Recession-R-Us

A lot of people are worried about the current economic recession in America.  My wife and I are concerned about the value of our home.  My family has been asking if I’m still employed.  Friends and co-workers have been discussing their less than spectacular pension plan balance.  When the stock market tanks, it triggers this knee jerk reaction by most people.  They’re looking for people to blame.  They’re looking for a way out.

Who’s really to blame?  The CEO/CFO of companies who let their stock prices go down?  Is it the financial advisers at Wall Street, who tell us it’s OK to invest more in certain hedge funds because they’re speculating higher profits to be gained later?  What about President George W. Bush who plunged us further into debt by giving golden parachutes to banking executives?  Or, is it also possible the problem is me, you, and the average consumer?

The answer can very well be all of the above.  There’s enough blame for everyone.  But, it all comes down to us, the folks at “Main Street”.  We make greedy investments in the highly speculative stock market, hoping to make at least 30% profit within a few months.   We buy houses that we can’t really afford because we’re hoping to sell again, in the near future, with a tidy profit.  We take jobs with the fly-by-night lending companies because there’s a huge demand in credit processing.  We signed up to become real estate agents because selling a house is easy and the commission is too good to pass up.  I didn’t make those excuses up.  They were actually happening to the people I know and talked to, recently.

It’s a scary reality, but one that we can usually avoid if we just use common sense!  When it was all roses, no one objected to the profit taking.  Not many people stop and say, “Wait a minute, how long can this last?”  Recall this stuff happened before!  Remember the dot-com boom?  Back in 1999, I certainly didn’t expect it when pets.com was considered a darling company.  The company I worked with, at the time, was on a spending spree, gave lavish gifts, hired more middle managers, and took a lot of “off-site” meetings.  I was along for the comfy ride, until they decided to kick me off the limo while it was still moving downhill.

Good thing too.  Now I’m more cautious in what I do, and where I put my money.  This is where common sense really helps.  Common sense tells me I have to work smart, work hard, and bring value to my employer.  Common sense tells me to buy a house I’m going to live in for the next 20 years, instead of the next 2 years.  Common sense tells me to put money into long-term investments such as a 401k, or College Fund for my daughter.  Common sense tells me to start saving money and help others, using the 70-20-10 rule: 70% expenses, 20% savings, 10% charity.

So, what are the key words to ride out the recession?  Long Term, Savings, and Perseverance.  Along the way, don’t forget to care about the people around you.

Photo Credit: dweekly

Tags: economy, housing, investments, recession