What financial crisis? Haven't had a car loan in 20 yrs, house was paid off 8 yrs now. Put a 280 sq. ft. addition on the house and paid cash. Credit card is used for groceries and paid every month 'cause it lines up with payday. Our house is filled with garage sale items, some of the neatest stuff and not made in China. All our books and videos cost .25 to a dollar.

So I ask, what financial crisis?

On this forum I think you're preaching to the choir. For others---I hope so. But I'd like to see it happen out of choice instead of necessity. Sandy

On this forum I think you're preaching to the choir.
I agree Sandy.

I too personally don't have a financial crises, as I have always lived well below my means and been frugal. My 'bills' consist of utilites, taxes, insurance, etc. No mortgage, vehicle, or credit card debt here.

Sue

Same here, but we did take a big hit on our very conservative retirement funds--again-- this week. Still, we're in better shape than those with debt. So far we'll be OK. S.

I think that using less and being prudent in the way we manage our financial affairs and our resources is the way to go for the long-term, but I do not think that it relates directly to our current financial difficulties.

The implication in the opening statement of this thread is that the crisis was caused by people imprudently living beyond their means and that it is their fault that we are in this mess. I disagree strongly with that statement. While it is true that many people have been living beyond their means, they did not cause the mess.

The mess was caused primarily by Wall Street bankers, and the politicians they have bought off with their lobbying money. That created a free for all mentality that says that regulation is not necessary. There were plenty of financial experts who saw the problems and spoke out about it, but nobody listened.

So if it makes you feel better to blame the little guys who got in over their heads in credit card debt or who fell behind in their mortgage payments go ahead. But that is only a small part of the picture. Don't forget that "easy credit" was foisted on the American public, often with deceptive lending practices, where they say in BIG PRINT that this is "0% INTEREST" but in small print specify how fast the penalties and high interest rates are imposed if you are a few days late in their payment.

And don't forget the predatory mortage lender who talked naive first-time home buyers into taking mortgages with attractive initial terms, but that go up astronomically after the first years. THE MORTGAGE LENDERS KNEW THEY WERE LENDING TO PEOPLE WHO COULD NOT AFFORD TO REPAY THE LOANS, BUT THEY DID NOT CARE BECAUSE THEY WERE MAKING BIG COMMISSIONS ON THE LOANS AND THEN PACKAGED THOSE LOANS IN SPECIAL "SOPHISTICATED" INSTRUMENTS WHOSE TRUE VALUE AND RISK COULD NOT BE DETERMINED. That's the core of the problem we're in.

So, like I said, blame the little guy who was led down the garden path, if that makes you feel better. And let's kick them out of their houses. They don't deserve them. As far as I'm concerned there enough blame to go around, for a long, long time to come. We're not getting out of this mess anytime soon.

Could people be more specific? "...we took a big hit..." doesn't tell me much. What percentage are you down? How is your portfolio weighted, in general terms? How long until you retire, or have you retired?

To add to the confusion...I can now get 20% less on a CD than I got over the last 12 mos. (Earned 5.65; now earning 4.5.)

Hard to quantify our portfolio because money flows in and out, but our bottom line is down 4% from year's beginning. Hold a couple individual muni's, mostly mutual funds in bonds and other muni's, 13% cash (MM account).

Our nestegg was invested 44% in stocks, 44% in bonds and the rest in money market funds. But about 4 months ago, when I saw what was coming, I reduced our stake in stocks by 50% -- down to 22%. I transferred the proceeds to money market funds. So now I'm sitting on a bunch of cash and trying to decide what to do, and when. My only regret is that I didn't sell more of our stocks.

I have not lately owned any stocks directly -- only in broadly diversified index funds with Vanguard, and I don't want to change that strategy. EXCEPT I am beginning to worry that the credit crisis will result in a significant uptick in inflation or, if things get really bad, in a sudden devaluation of the dollar, sort of like what happened with the Mexican peso about 20 years ago. People say that that's unthinkable BUT they also said that about the mess we're in right now.

So to protect against such a big negative outcome, having money in gold bullion coins or gold mining stocks is a good idea -- maybe 5-10% of the nestegg, or even 15%. The coins can be a problem because you have to keep them safe, and cashing them is is messy and expensive. But if gold goes to $5 or $6 thousand dollars an ounce [ it's about $800 now], it will be worth it, UNLESS the government suddenly decides to go back on a gold standard and confiscate your gold coins like they did back in the 1930s. That would not be nice. [There are ways of holding the equivalent of gold coins outside the country beyond the government's reach, but that carries its own set of risks, some of which are unknown and possibly very high.] So holding stock in companies like Newmont Mining, a large gold mining company is a sensible alternative because it will go up a lot if inflation accelerates.

The other strategy is to increase the percentage of holdings in foreign stocks index mutual funds as opposed to domestic stocks -- instead of 10-15%, to something like 20-25%. And make sure it's broadly diversified in developed countries and that the fund refrains from hedging strategies to compensate for changes in currency conversion. If the dollar continues to lose value relative to other currencies like the euro, the Swiss franc, etc. you want to maximize your benefit in that devaluation in the dollar -- so, no hedging strategy.

I'm planning to follow this strategy soon, but slowly, a little at a time over a few months.

As I've made a substantial number of moves during my lifetime and have not owned a home, I've been buying some stocks and regular, mainly equity-based mutual funds, not recently for the latter, with a few ETFs.

Down about 10% ... last week.

There was to be a buyout of Canada's largest phone company, arranged before the recent market slide ... and partially to be underwritten by the Royal Bank of Scotland ... which the British government is now assisting ... so some say that their participation in this supposedly ironclad buyout is becoming quite problematic (read "improbable"?) ... recent slippage in the stock price leads one to think that is in the cards.

While checking with my bank about spread between borrowing using fully-secured L O C and margin account with stockbroker, was told Thurs. Oct. 2 that I have only unsecured L O C, that they can only accept GIC or a home as collateral, so thought that if the policy-makers at the bank say that my stock and more diversified mutual funds are of nil value ... they aren't worth much to me, either ... but didn't plan to sell much, if any ... possibly because they'd gone down so much. Planned to write some friends in investment groups about that experience ... didn't do so till after big fall, last Mon., then included an apology. On Wed. I found that my L O C is still fully secured ... that my origininal informant is wrong. But I would have been well advised to have sold some, 10 days ago, as there has been major drop, this week.

However - which one(s) to sell? Some go down a great deal more than others, and often it's hard to judge which one(s)will/may? suffer the big dip.

On the other hand ... we have been told for years that those who try to time the market, hopping in and out, don't do well, as guessing wrongly a few times ... means that one will likely miss out on some substantial increases.

Those who invest a given amount, regularly, do best in the end.

I have far too high a percentage of my total asset in North America, mostly in Canada ... we've been living much higher on the hog than our descendants will be able to do, and we need substantial assets based elsewhere ... and other than based in Dollars, whether U.S. or Canadian ...

... for when the U.S. gets a sniffle ... Canada gets pneumonia, since so much of our exports go over that one border.

I live on much less than my pension income, so am not under pressure to sell assets when I don't choose.

I have few needs - most seniors are cutting down, rather than adding to their possessions.

As each year goes by, perhaps especially now, as I near age 80, I become more aware of it: the number of my future years on this dimension of life decreases - annually: my short candle is getting shorter!

However - my bequests will be to two offspring, neither of which will be under any pressure to liquidate the asset over the short term, and one of which is much shrewder as a manager of money than the other.

Quite likely some assets will be transferred intact to a central charitable institution, which produces a major tax benefit to my estate, and the agency is quite well versed in shrewd money management and will disperse various amounts to operating agencies over an extended period.

The major reason to liquidate some assets over a short period following my death will be to pay income tax.

So - I'm not getting upset about short-term fluctuAtions in the market ... but I doubt that recovery will be nearly as fast as in former cycles, this time.

ole joyful

P.S. For further info on my recent financial issues and opinions (plus a discussion re money management and taxes with local Member of PArliament currently running for re-election), see thread regarding "Mortgage"s, titled something like "Mortgage Woes", over on "Money Saving Tips", I think (or here).

o j

If we do what scootawop says we kill the economy.
The whole model is totally screwed up. I'd like the crises to fix that somehow.

We live in a small rural community and both houses beside us have gone into foreclouser. Both have been due to over spending and the men of the households not working for more then a few weeks at a time. I don't feel sorry for either one of them. We are " NOT" talking about big expensive houses. Truly their spending got them into hot water.. I know the one house was bought 4 years ago for $60,000 and when it was all said and done they owed $150,00. When you go out and buy a $40,000 vehicle, 52" Tv, new big washer and dryer, have 5 horses to feed, sewing pool and on and on and not want to work, someone is coming to take your home... Anyone can sit down with a pen and paper and figure out how much you have coming in and what is going out to figure out you can't afford something. Many knew they could "NOT" afford the loan when they took them.. Why is that someone else's faul

We have one charge card and pay it off every month or we don't use it.. Did you see the Oprah show that had a couple on that was $90,000 in credit card debt? How in the world did this happen?? When the financial person said they needed to sell the house I thought the woman could not believe what she was hearing... How stupid could one person be??

It is going to be interesting to see what happens in the future to alot of these people..

Susie

No financial crisis in this household. But our investments have taken a hit to the tune of about 23%.

The only loan we have is our mortgage and the plan is to pay it off in 10 years. We have one credit card and the bill is paid off every month. No rolling over into the next month.

I'm retired, just this past June after 33 years in public education. My wife is continuing to work because she wants to not because she has to. We do not need our investments right now so we will sit tight and continue to consult with our financial adviser as to what moves we need or should make.

Just bought a pre-owned vehicle and paid for it in cash. We do not purchase new vehicles. You get a much better deal shopping around for pre-owned.

As to who is to blame, look at Washington, D. C. and there is your answer - both side of the aisle. Many articles were written about the loosening of regulations all the way back to 1999 by the WSJ, all saying it was a big mistake. Alan Greenspan said back in 04 that Fannie Mae and Freddie Mac were headed for disaster. Legislation was introduced in Congress in 05 to rein in both outfits and it was killed.

Frankly, some people never should have received mortgages. They were not financially capable of keeping up with the payments. And yes, some were conned by mortgages brokers. But at what point to you take responsibility for your own actions? People have to wake up and realize that credit is not free and there is a price to pay for be irresponsible. Well now we are all going to pay for irresponsibility.

Our bank is stable and does not suffer from subprime mortgages. They are a privately owned community bank that has maintained very strict lending policies. They do not bend. And for that we are very thankful. And they are loaning money, car loans and mortgages, provided you have a down payment and you financial and work history are good.

Our son and daughter-in-law have adopted our money philosophy. No credit cards balances go unpaid in any month. Pay them off. They had one car loan but paid it off. They are saving to buy a house or condo and will use the tried and true formula of 25% of your monthly income goes to the mortgage payments and up to 33% of your monthly income is for the mortgage, taxes and all other home expenses. Their first house will not be the big one but they know that they have to work their way up the ladder as we did and her parents did.

So I'm now off my soap box.

Enjoy the journey.
eal51 in western CT

I 'happened' upon this post and find it hard to believe that someone would still want to borrow money after already being turned down once.

It is a case of the old I want it NOW syndrome IMHO.

Some posters suggest they check out firstagain.com. When doing a search on that it says...Excellent & Substantial Credit Only AnythingLoan Rates as low as 5.99%
Anyone wanna bet that Firstagain is making loans to risky folks?

When my DD was first looking for a house maybe 10 yrs. ago she was told she could buy much more than she actually could afford. And the realtor took her to homes I knew were out of her price range. The realtor actually suggested that since her dad is a veteran, he could apply for a VA loan for her!

I called that realtor and gave her a piece of my mind, but not a piece of our credit. Sandy