Comments on: March 2009 Financial Status / Net Worth Update

By: Misterk

Misterk — Fri, 13 Mar 2009 03:13:11 +0000

Like Red, I’ve been a bit of a lurker. I’m, too, am bothered by some of the gloating and smug tut-tuting that folks are dishing out but I guess you come to expect that kind of thing when you post so many personal details in a public forum.

I do have an observation, however, with regards to the cash position. Jonathan mentioned having moved 10K into an IRA plus you have to consider the 23K in credit card debt. That will presumably be coming due within the next few months, leaving a cash position of somewhere closer to 70K. Still quite a bit of cash, but an strong emergency fund in these times isn’t such a bad thing. If we get hyperinflation, it’s suddenly not so great. On the other hand, deflation still isn’t off the table in this economy.

It is also remarkable to me you can sock away 8K a month. True, I don’t what kind of income you are looking at, but that must a lot frugal living and ramen noodles you are eating…

By: Strabo

Strabo — Sat, 07 Mar 2009 22:04:56 +0000

Jonathan, see if you can take advantage of the new mortgage programs that the government has available. There should be a thread somewhere on fatwallet regarding that but I think it all starts with asking your bank if you qualify.

By: teeej

teeej — Sat, 07 Mar 2009 03:29:08 +0000

SS – Jonathan’s got a few posts on 529 deals and I think he’s in bonds or something conservative – short term investment.

Jonathan. losing money sucks. I don’t have much invested, but what I’ve got in the market is about half what I put in.

I often reflect on the fact that I spend so much time scrimping and scrounging and being conservative day to day, however, I lose much more money in the long run by risky investments and poor decisions with large chunks of money. I see this same thing replicated in others too. We spend all this time signing up for credit card bonuses, taking surveys for chump change, etc. and then watch our net worths fall off a cliff.

By: Josh Friedlander

Josh Friedlander — Fri, 06 Mar 2009 19:27:39 +0000

A post on how to invest in gold would be extremely interesting. I looked at Monex and Kitco and neither seemed to make financial sense (given fees) for anyone with less than a few hundred thousand to invest. I know you are extremely rigorous in your research, so I would very much appreciate your take on the subject.

By: SS

SS — Fri, 06 Mar 2009 15:10:22 +0000

Jonathan,
In what have you invested your 529 if I may ask? Mine is going negetive and it is almost half of the contributed amount. Yours is showing positive change. I have invested in Equity portfolio.

By: Curt

Curt — Fri, 06 Mar 2009 06:20:41 +0000

Cash is a large part of your networth. The dollar has been holding up, but later in the year it is likely to start to sink along with the bond market. You should consider selling your dollars before everyone else tries to.

By: Max

Max — Fri, 06 Mar 2009 02:58:50 +0000

Jon … sorry about equity loss … but this is just the beginning. Wife and I bought house in Nov 2007 when prices dropped and just before banks stopped lending, and our strategy has been NOT PAYING ANY MORE MORTGAGE THAN WE HAVE TO. Friends, on the other hand, are busting their humps, scrimping, and dumping every last cent into their home with the idea that they will pay it off sooner and own it free and clear.

People STILL don’t understand — we’ve been brainwashed into thinking that a house is an investment, even though it’s a depreciating asset, like a car, or a piece of equipment. The thinking that home values will keep going up is WRONG, and it’s what got us into this mess.

Our strategy is simple — having a 30 year fixed loan will start paying back in spades when all this stimulus money hits the real economy and causes inflation, which is not that far from now. Why bust your hump and sacrifice NOW when within just a few years you’ll start paying for your house with dollars that buy less and less?

Imagine if a Zimbabwian bought a home for $600K … He/she would pay it off in one foul swoop with newly-minted $100Bn notes … that can only buy a box of matches

By: Banditfist

Banditfist — Fri, 06 Mar 2009 01:37:57 +0000

Agreed Rob. But other were posting that Jonathan had too much cash and should put it into equities.

Just be careful of those leveraged inverse ETFs. Slippage is painful.

By: Rob

Rob — Fri, 06 Mar 2009 01:14:10 +0000

Wrong Banditfist. Being short the market would be one of the best positions to be in. Lots of funds to choose from. Specifically the financial pro short.

By: justin

justin — Fri, 06 Mar 2009 00:53:16 +0000

@gretchen – Was that the issue about some low-middle class blonde chick who made a bunch of money selling her house? They were talking about how amazing the housing bubble was going then!

By: justin

justin — Fri, 06 Mar 2009 00:46:25 +0000

Lewis…

I said the same thing to him at 9,000. How stupid would that have been?

Mine was actually for his pre-retirement investment since he talked about retiring @45 or so.

Hopefully we have some amount recovery by then!

By: Banditfist

Banditfist — Fri, 06 Mar 2009 00:42:32 +0000

Guys, cash is a position. For the past year and half, it has been the best position to be in. There is nothing in the news nor anything else indicating that we are in the process of bottoming. I am not talking of timing the market, but you can follow a trend. The current trend is down.

By: Lewis

Lewis — Thu, 05 Mar 2009 21:12:36 +0000

Wow, if I had 100k in cash I would be majorly tempted to pump half of it into stocks this week. Your net worth is 56% cash!
Then again, I’m at a moderately higher risk taking place in life.

By: Gretchen

Gretchen — Thu, 05 Mar 2009 18:57:00 +0000

Don’t forget people were also still going off the old advice that “housing never goes down.” In fact, a Money Magazine article back in late ’02 or early ’03 warned about a potential housing bubble (I remember this because I was about to buy my first home) but also stated that “housing has historically never gone down nationally.” It was hard to fathom not buying a house at that time (and still even a year or two ago) just as it is hard to fathom putting money into the stock market right now. Time for a bit of contrarian thinking perhaps.

By: Dario

Dario — Thu, 05 Mar 2009 18:56:45 +0000

Doesn’t the value of your home only come into serious play when you SELL? So if you are happy where you live, and are willing to live there more than 10 years, I’m sure you loses will be justified or recovered.

By: Red

Red — Thu, 05 Mar 2009 18:40:45 +0000

Man, some of you are hard on Jonathon.

Long time reader (mostly lurker), but I really feel for losing that much equity after so much effort. Truly heartbreaking.

By: Ace

Ace — Thu, 05 Mar 2009 18:33:58 +0000

Yes. When things outside of your control are in shambles, just focus on the things you can control. Worrying about what you can’t change will just make you sleep less. Pre/During/Post recession, always focus on the things that matter like friends and family.

P.S. We are DEFINITELY all in this together.

By: Rob

Rob — Thu, 05 Mar 2009 18:22:54 +0000

Makes me love renting in Texas. No property taxes. No state income taxes. Just a grand a month for a beautiful 2 br place with 2 car attached garage/washer-dryer/stress-free.

What’s better, working ones life away 50 hrs / wk (plus another 5-10 hours sitting in traffic) for 50 yrs to try and pay off a 800k mortgage while financing the state of CA illegals …

Working 20-30 hrs per week 50% telecommuting, making 50k almost tax free thanks to Obama and TX, learning photography, playing with your kids (and volunteering at their school), staying in good physical shape not sitting in a cube, eating well, and living a simple life …

I love this site for your insight and findings but times have obviously changed. America (esp CA, NV, AZ, FL, MI) is a much different place then it was 5-10 years ago. Sure makes making 500-2000 a year on credit card deals vs. losing 50000-500000 in the housing and stock markets a sobering comparison.

By: dong

dong — Thu, 05 Mar 2009 18:14:16 +0000

I don’t think Jonathan tried to purchase an “expensive” home. He just happens to live in area that only has expensive homes. That’s one of the memes on the whole housing bailout that has irked me. Everyone thinks that people are being bailed out for McMansions. True for some, but for many it’s just a function of timing and location. In many areas of California, a modest 2 bedroom condo were selling in excess of 600k. Was it dumb to buy at those prices? Obviously. But that’s hindsight. Many people were so worried that they would never be able to buy that they made hard choices that shouldn’t have. Very few people are able to the time market to perfection. Blame it America’s obession with the housing dream The blame however is not solely on those who decided to buy.

By: mimi

mimi — Thu, 05 Mar 2009 18:13:57 +0000

Nobody knows the future — if we did, we all would have pulled our money out of the market in Sept. 2007.

By: Kevin

Kevin — Thu, 05 Mar 2009 16:58:31 +0000

Using your 5% to be conservative and 6% commission, I am about 22% underwater on my house, and like you I also put down 20%.

By: Abraxas

Abraxas — Thu, 05 Mar 2009 16:58:10 +0000

Looks like it is time for you to change your mid-term goal to maxing out your 401k for 2009 rather than 2008.

I put 50% of my salary/bonus into my 401k until it fills (which is something I can do in California only because I don’t have a mortgage). This delays the money lent to the government for income taxes (i.e. they get it all, but somewhat later on average) and puts the maximum money into the market ASAP (which is wise if you have a bull mentality). This worked much better several years ago than now, but I like getting it over with. Plus, it feels like a big raise once the 401k payments stop, similar to when the social security cap is reached. These days, those may be the only raises I ever see.

By: James

James — Thu, 05 Mar 2009 15:46:55 +0000

@Stephen Waits –
What would you suggest doing with his cash? For a short-medium term saving vehicle is there anything that is as save as cash/cd’s/MMA’s? If Jonathan had invested in Bonds or Stocks or Housing, it would have been decimated. Which is why people shouldn’t ever keep emergency funds or other short-medium term money in an asset that can lose money.

By: Justin

Justin — Thu, 05 Mar 2009 15:45:39 +0000

Thanks for sharing Johnathon. I feel like some of these comments are from young twenty-somethings without a clue.

The one great thing about this economy is that we are all in financial misery together. It’s not like losing a bunch of money during a boom. I take great solace knowing that someone else in my demo with about the same knowledge background isn’t making piles of cash right now.

I know those people out there right now, shorting the marketing and timing commodities and metals, but they are few in number.

By: Dividend Growth Investor

Dividend Growth Investor — Thu, 05 Mar 2009 15:23:50 +0000

Ouch, your house dropped by 33K in value.. At least your mortgage is lower than he house value, that still leaves you with some equity