The Road Back From The Great Recession

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Joan and Pete Young were “knocked flat” by the recession, They’re now slowly getting back on their feet.

CNN Money is doing a retro-fact article highlighting several people who have weathered The Great Recession Of 2008 and where they are today, ten years later. It’s an interesting piece (click here) that chronicles the many, many difficulties most of us all had to face: declining property values and net worth, job loss, foreclosures etc. Truthfully, once you go through a financial upheaval, such as The Great Recession or the 1929 Great Depression, it’s hard to eradicate the lessons you have learned along the way.

 

Nick and I learned our financial lessons from the 1987 Stock Market Crash and the 2001 Dot Com Disaster when we lost ALL of our money. TWICE. We learned never to be in debt and by the time 2008 came around we were mortgage free, car loan free, credit card free and had absolutely no debt whatsoever. You would think we were in great financial standing, which technically we were, BUT we still felt the pangs of The Great Recession nonetheless.

In 2007 Nick and I earned $50K a year. By 2008 we barely earned $39K. Nick took a big hit in salary, going from $35 an hour down to $20. By 2010, Nick was lucky to be earning $11 an hour. Nick went through a series of job losses, as did I. We each kept losing jobs, never could qualify for Unemployment Insurance. At one time, I applied for Food Stamps but refused to follow-up on the state’s offer. It got to the point that Nick was earning $332 a week. I was earning $200 a month. By March 30, 2009,  we were living on $2,500 a month, down from $4,500. It was NOT a pleasant downward journey.

I was obsessed with buying food. There were too many times Nick and I had to go without food. People don’t forget experiences like that. Since I keep a diary of my life (as I have since age 14) I have well documented the many, many struggles Nick and I went through since The Great Recession took hold, till even today. I remember back in April, 2009, layoffs were about 650,000 per month! Wal Mart was laying off 11,500 people. GM was facing bankruptcy. Florida had become the foreclosure capital of the world! My freezer and pantry today are overstocked with food. I just can’t help it. I purposely overspend when it comes to the food department.

In 2005 I had inherited money from my father’s death. I wish I had known then what was to be in store for us because in retrospect, I didn’t manage my inheritance well at all. Right off the bat, I was hit with a $187,000 tax bill and I owed my attorney $30,000 for his year-long fee (the executor of my dad’s will wouldn’t release any of my inheritance money for three years, so I had to threaten to sue the estate) I bought cars for cash, RV’s for cash and rather than invest in the stock market (because I lost in 1987 and 2001) I bought an investment property. After 10 years of ownership, I lost $100,000 in its sale.

Thankfully, I did invest much cash in laddered CD’s (paying 2%) in ROTH IRA’s. In order to fully benefit from the tax breaks, I split my inheritance in two and deposited half in my name and the other half in my husband’s name. In 2010, the only job Nick could get at that time (after a career in engineering) was as a manager of a local deli. The pay was $700 a week. I was barely making any money myself. To put the final straw that broke the camels back, my husband had a fucking affair with one of the female deli workers and all hell broke out in our marriage. I immediately filed for divorce, left the marital home and went to live in Newport, RI (in the investment property I had purchased, for cash) I got a job working as a journalist for a local newspaper. I was paid $65 an article and I begged my editor for at least a minimum of two articles per week (so I could afford food and gas).

This is when my husband went off the rails. He actually withdrew ALL his money out of the ROTH IRA’s I had set up for him and proceeded to blow ALL the money. He spent it on his girlfriend, his buddy friends (buying them cases of wine, buying himself fancy clothes and jewelry, restaurant meals for everybody) I made a distinct entry in my diary on July 7, 2010. The notation stated that something clicked inside my brain that day. I no longer saw my marriage as a romantic one anymore. That has never since changed, despite our getting back together again (when Nick’s money ran out, the girlfriend split and Nick was served with divorce papers). Nick and I are just very good friends now who have come to realize that financially we are good together. Apart, we are paupers.

On May 30, 2011 our savings was down to $45K. Gas was $4.00 a gallon.

On June 16, 2011, according to my diary, we were officially ‘poor’.

Nick has the ability and capability to earn big money. I am a genius (now) at good, sound financial management. We both buckled down, ceased our foolish ways and mutually decided to make a come back. Which we did. We had gone bankrupt twice in our relationship (1987 and 2001) before. We were not going to go down a third time. We still lived mortgage free, car loan free, credit card free, debt free…….we just had to build up our cash reserves. I sold the beach house in 2014 (at a $100,000 loss) and re-invested the money back into laddered ROTH IRA’s, index funds based on the S&P 500, bought another investment property in Florida (for cash) and we somehow both got ourselves back up to where we left off before The Great Recession madness started.

Then in May 2015, Nick suffered a heart event. He was unable to work for 1.5 years.

Nick and I used to have a net worth of $1.2 million dollars. Today we’re worth around $615K, half of what we used to be. We still live on $2,500 a month. I still earn about $200 a month. Nick must work so that we do not dip into our dwindling savings/retirement accounts. I consider that his punishment for the financial and marital upheaval he put me and our two daughters through. We have re-established our good credit but we are extremely cautious about it and use it judiciously. To be further truthful, my relationship with Nick will never be the same. We’ve been together for 36 years to date but any hint of romance has long since dwindled. We’re together due to survival plus we enjoy each other’s company AND the lifestyle we have etched out for ourselves. Is it love? I dunno. I make sure, however, that no matter what happens, I have the power and the resources to continue living on my own.

Ten years ago, this is what everyone’s financial world looked like. Never forget:

 

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