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kealii
Aloha
USA
39 Posts |
 Posted - 03/12/2008 : 1:38:14 PM
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Are we there yet? What is the best thing to do to prepare and maybe even prosper in that situation? The threat of a recession is causing me to hold back on buying more guitars!  Maybe thats a good thing.
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"Geevum ... one more time!" (Gabby) |
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javeiro
Lokahi
USA
459 Posts |
Posted - 03/12/2008 : 1:58:15 PM
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| By the time a recession hits it is probably a little late to do anything. I'm no expert so I don't know if it's here yet or even if it's inevitable. Just yesterday I read an article that said some financial "experts" say that we may avoid a recession yet. Cash is king during a recession so I'd say don't make any loans or increase your credit debt and save money if you can. One thing I don't like about it is that interest rates go down so you can't get good returns on CD's and other safer cash investments. At my age I can't afford to invest too aggressively. |
Aloha,
John A. |
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rendesvous1840
Ha`aha`a
USA
1055 Posts |
Posted - 03/12/2008 : 4:31:24 PM
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Note: I screwed up. This is Wanda, not Paul. Paul would never be as verbose. I forgot I was looking at TP under Paul's profile, not mine.
Best thing is to owe no one. Do not buy anything on credit. Whatever credit you have outstanding now, pay it down. The recession is here, now. Try to save as much cash money as you can, even if it is just a few bucks a week. Put whatever you can into retirement accounts. If your employer has a thrift savings plan or anything where you can save and they will match, take advantage. More cost effective to buy your own life insurance than get it through where you work, unless you get it for free. I was a chump paying for that federal employee group life insurance all those years. If you can get long term care insurance, do so. That is your greatest protection against catastrophe in your aging years. The younger someone is when they buy it, the better off you will be in the long run. I know young people think it is silly to think of those things at a young age, but it is really worth it.
Do not buy any stocks, etc. on margin. Diversify any mutual funds. As one ages, one should move from risky stocks and funds to more stable, but lower earning funds. Do not want to risk your retirement kala in the hopes of high returns. The riskier, the higher the return, but as one edges closer to retirement age, one can ill afford to assume that risk.
If you own a house with a mortgage, pay extra principal, even if only 2o or so dollars. Every bit you reduce the principal helps. Do not take out less than a 30 year mortgage. The difference in interest rates is not that much, but you will then have smaller monthly payments required. Then make extra payments whenever possible. That way you can pay it off quicker, but should something unforeseen happen, you will not get in trouble as bad as you would if you had less than a 30 year mortgage. I know it sounds goofy to owe someone for 30 years, but like I said, if you make extra payments, you will cut the payment time down considerably.
If you are younger and your state has an educational fund that you can buy shares in, do so. Better to pay for your kids college at todays dollars than whatever the cost will be 12 or 15 years from now.
Keep your car a couple of years longer, if possible. Matter of fact, more better to run them into the ground. Onliest thing against that -- if you are the woman of the family, then don't drive a junker. That is only for men. If the car breaks down, it is the husband's fault.
Reduce, reuse and recyle.
Don't buy as much "stuff". You don't need it. You don't have enough room in your house for all the "stuff" anyhow.
Onliest thing to buy more of, Hawaiian music recordings.
But please, do not forget to give what you can to deserving charities. Investigate how much the charity spends on admin fees. The lower the admin fees, the more your money goes to support the programs that are needed. NEVER give to those police ore firemen funds when they call you on the phone. That is paid fund raisers soliciting and they give maybe 15% if that much to the charity so named. Never give when you get a phone call. If you are interested, ask them to mail you literature. If they pressure you, then you know it is not a good one. More better to give to your local food bank. Just about 95% of that money goes directly to feed the people who need it.
Walk wherever and whenever you can. It helps the environment, saves you money and makes your heart healthier. |
"A master banjo player isn't the person who can pick the most notes.It's the person who can touch the most hearts." Patrick Costello |
Edited by - rendesvous1840 on 03/12/2008 4:35:16 PM |
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rendesvous1840
Ha`aha`a
USA
1055 Posts |
Posted - 03/12/2008 : 5:38:30 PM
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If I ytped all that verbose, I wouldn't be done till two-three hours. But it's mostly good advice, cept the part about "the husbands fault." And, expensive, one-of-a-kind guitars are a very good investment. Buy plety of 'em, and I'll store 'em for you here.
Paul |
"A master banjo player isn't the person who can pick the most notes.It's the person who can touch the most hearts." Patrick Costello |
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javeiro
Lokahi
USA
459 Posts |
Posted - 03/12/2008 : 5:42:19 PM
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Wanda, were you a financial planner in your other life? You sound just like mine!
Looking over your laundry list of suggestions, I seem to be in really great shape whether we're in a recession or not! You said it's here already but you wouldn't know it from looking around this area. Homes still selling, stores doing okay, new ones even popping up at a pretty good rate, people still driving and spending money......etc., etc., etc...... |
Aloha,
John A. |
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kealii
Aloha
USA
39 Posts |
Posted - 03/12/2008 : 6:06:34 PM
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| Mahalos to all for the advice - especially Wanda. Never thought of the long term care insurance - I'll look into it. So how bout this - lets say that you have minimal debt and something put aside. If/when the real estate market tanks, do you assume that kind of debt or wait out the storm? I am thinking that if you can turn a positive on the investment then the answer would be yes. Prices are dropping here in Hawaii, but people are still buying properties at crazy high prices compared to three years ago. How do you capitalize on the recession? |
"Geevum ... one more time!" (Gabby) |
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kealii
Aloha
USA
39 Posts |
Posted - 03/12/2008 : 6:11:43 PM
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quote:
Originally posted by rendesvous1840
it's mostly good advice, cept the part about "the husbands fault." And, expensive, one-of-a-kind guitars are a very good investment. Buy plety of 'em, and I'll store 'em for you here.
Paul
Hey Paul ... The way it used to work is when my wife decided that her car was a junk, I would get it. Driving around in a Dodge Grand Caravan was not my idea of stylin. But now I got my truck and she got her van. No more hand-me-downs!
About guitars as investments - I think she will see that one coming a mile down the road.  |
"Geevum ... one more time!" (Gabby) |
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wcerto
Ahonui
USA
5052 Posts |
Posted - 03/13/2008 : 02:53:43 AM
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[quote]The way it used to work is when my wife decided that her car was a junk, I would get it. /quote]
Hah! Ask Paul to tell you when he got his first brand new vehicle.
And, if you heard his car history, you would be amazed. I think it all started with "Da Tank", a car he obtained from his cousin Luigi, who got it from Uncle Louie. Would not go in reverse. I think the doors had to be tied shut. There was a Corvair that died on Granger Rd. hill and Paul had to drive it in reverse all the way up the hill. There was a '49 Ford. There was that huge Chevy station wagon where the back window wouldn't close -- the one that my friend was going to send to the junk yard, but the junkyard guy didn't want it, so Paul bought it for maybe $40. There was the Dodge Aspen (used to be my car), that he drove until the body rotted away and fell apart as he was trying to exit a parking lot. He had a Chevy Nova, circa 1970 vintange, which my drunk father put the wrong cables on the wrong terminals on the bettery and screwed it up. He gave it to Paul. Drunk dents and all.
Oh, Paul and his cousins call tell you the funniest histories of their cars. Oh, and don't forget his brother's Karman Ghia.
And I won't tell you about my Opel 1900.
But, if anything happened out of all this, we got our money's worth outta them cars. |
Me ke aloha
Malama pono,
Wanda |
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wcerto
Ahonui
USA
5052 Posts |
Posted - 03/13/2008 : 03:05:44 AM
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John - you are the smart one -- if you do these things, it makes no difference recession or not.
Fred - if you have ready cash, you COULD invest in real estate. I mean, the obvious thing to do is buy it low and sell high. (Where have you heard that before?) However, you have to be certain about what you are doing. You've got to be able to afford those monthly payments, those closing costs, title searches, etc. You've got to be able to derive some income from them, which means additional responsibilities being a landlord. More complicated accounting and taxes. More property taxes. Never overextend yourself to buy property. It is the easiest thing to lose. Make sure you are comfortably taken care of before you start buying more real estate.
Me personally, I would only buy land or properties if they were for me. Maybe some piece of land in West Virginia. Maybe some hunting land for Paul. Maybe somewhere to live in the country-side, away from the Cleveland city area and away from the "lake effect" snows.
In Hawai`i, it might be a good idea to buy property. Limited area, being an island. Seems to me that as an investment, price would only continue to increase due to limited supply. If fso, then it seems logical to me to hold on to it, then, as long as you can. An investment really only makes money for you the longer you hold it. |
Me ke aloha
Malama pono,
Wanda |
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ypochris
Lokahi
USA
398 Posts |
Posted - 03/13/2008 : 05:08:47 AM
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In the midwest, right now is the best possible time to purchase houses. I just bought a 3 BR 1-1/2 bath 1200 Sq Ft house in Lansing, MI. (the capital of MI.) for $28,000. This is the fourth house I have bought in the past year, and the best deal so far. Banks are desperate to get rid of all the properties on their books, and there are lots of new renters who have been foreclosed on. Sad to profit on other's misfortunes, but you are actually helping them by providing cheap places to live and not contributing one bit to the problem. I don't think houses in Hawai'i are good investments, however, as the rents do not cover the holding costs. You will be paying the difference every month, hoping the value of the house will go up faster than your bank account empties out. This is gambling, not investing. Look at all the people who lost their bets these last couple of years...
Much of Wanda's advice is sound, but I do disagree on several points. For one thing, when interest rates are lower than they have ever been and the value of the dollar is dropping like a stone, borrow as much money as possible at fixed, long term rates if you can make investments that pay for the interest. It is going to be very easy to pay off these loans in ten or fifteen years when the dollar isn't worth the paper it is printed on (O.K., an exageration, but you get my point). Secondly, be aware that in general insurance companies are in the business for a profit, and this means that they only pay out a fraction of what is paid in. Buying insurance is a bad bet, made against yourself. Some people do benefit, but the majority of people would do far better investing the money in something safe like T-bills or A rated bonds.
But drive an old junker car, drive less, don't buy things you don't really need (especially electronic equipment!), conserve energy, pay down high interest debt (never pay extra on your house if you have a credit card balance!), don't borrow money except to invest and make more money, live below your means, have savings enough to live on for a few months (once that high interest debt is paid off!), put those credit cards in a safety deposit box where they are hard to get to and only get them out for emergencies if you don't pay your balance in full every month, fully fund any employer matching plans- these are basic strategies towards financial security and wealth building that are applicable any time, not just during recessions.
Chris
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javeiro
Lokahi
USA
459 Posts |
Posted - 03/13/2008 : 05:34:05 AM
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quote:
Originally posted by ypochris
For one thing, when interest rates are lower than they have ever been and the value of the dollar is dropping like a stone, borrow as much money as possible at fixed, long term rates if you can make investments that pay for the interest.
"......if you can make investments that pay for the interest"
That would be the hard part! |
Aloha,
John A. |
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Mark
Ha`aha`a
USA
1628 Posts |
Posted - 03/13/2008 : 08:18:48 AM
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quote:
borrow as much money as possible at fixed, long term rates if you can
Yep. And if you die in debt... you win.
(Assuming no heirs, of course.)
Which reminds me of the only economics joke I know. (Edited for brevity)
An an economist is among a group stranded on a desert island. One after another, each member proposes one wildly impossible scheme after another.
Finally, the economist says, "Assume a boat..."
Mark
University of Utah Graduate School of Economics Drop Out
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ypochris
Lokahi
USA
398 Posts |
Posted - 03/13/2008 : 2:02:25 PM
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"That would be the hard part!"
Here in Michigan those cheap houses pay the interest, taxes, insurance, and pay down the principal, with a generous margin for repairs, and still put money in your pocket every month. As I said, houses are cheap and the rental market is strong. Going into debt for a good investment doesn't bother me a bit- it is all other people's money, and using other people's money is the heart of capitalism. Borrowing money to buy stupid stuff like a new car or a bigger television, however, is stupidity. Only borrow money to make money with- if you don't have the cash for the stuff you want, then you can't afford it and shouldn't be buying it until you have saved up for it (and even then you should invest the money instead!).
Chris
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noeau
Ha`aha`a
USA
1105 Posts |
Posted - 03/13/2008 : 2:24:55 PM
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If you already rich it doesnʻt matter. Just ask those guys who keep getting tax breaks from you know who. Their portfolios just keep on looking better. I think we are in recession already. Prices have gone up 13 to 20 percent CEOs make 300 times more than the workers on the line. No raises worth anything in the past 10 years. How you going buy stuff when you canʻt afford it anymore? It doesnʻt matter if you buy a car a guitar or investment property. If people getting laid off no body going rent the house. We all going live in the park.Get this paradox. Interest rates on the prime are the lowest in history. Look at credit cards they only supposed to charge an x amount above the prime. Have interest rates charged by credit cards gone down? the dollar is only worth 100 yen today pretty soon it will match the Mexican Peso. This friggin war is harming this country in so many ways. We are getting what we deserve if we donʻt wake up. Investment strategy is only one way to make things better. Property speculation is more a part of the overall problem rather than an individual solution. It contributes to the greed that may be driving this country down. Conspicuous consumption is one of the bad points of capitalism. It just adds to the list of things that encourage anger and hatred of the USA.
I donʻt say this to attack any one individual but the aforementioned concepts tend to serve to separate the people in this country instead of bringing them together.
Our Congress spends precious time investigating a baseball player while gas prices jump at the pump. Crude oil auctions increase the price of oil. That oil is not gasoline yet. But the price of gas made from cheaper oil goes up immediately. Whatʻs up with that? Newer cars get better mileage maybe its better to get a new car today and get rid of a gas guzzler. The new car if maintained will last longer and save gas.
If we end up homeless a guitar might allow us to play for pennies on the street corner and maybe keep starvation at bay.
I just wonder what is enough? do we need to own several houses? Do we need to wear a Rolex? Economies go up and down and usually the light is brighter on the other side when we emerge from the darkness. We could just take it easy and we will weather this crisis too if there is a crisis at all. |
No'eau, eia au he mea pa'ani wale nō. |
Edited by - noeau on 03/13/2008 2:57:53 PM |
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ypochris
Lokahi
USA
398 Posts |
Posted - 03/13/2008 : 2:32:07 PM
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Noeau, I couldn't agree with you more.
(Well, until you edited your post. Some people make money working a job. Some depend on taxpayers- both government workers and welfare recipients. Some build houses and sell them, or fix houses and rent them, for income. Everyone needs a place to live and not everyone is a carpenter/handyman or wants/can afford to own a home. Providing low cost housing to those who need it is an honorable profession, not conspicuous consumption. My goal is not to get rich, it is to provide an income stream back to Hawai'i so I can help support my elderly parents and focus on my cultural and environmental restoration projects instead of spending all my time doing someone else's work to survive.)
At least in Hawai'i it is warm in the park! Some of those tent cities on the beach don't look so bad...
But I'll be in the jungle.
Chris
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Edited by - ypochris on 03/14/2008 03:24:18 AM |
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kealii
Aloha
USA
39 Posts |
Posted - 03/13/2008 : 3:35:20 PM
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Noeau - I hear you. I'm not a bling kind of guy. In fact, some of the family look down on us because we still live in Kalihi. But if we were to compare balance sheets, well thats another thing.
I have concluded that I can't rely on anyone else to provide for my retirement - not even my 401K. And what Wanda said about long term health care is a concern - cost of that continues to escalate.
Some friends have aging parents. Care homes in Hawaii can easily run you $8K a month, with $10+K becoming the norm. So now the money they had set aside is being redirected, and people are looking into reverse mortgages. I'm not there yet (knock on Engleman Spruce), but it won't be long before I have to grapple with all that.
So I gotta do something to address the future before it addresses me. Aloha! |
"Geevum ... one more time!" (Gabby) |
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