The Hustle of Sistah Ant

Oh yeah.  This is a recession.  It’s getting ugly out there, folks. Governments are feeling crunches.  I read one article that said a few states only have enough in their unemployment funds to last for a finite amount of time.   This is what I’m telling myself in order to be proactive about any hard times to come:

Keep Investing
And the stock market averages are constantly in the red.  I already know what I want to do with my next paycheck - buy more mutual fund shares for my IRA!  The price per share is as low now as it’s ever been, so I can get more for my money.  

Keep Saving
I also want to shovel as much as I can into the My Own Home fund. You don’t know this yet, but I’ve been in touch with a realtor, and Mister Ant and I have gone to look at a house.  I know, I know - I’ve been grousing about how I shouldn’t buy with my unstable income.  But I couldn’t resist.  The picture pulled me in.  And don’t worry, we didn’t put in an offer.  I just wanted to experience viewing a home as a prospective buyer.  It was fun!  When the time comes, we are going to be so ready.  In any case, the more money there is in the My Own Home fund, the better, both as a backup emergency fund and as a nest egg should the need not arise to use it in place of lost income.

Keep Controlling the Spending
I’m being extra conscientious about energy use, since our gas bill goes up in the winter, and the nights are cold again now.  I’ve read suggestions to have the heat on during the day and turn it way down at night.  I find that stupid and I do it the other way around.  We turn the heat way down and let the sunlight in when we leave for work, and then turn the heat back up to about 68-70 when we get home.  We both like it hot, so that’s a real sacrifice.  We keep plenty of blankets around.  I’m also buying lunch, and ordering delivery and take-out much less often.  It’s a two-for-one deal to cook at home, because you save money on food, and you warm up the place while you’re cooking.  I’d gotten lax when I started making more money, but I’m using more discipline lately.  I want a new waist-length peacoat, but I’m not in a rush to get one - the 3/4 length wool coat I have is good enough for now.  By saving in these ways, I don’t feel so guilty about the things I do spend money for, like the new Toni Morrison book I ordered online the other day.

Keep out of Debt.  Period.

I don’t have credit card balances, and I aim to keep it that way.  I don’t put anything on my cards that I can’t pay off in one billing period.  If I don’t have the money, I can’t buy it - cash or credit.  Not having balances means less monthly bills.  I can definitely get with that.

That’s about it.  Keep investing.  Keep saving.  Keep controlling the spending.  And, keep out of debt.  Period.

That’s all.  Just vote.  If you care about your money, then you care about your economy, so you need to care about who’s running things locally, statewide, and nationally.

Handle your business.

I am STILL looking for full-time direct employment with benefits almost 11 months after I was laid off from my real-estate based company.

Recession 1, Sistah Ant 0

At its worst, my IRA lost at least 30% of its dollar value within a few months of buying into my current long-term mutual fund.

Recession 2, Sistah Ant 0

I bought some more shares of my IRA at a cheaper price.

Recession 2, Sistah Ant 1

I can afford to move into the house I’ve been dreaming about owning, because my increased temporary income has helped me save.

Recession 2, Sistah Ant 2

It’s not a great time for me to take advantage of today’s interest rates because my employment is unstable.

Recession 3, Sistah Ant 2

Things are getting hard for people with lots of debt, but I paid off my credit card debt back in February.

Recession 3, Sistah Ant 3

This thing ain’t over.  I’m still fighting.   Just wait ’til I get a job.  I’m gonna kick this recession’s ass.

Spending.  Spending.  Spending.

She’s a spending machiiiiiiiiine - watch her get down, watch her get down, as she do do do her thing… with a debit card.  To the tune of $234.26.  In one weekend.  That’s a lot for me.  What’d I spend it on? 

A housewarming card and wrapping paper, gas, eating out three times since I was out all day, an oil change, wiper blades, auto floor mats, a car wash, hair products, and the movies with Sistah Beginner.  I made it a priority to take care of my car.  The other stuff was incidental.  I actually did shop - I was looking for a good winter coat, since I gave last year’s coat, which I got second hand in college and had been wearing for the past ten years, away.  However, all the coats I found were more stylish than functional, so I didn’t wind up buying a coat.  (By the way, what’s up with that?  I mean, I want to be cute.  But shivering in a lightweight coat isn’t cute.)

Anyway, on an ordinary week, I would have sent this money directly to my savings account.  But since my income will be changing soon due to being laid off, I’m just trying to get what I need for the winter, like car maintenance and a coat.  Just like the Ant I named myself after.   I can’t imagine what it would be like to spend this much money every weekend, but I know some people do it.  I’ll say this, though - nobody was shopping.  I went to two malls today, and the crowd was so thin, it could hardly be called a crowd.  There were some empty stores that I didn’t even know had closed.  One store was going out of business - jewelry as far as the eye could see, all for 50% or more off!  I was tempted to go Christmas shopping then and there on the spot for our mothers… but then I remembered I need to spend conscientiously from now until my income is more predictable.  Anyway, those empty stores let me know that the news is right.  People are not spending like crazy anymore.  I hope they’re saving instead.  And in the banks, not the mattresses.  Because trust me, if I didn’t need to prepare for winter, I wouldn’t be spending either, I’d be beefing up my savings.

Anyway, next time you want to go to the movies, please go see the Secret Life of Bees.  I really liked it!  And take tissue. LOL!

I gave in to temptation and looked at my balance over the weekend.  My IRA is down 27% because of the bear market.  That’s over a quarter.  That’s almost a third.  My initial reaction was anger.

And then, surprisingly, I was calm.

I just finished increasing my Emergency Fund to another landmark.  So now that that task its done, I am inspired by my IRA balance to start contributing again.  I had stopped contributing because I had met the minimum amount necessary to get the money out of a money market fund and into a mutual fund.  I then turned my attention to working on the Emergency Fund, but now I’m done with that for now.  I need to get back to building my IRA.  I am nowhere near this year’s contribution limit, anyway.  Now I haven’t given up the idea of continuing to increase the My Own Home fund. But with my Emergency Fund task completed for now, I feel more comfortable with splitting up my non-expense money between both goals of savings and retirement.  The thought of buying more shares while I still can and the getting is cheaper has been nagging me for at least a week now.  I’m going to do it!

It’s gonna be alright.  I’m going to own more shares.  I’m going to have more savings.  I’m going to get a job.  I’m going to get a home of my own, which is a retirement goal in and of itself.  And Everything Is Going To Be Alright.

I am willfully not looking at my IRA balance, especially on days like yesterday, when the market goes down almost 700 points.  I just don’t want to look.  I keep telling myself that I’m young, and I’ve got many years between now and retirement.  That the market will eventually go back up once this correction/crisis/whatever-they’re-calling-it-this-week is over.  That my shares have a long way to fall before they’re worth absolutely nothing.  I keep trying not to think about how hard I worked to finally get up the minimum amount required to finally get my money out of a money market fund and into a stock-heavy mutual fund.  I keep trying not to kick myself for not leaving my money in the money market fund, because I really did have no way of knowing that the nervousness in the market at the time was going to develop into an all-out global panic.  This is where the rubber hits the road when it comes to the concept of "risk tolerance."  When you’re a beginning investor, as I am, and you’re learning about how all this investing works, you’re advised to consider your risk tolerance as it relates to how long the time horizon is between when you invest and when you think you’ll be able to stop working.  And when investors like me are young, you are virtually told that your risk tolerance is high if for no other reason than that your time horizon is long.  "You have plenty of time" to absorb the fluctuations in the market and still make gains by the time you retire.  So goes the conventional wisdom.

You know what scares me? According to the news and the markets, conventional wisdom doesn’t seem to be working lately. 

And I don’t want to log on to look at my balance.

And maybe I should just put my little bit of IRA money into bonds, but wouldn’t that be "locking in" my losses?  And isn’t that against the conventional wisdom?    You know, the same conventional wisdom that isn’t working lately…

Well, here’s a link to last month’s net worth:

For the first time, my Retirement savings declined due to market turmoil.  I’ll live.  My stocks only went up a few dollars because I bought stock the day after the market went down over 700 points.  My debt fell nicely this month, but because I don’t want to pay my credit card balances before they are billed, I am still carrying credit card balances - luckily for me, I am also carrying that amount of money in my checking account, just waiting for them to bill me.  I am still saving in my Emergency Fund Account, and my My Own Home fund is pretty much getting interest only as I beef up the Emergency Fund.

One more thing: two years of hard work since October 2006 and I have cut down half of my net worth deficit!  Hooray for me!!!

I funded an order for a stock today that I’ve been looking at that I think is a good buy for the long run.  I’ve had my eye on it for months, and I haven’t gotten around to buying it until today.  When the market tanked yesterday, I put in my order.   I believe that the market will rebound and stabilize, eventually.  And I figure that the particular stocks I bought in my Sharebuilder account won’t crap out before that happens.  It’s only $300.  If I’m wrong, I’ll be able to live with the consequences.

I’m not moving my stock-heavy IRA into bonds.  I’d lock in my losses that way.  It would be different if I were 30 or 40 years older and had less of a time horizon to recover, but I’m just getting started.  I believe that the market will rebound and stabilize, eventually.  And I figure that the particular fund I own in my IRA won’t crap out before that happens.  It’s only $2,500.  If I’m wrong, I’ll be able to live with the consequences.

My entire house savings and emergency fund are both in the bank.  I checked on the health of my bank at this website and am considering my options for whether or not I want to move it to a stronger bank. This would forfeit future interest earnings on the money but the money could possibly be safer somewhere else.  I am not pulling all of my money out of the banking system entirely.  It is FDIC insured.  It appears that the FDIC hasn’t been wiped out yet, after huge banks have failed, so if my bank fails, I think my deposits will be secure.  Besides, if I pulled it out, where in the world would I put it?  A fire or theft would destroy all that I’ve worked for.  All of that said, however, this is subject to change.  I’m just not nervous enough to panic.

There are a few things that do make me nervous, though.  First, I am still in the job market and when my contract ends, I will have no health insurance.  An emergency could deplete my house savings or put me in debt, making me less eligible to borrow for a house.  Also, if my credit card issuers decide to lower my limits because they feel they’re exposed to too much risk, and I wind up carrying a credit card balance for any reason, this will lower my credit score because the ratio of my balance to available credit will go up.  This will also drive up my monthly obligations in proportion to my monthly income, which is another thing that lenders look at when evaluating your creditworthiness for a mortgage.  If I get a house with a lower income than I’m getting with this contract job, it’ll probably make me able to borrow less.  The possibility that I’ll have a New Years’ Eve housewarming at my own place is threatened by the job market already, and now this is further threatened by this credit crunch in the marketplace than it was before, since investor confidence is shaken.  What a bummer.

Mister Ant is in favor of the bailout, since he figures propping up investor confidence is the name of the game. He thinks that not passing a bailout, in order to avoid rewarding fat cats and big companies, would be cutting off our noses to spite our faces.  I see his point, but I still have my reservations about whether or not we want our country to buy bad debts and simply hope that they improve, with no guarantee that these debts would have value again.  No one else wants these bad debts - there is no market for them - but we want our country to spend an obscene amount of money to buy them so investors will feel better?  That scares me.  How would it affect other aspects of America’s budget health?  What effect, if any, would this have on inflation and my ability to save for a house and retirement with a devalued dollar?  Why is it that the president can articulate why we need the bailout in speeches, but he can’t answer these questions in his speeches?  I need more answers.  I am not sold on this, even though I see from yesterday’s 700+ Dow drop that continued inaction really is threatening. 

Well they think they have a solution to the problem.  Like to hear it?  Here it go:

Bailout Deal Nears, But Will it Work?

What do you think?

I just don’t like the way this bailout thing is looking.  I’m glad that the President and the Fed and Congress are all arguing about this instead of just nodding, smiling, and going with whatever makes them feel a little less scared.  I don’t want them to act without thinking - this is how Wall Street got into this mess.  If the government is going to saddle my great-great-grandchildren with the burden of bailing these companies out, they better think long and hard about the kind of precedent they’re setting and the responsibility that they’re taking on.  I’m suspicious.  This is all unprecedented so far as I understand this, and we don’t even know how far down this rabbit hole of new territory goes.   I understand that the Fed Chairman thinks that swift and decisive action would be best for the economy, but I honestly don’t think rushing makes the most sense right now.  I hope they get this right, thinking about long-term consequences just as seriously as short-term patches.