All is takes is a quick glance around the internet to see that the financial outlook these days is not as rosy as it has been for most of this decade. The doom and gloom crowd is predicting a full blown recession, while the more optimistic folks say that there will just be a bit of an economic downturn. Nobody is predicting 2008 to be a booming year for the dollar, housing market, or finances in general. So for all the personal finance people out there, does all this economic rumbling change anything about the way you spend or save money?
For us, I think we’ll keep right on doing what we’ve been doing. I don’t see us hiding gold bars under our bed anytime soon (but I can’t tell you where I live, in case we change our mind…) or selling everything and moving to Australia.
We’re going to keep plugging away at our emergency fund, and keep focusing on our main financial goals for 2008 (we just put $1200 into our HSA this week, which is a good start toward the $5800 allowed for the year). We’re going to keep paying extra principal on our mortgage every month, working towards our goal of paying it off by 2018. We’re going to keep paying off our credit card every month, using our new online bill payment software from Mint. We’ll keep the bulk of our assets in the stock market, because we’re in this for the long haul – most of what we have is in IRAs and can’t come out for more than 30 years anyway.
When I read about economic instability, the sagging dollar, and the mortgage industry mess, I’m very glad that we worked so hard to get ourselves out of debt over the last few years. I’m glad that we got a fixed 6% mortgage when we bought our house, and aren’t stuck with an ARM. I’m glad that we didn’t refinance and take cash out since we bought our house. And I’m glad that our frugal habits are so ingrained that they are second nature to us. It provides a sense of comfort, knowing that we can get by with very little.
I hope that 2008 turns out to be a good financial year. Nobody wants to see the stock market decline or the dollar dwindle any further (except maybe all the people with gold bars hidden under their beds…) But I’m comfortable knowing that we’re on the right track for long-term success, and that our living expenses are currently well below our means. So we’re just going to stay on the same course we’ve been on for the last few years.
What about you? Does all the financial pessimism in the news make you nervous? Are you changing any of your short-term financial goals or plans because of the current economy?
Kelly says
Well, I live in France, so any downturn in the dollar is good for me when I visit the US. But this economic recession has definitely made me very wary of moving back to the US. We have a tentative plan to move back to the States in three years, but I’m not sure that it won’t be a bit longer.
Jessica says
The money situation does make me nervous and we are just trying to survive. I would love to start an emergency fund but bills won’t allow us right now. Good luck with your emergency fund and I hope 2008 is a great year for you!
Bitsy Pieces says
Our big goals haven’t changed: We’re still trying to save for a down payment on a house and future retirement. I’m ashamed to say that I hope to take advantage of this downward spiral of the housing market… we’re hoping to find a great deal on a house in the next 1-3 years. The only real change I’ve made to our financial goals is cash… I’m trying to build our emergency fund bigger (right now it covers 2 months of expenses). I’m trying to build it so it covers 3 months comfortably, or 4-5 months if we pared down to the minimum.
H_Roarke says
I love this down market. I moved a lot of my money to cash in the fall and the next few months are a great buying opportunity…so yes, I wouldn’t mind seeing the market go down more.
Kelly you don’t need to worry about a recession if you aren’t moving back to the U.S. until 2011. The recession will be long over by then. They rarely last longer than 6-12 months. We are already through 2-3 months of it, so it won’t be an issue for you.
If the recession isn’t over in your 3 year time frame (unlikely) it won’t matter where you live, because it won’t be a recession it will be a depression and living in Europe will not protect you.