Sunday, June 03, 2012

Stagnating and Slipping Back

I remember in 2001, when I first began homeschooling my son, he was kindergarten age, and we were setting out on one income. Despite this significant change to our household spending money, we were able to enjoy a vacation every year, and take inexpensive plane trips to see friends and family. We enjoyed low property taxes, decent food prices, inexpensive utilities and services, low out of pocket insurance costs and premiums, and a dinner at a restaurant twice a month.We earn more now,  and yet we can no longer swing those special vacations, we almost never eat out, and our food budget has become a juggling act. Our real estate taxes more than doubled with bloated housing values, and the city services and utilities have all gotten more expensive. My out of pocket expenses for medical testing and diagnostics has greatly increased. Insurance premiums are hefty, but you pay it, because you need it with the increased medical charges.

The drain on our money has been gradual; it didn't just happen during the recent recession. I haven't looked at the numbers, but I could swear we are worse off, as far as disposable income, than when we started a one income family in 2001! We are blessed to have employment and a roof over our heads, but even that isn't guaranteed these days. One smart thing we did was to pay off our mortage in about ten years. We plan to live in our current home forever, so it was worth it for us. We'd be struggling if we had a mortage on top of everything else. We'd do it, but it would be just scrapping by.

I pray something will change soon for all the families in America. I'm not bitter, and I love my life. It is the simple things in life that are important, but if we are struggling, what about people who earn less, or haven't the time to do extreme household budgeting? It takes a good amount of time and research to live frugally, and if you are working to keep your head above water, you don't have time or the energy to look for ways to cut corners. Many people are resorting to second jobs to get by. So much for time with your family.

I look back at our disposable income in 2001, and I think we were spoiled; it was nice while it lasted. It's amazing how quickly the new normal becomes an accepted part of life.

Now that my husband and I was in our forties, we are planning retirement and thinking we'll really need to save every bit we can now, to survive in the future.

My advice is to live way below your means, and sock away as much as you can for the future. Be careful about purchasing a house, as the market prices for homes are still bloated in many areas of the country. You don't want to purchase a home that will devalue. Get out of debt, and stay that way. Cut corners and make it a way of life to cut expenses in every area of your life. Cutting back small percentages here and there all add up to big savings. Personally, I think personal wealth will continue to decrease before it gets better. Our current economic state is still lousy. Our country has big debt, below-average GDP growth. and slow job growth.  When we have an upswing in the economy, and we will because these things are cyclical,  that will be the time to kick your savings into high gear.  Save, save, save, or the prospect of eating dog food in retirement might not be too far fetched.


Maureen Sklaroff said...

I don't know if it is something about being in your 40's or if you're just spot on, but I totally agree. I think some of it is just getting older. I can remember when there were dollar days for movies, now one theater near us costs $18/person if you don't go to a matinee. When I was younger, I never bought used stuff, thought it was yucky and tacky. Now, used things have charm and so forth, partly just because they aren't available anymore. Plus quality has just gone down hill. My 19 year-old, however, doesn't seem to have learned from our mistakes and considers buying used to be tacky and gross. She won't even get her books from the library. So I don't know if there is just something about being young that makes it so a person can't absorb that there aren't any money trees or what. All I know is that I sure have changed my approach to spending and my attitude towards unnecessary "bling".

Alexandra said...

Wisdom in age, definitely. The landscape looks quite different looking half way back and half way forward(God willing).

Yep, crazy prices now. We don't even go to a movies anymore...just wait for it to come out on DVD(Netflix).

Eddie said...

I know what you mean. We earn twice what we had ten years ago but the rising cost of everything means that we have less disposable income than before. It's a bit disheartening sometimes.

Alexandra said...

It is disheartening. I don't know how those at the poverty line are surviving.

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