anonymous said...

I am a realtor working in the western suburbs outside of Chicago. I must say that I am disgusted by NAR, I am disgusted by housing prices being so high. I have been checking out Chicago condo's recently and I should tell anyone thinking of buying to wait atleast 6 months; there is a glut, nothing is selling and nothing will sell until prices come down 30% or more. This is as bad as it gets.

charlatan said...

what job? i bet for a living and here in the uk there is no tax payable on gambling income. also since my income doesn't count as "income" when we have kids the government will give us more money to help look after them than it costs to keep them thanks to their mad tax credit scheme (this does depend on my wife staying in her part-time min wage ($11 per hour) job but it is pretty recession proof anyway).

homeschooling the kids will help to keep me apart from the worst of the system and the the kids will learn more in a hour with me than i learned in a day at elementary school.

the only way i could lose my job is if the government banned it (which effectively is the situation in the us: you can't access the site i use from a us ip address apparently) which isn't on the cards. in that event we have 19 years worth of rent in liquid assets anyway.....and rent shows no sign of increasing at the moment.

bob said...

"I am a reservist & can opt for an active duty tour to cover me in the short term "

Ohh, clever! So much better to be shot at in Iraq (through multiple extended deployments) than paying a mortgage in the USA.

Congrats on your financial situation, though.