From FoxBusiness.com:
For the first time in history, S&P cut America’s top-notch credit rating one notch to AA-plus from AAA after the close of trading on Friday. The ratings company also said Monday it would slice Fannie Mae and Freddie Mac’s debt rating because the mortgage companies directly rely on the U.S. government.
The Dow is facing its worst week since 2008 and most of the headlines this week are about America’s financial crisis.
I’m definitely not someone who follows US and Global markets faithfully. I have two brother-in-laws who are very knowledgable in this area and I rely on them for information. For the past 18 years I’ve focused primarily on our family’s economy.
From reading the news it seems pretty bad, but is it? I would think people would be nervous and curtailing their spending with all this uncertainty. But the restaurant parking lots are filled every evening, malls are busy, and the Apple store is packed every time I’m there.
I’m curious, where’s the disconnect? Are people not paying attention or do they think the problems with America’s economy don’t really impact them.
Has the current financial crisis affected your family? Have you changed your spending or saving habits?
We definitely have to budget for nights out and I had to raise our weekly budget a little to accommodate for rising food prices. I cook much simpler, cheaper, less complicated meals and I’m buying more things from craigslist. I’m also doing more freelance writing and crafting to try to bring in what little income I can while staying home with the kids. So yes, we’re noticing it and we’re making minor adjustments, but we haven’t had to make any major sacrifices yet, praise God.
We’re somewhat discouraged because we have remained here in the US instead of returning to the mission field. Since we are missionaries who are sent “by faith”, we have to raise our own support, which has gotten progressively more challenging!
It seems to me, and this is just my opinion, that most people will continue to have spending money for eating out, going on luxury vacations, and buying the latest vehicles and gadgets. They’ll slash other nonessentials in their budget in order to do it, or go into debt if they have to.
I always wonder the exact same thing! We live in a military town and I know a lot of people really struggle month to month, yet they are eating out for lunch every day and most nights. We changed our spending habits a long time ago when we realized just how much money we were wasting on luxuries like eating out and entertainment. We started budgeting, paid off our credit cards, our cars, our loans and started building our investment portfolio and savings! Now even though I don’t work outside the home anymore, the economy hasn’t had much impact on us because we have been saving and learning how to live well on less and we always have wiggle room in our budget.
It seems like people either know how to manage money or they don’t. If they can’t get their finances in order when the economy is good then they definitely can’t when it is bad. I wish more people would really sit down and take the time to look at their income and debts and figure out a plan. For us that was a huge wake-up call when we saw how much of our income was going to Starbucks, lunches, clothing, movies, eating out, etc.,.
There isn’t much more that we can cut. With my husband going back to school, we’re on a very limited income. We just hope there will be a job available when he’s done.
I think many people have no clue! These are the people who get their news from network TV or MTV. They don’t understand what has caused the problem (because it hasn’t been reported truthfully on those stations,) so they have no idea how to fix the problem, nor how they figure in to the solution. As my DH works for a health insurance company that specializes in small business and individual plans, we know that without a repeal of Obamacare the government will run his company to the ground. We are cutting back where we can. The majority of my homeschool books for this year were purchased used. We are trying to downsize as much as possible. We are giving many things to our church sharing room as we know many who are worse off than we are. Yet – I am confident that God will supply what we truly NEED.
We’ve definitely been cutting back in some areas, and shopping wiser in others, just to be on the safe side. Lately there has been a lot of talk [although, thankfully none of it has come to fruition] about holding pay for military and vets, etc. My husband is a disabled vet who receives a pension check each month. Without it bills would be really difficult. On top of that, he works for the state currently. And if anyone else here knows about North Carolina’s financials, they know the state is CONSTANTLY cutting state jobs, and holding pay for a few months at a time, before back paying them. At any time, our pay could be obsolete, so learning to spend smarter now is preparing us “in case”.
I think things were looking pretty good up until the end of last week and yesterday. Now it seems that there is a sudden veer toward the possibility of a recession. In an article I read yesterday some important sounding institute put the possibilities of recession in the next six months at 1 in 3. No one was talking recession three months ago — they were talking recovery. I think it is bad, but I am rather an Eyeore about these things. And perhaps the news is just so recent that it hasn’t filtered into people’s lives yet.
But, yes, we have changed our spending. We are expecting our third child and had planned to buy a minivan this fall, but I don’t think we are going to do that now. My husband won’t touch our savings for anything. We had also been contemplating moving to another state to be closer to family, but that is completely out the window now since interest rates are probably going to go up significantly.
We’ve just signed paperwork (and loan papers) to adopt a baby from here in the states. It is very nervewracking to think that we are really stepping out in faith to do something that we feel we are meant to do but that the financial state of the entire country we live in is crumbling. I do not pretend to know and understand what all of it means as the bigger picture….
But for our family, it means, living within our means and on a budget. It means NOT using a credit card. It means eating at home. It means a one day “vacation” to a nearby amusement park. And it means saving and doing ALL that we can to use as little from that adoption loan as we possibly can. I am sewing and setting up a booth at a local craft fair and will be listing on etsy to try to earn a little more while being a stay at home, homeschooling mom.
Much sooner than this latest collapse. I don’t think things were looking good until last Friday, wish I knew where that lifestyle is. We’re self employed in the construction business in N Michigan so that pretty much says it all. Going under quickly, after 34 years in the business and owning our own home all that time. They might keep extending unemployment benefits, but they’re doing zippo for the self-employed. Except offering loans we don’t qualify for. Hearing the President go on t.v. time after time and say “we will get through this” and other cliches isn’t cutting it.
Yes it seems many people don’t have a clue what cutting back and going without really means. Entitlement seems to be their belief, and I know this from hearing it. An ex-employee (laid off due to no work) felt he was entitled to a new cellphone every time his contract was up and he and his young family eat out 90 percent of the time. He doesn’t think that money adds up, even though it has been pointed out to him. He’s filed bankruptcy a few times and doesn’t pay the propane heat bill etc or 2d mortgage but doesn’t see it as his fault. I could rip my hair out….”entitlement” just makes me so mad!
My husband works in financial services and so I always worry when it comes to the economy. We save 25% of our income because we know that we need it for our car, in case something breaks or God forbid we suffer a lay off. We have no cable, one car, and my husband takes the bus to work. We splurge in the area of food where we budget 200-300 a month but we eat all organic/local/grass fed and we have some food allergies. Some of our friends spend that much per week on eating out. Are we rich, no? But we pay our bills on time and have a comfortable lifestyle. We sacrifice things that we may want, to take care of our needs, and that’s what a responsible adult does. What I don’t understand is how our government and our neighbors can’t figure out how to do the same thing.
We had hoped to sell our house and move closer to family but our property values dropped by 70,000 and there are six foreclosures on our street. One of the houses that was foreclosed on went up for auction recently and sold for 60,000 (originally bought for 250,000). The guy that lived there and was foreclosed on, he drove an expensive sports car which was over 100,000 dollars. So now, we can’t sell our house because someone else can’t figure out how to be responsible?
We have friends coming into town this week for a conference. They wanted to meet up for dinner and first we suggested our home and then a local restaurant. The response we got back was that they wanted to go to a fancier restaurant because they get a big per Diem for meals since they work for the government. You would think that everyone would be tightening their purse strings, but i guess not.
Sorry for the long comment but what is it going to take for people to wake up and smell the coffee?
We are trying to rework our budget yet again. We are waiting for hubs advancement pay to finally kick in. We are looking at maybe cutting out cable again, and we acknowledge that we have a real problem with going out to eat when we should be eating at home, besides saving money it’s so much healthier. It’s just so hard to pass up easy.
My husband has Fox News on 24/7, or so it seems, so that’s where we get most of our information.
I have been thinking about changes our family needs to make but I don’t think the changes would be out of my family’s ordinary — putting more toward savings, working on a food stockpile and going out to eat less (my weakness). I am, however, concerned about the US as a whole because some people just don’t pay attention or don’t care.
We have been fortunate enough not feel any effects to be honest I think my husband might make better money now then when the economy was decent. WHY? He works nothing under 50 hours a week and we go without so we can spend money where we want it. We food shop every 2 weeks, get free cable cause he works for a cable company, drives the company vehicle to and from work (they cover gas as well)
What do I do all week? Nothing but homeschool and take care of the house and kids. I dont spend money on gas or eating out. I haven’t been to a bar since 2007 and I look for deals when we do need to shop.
I go without so when I see something we REALLY want I can buy it. I’m not greedy though I donate to a few different charities and do what I can to help others. Do I have a savings? No. Do I live like everyday is my last? Yup
Interesting topic =)
My grandma (who lived through the depression) always told me when things got hard that people would keep spending on things that made them feel good especially because times were not good. That would be makeup, restaurants, coffee shops, movie theaters. Another interesting tid bit from her was that she never ‘felt’ the pinch of depression, in her words “It really hurt those who had it to loose the most” For her on a farm she didn’t have money anywhere, it was days as normal. For us it’s the same. We live paycheck to paycheck, we were never big spenders (makeup, clothes were second/third hand or dollar store/Salvation Army) We use cloth “paper towels” and cloth diapers. We make our own cleaning supplies, no T.V, haven’t been to the movies since 2009. The biggest and most painful aspect of America’s situation on our family is the housing and job. We had planed by this year to buy our first house, even with the market so low we find we can not secure a loan because 2 years ago my husband lost work hours and left his job. He has not found anything better then a min. pay job. He earns his Master’s degree in two weeks and still no one is hiring. Although we don’t have much to loose there is this dread that we are loosing our children’s future~ Meanwhile we work on meal plans/stocking for less trips out (gas and temptation for coffee shops) and go camping at our local park for vacations.
It would seem that the America people on the whole have no problem spending money that they see as their own from work, refunds, taxes.. (spending it on: restaurants, coffee shops, movies, malls for self gratification) but are VERY reluctant to give it away (donations, support of missionaries) or even use it to pay off their debts (our family is the only family I know of who will pay more then the min. payment on bills)
This is a GREAT concern of mine as they seem to know there is an issue but are unwilling to behave any differently.
Just because you see Americans continuing to spend money doesn’t mean that they a) have it or b) there’s no problem. In general, many people tend to disbelieve until something is happening DIRECTLY to them. It’s like a tsunami at sea: you may see the signs and not understand them until it is too late. Furthermore, Americans are culturally trained to spend money that we do not have. Many Americans simply do not understand the far reaching ramifications of market events. For most, so long as they have the pocket money (or illusion thereof) to spend, they will choose to turn a blind eye toward the economy.
Our family has definitely felt the pinch. We are a one income family and any hit to the economy gets felt extra hard here. We’ve learned to do without a lot of things, cut back everywhere we can and are looking at cutting back further.
I think we need to remember that we don’t know the stories of every person. Maybe they are out to dinner using a gift card or at the Apple Store purchasing something they have been saving for. We certainly made adjustments when I decided to stay home, but we take a lot of trips using air miles and hotel points that my husband accrues from constant work travel. However, if you didn’t know that one may think we were living lavishly.
I actually think most people get it. What may seem like a cut to one person may still seem extravagant to another. I cut back my driving, but I will go kicking and screaming before I give up my smartphone. Change doesn’t look the same to everyone.
I think your comment is my favorite in this entire discussion. You aren’t judging anyone and instead speaking for yourself. A lot of the other comments are super judge-y, blaming other people for being irresponsible when they may not know the entire story.
You’re judging other people for making bad financial decisions (without directly knowing their situation) but then you have a house that isn’t worth what you paid for. You may not want to admit it, but you also made a bad financial decision but you choose to blame it on someone else.
So where are you getting your news? I don’t think you have all the answers either. And maybe your husband should look for a job in a different industry while he can so that when Obamacare changes our nation’s health care, he will at least be employed.
The credit rating of the US means that US dollars are (or will be eventually) worth “less” than they were before, relative to other currency. The exchange rate will be worse. This shouldn’t matter very much to purchases made in domestic markets (buying CA cheese, or Florida oranges, or Texas beef, for example) because if you stay inside the domestic bubble, you don’t notice that the dollar is worth less. Everybody has the same dollars so nobody notices they are “smaller”. Have you ever been to a foreign country and bought something that had a high price tag compared to what the locals could afford, but in US dollars it was $50? Same idea. The trouble for consumers would be if they were trying to buy goods from a foreign producer who had a strong currency. So the price of foreign oil, for example, would go up because if each American dollar is only worth 80% of what it used to be worth, it will take more of those “smaller” dollars to equal the same amount of foreign currency. Your sneakers used to cost $40, now they cost $60. But it will equal the same amount of money in China. So if one were really concerned about the direction of the world market, one might buy sneakers, and box fans, and car parts, or Apple products, before it took too many USD to do so. Hey maybe that is why the mall is full.
On the other hand, the US economic woes have such a huge, global, far-reaching effect that everyone will be affected for years. Look at what the 2008 housing crash is STILL doing to the world. We bankrupted Greece, Iceland, and maybe France. When you think of things on that scale, and you imagine governments going broke, and currency not being worth as much as it used to, and government services failing, and the Asian markets collapse because ours do, that $40 dinner out with your family doesn’t seem like that big of a deal. Its bailing out the ocean. If thing do get as bad as Fox news keeps telling you they are going to get, the economic problems would last for years, and that $40, even if you stretched it out to feed your family for a month, would not save you. So you might was well eat out, enjoy some imported food, tip the waitress, and stimulate the local economy.
It’s so comforting to know that no matter what happens in our country or with our economy, God is still sovereign and in perfect control. My husband and I try to budget and save our money wisely, and focus on what God has for us without worrying about what the media might want us to. Times like these show me how much more I should be praying for our leaders in government to make wise decisions!