Category: The View From Your Recession

A reader writes:

After reading the stories of people's recession on your blog these past few months I can't help but feel really blessed lately. I'm a software engineer that grew up in a trailer in Arizona, just like the movie Raising Arizona, except without a dad to steal for me and about 4 more babies. I graduated college at the height of the dot com boom just in time to get a sweet job and then get laid off, so I've been planning for something similar ever since. Work has not let up at all for me this

year. In fact there's more of it with tighter deadlines.

I have no debt (other than a mortgage that I'm closing in on), no credit cards and a very high paying job that I love and that has given me the opportunity to have worked on websites and built applications for companies that I'm sure 90% of your readers would know about. I work from home, so gas prices really only affect my groceries. Naturally I buy in bulk as much as possible. If work dries up I still have a small recurring income from internet ventures I've started over the years that would pay most of the bills each month.

My main investments over the past  years has been fine wine and my house. It just made sense from my perspective that I invest in something I can consume. It's never been a better time to purchase wines for investment. If it's the end of the world as we know it my fiance and I plan to get on the roof, smoke a joint and get drunk because that's how the song goes.

I've always had a budget and a plan for as long as I can remember. A small part of that is to meant to make forays into the stock market and last week when Citi was down just above a dollar I bought 10k shares of it. Yesterday I sold when Citi was around 2.50. Profits will go toward my mortgage. Barring complete economic meltdown I should be able to completely own my house before the end of the year. I'm 31 years old and the prospect of not having any debt makes me as ambitious as ever.

While I'm better than most financially I'm not immune to what's going on around the country. Most of my friends have been keeping up with the Jones' for years and I've had to watch them lose their jobs and self respect over the last few months. It's heart breaking to my fiance, but for me I've very apathetic. One of my friends actually hosted us at a nice dinner (that they probably couldn't afford), presumably to get us liquored and then to ask to borrow money. I didn't and now he blames me as much as anything for them having to go into bankruptcy. I can see it in his eyes when he talks to me.

All the sad stories makes me feel blessed for having the struggles I've had. My mother raised 5 kids by her self. We were poor because there were a lot of us, not because she was bad with money. None of my siblings are struggling at this moment either. While I'm apathetic and wouldn't trade positions with those that got overextended I'm still the poor kid who is jealous that others have something that I don't, so I go back to work because this is America and anything is possible. To struggle can be a beautiful thing.

A reader writes:

I've spent the last 9 years building my company.  Up until 4 months ago we had 14 employees, were twice listed in the Inc Magazine Top 5000 growing companies, top 20 in the LA Business Journal fastest growing LA County businesses, etc.  We felt that we'd reached a point where a solid foundation was established, as the sleepness nights worrying about (mostly) financing were waning as sales were mostly steady, month after month.

 

Now it's almost

over. 

I'm down to 3 employees and they all know that the end is near—I've implored them for the past 2 months to spend as much time as possible job hunting, while at work (as there simply isn't much to do here), as the doors are most likely closing by April 30.  We've gone from $800k a month in sales to <$100k last month.  Thankfully most of my previous employees were able to find other opportunities, but there are a few who are not having much success.  The lawyers & lawsuits are at the door & explaining to them that there simply isn't any $$ to pay them—that the secured creditors have all of the company's assets virtually locked up—isn't dissuading them.  I have 5-6 of my customers who are in similar shape and I just don't have the heart to be the one that puts the final nail in their coffin.  Several of my vendors are going to lose hundreds of thousands of dollars when we go under.  I'm devastated by this as these have been my friends & business associates for 5+ years.  The effect on their families is ruinous. 

Personally, I'm ruined.  I'm facing a personal bankruptcy, whereas one year ago my personal net worth was in the low to mid seven figures.  I really don't know what I'm going to do next, and I'm stalling/procrastinating at either job searching or establishing a new business (which seems impossible given the lack of access to capital that exists).  My wife & I have a cash nest egg that should hold us through most of 2009, so we aren't in as bad a shape as most, however the sheer magnitude of the reversal of our personal situation is crushing.  We didn't make our success based on flipping houses, stupid investments, or pie-in-the-sky business investments—we both worked extremely hard, 60-80 hours a week, for the past 5-6 years and felt like we were at the pinnacle of our chosen careers.  To see it all vanish, this quickly & completely, could be depressing but for some reason isn't.  I remind myself at least 4-5x per day that we are going to be ok, that the fundamentals of our life are sound and that the country as a whole will eventually get back on track.

 

My self-assurances are beginning to sound a bit hollow.

A reader writes:

I left a job in journalism last year to focus on my own personal writing. As 2008 wore on, I found it harder and harder to find work until finally the money completely dried up. My wife's salary is small but just enough to keep us chugging along (as we have no kids), but it certainly led to plenty of strain between us. In the fall, I accepted an offer to go and work for the Obama campaign in a state halfway across the country. While I was away, my wife cheated on me. I found out at Christmastime, which made an already spartan holiday even more dreary.

Normally, that's the sort of indiscretion that would end a marriage, but in this case, I could not afford to move out, and it ended up being cheaper to pay for counseling through her health insurance so we could at least live with each other.

The counseling managed to rekindle our friendship and is now rekindling a love that we left untended for far too long. I don't harbor any illusions that this will all be put behind us quickly or that this means our love is here to stay, but it has reminded me what a good thing having a caring partner can be and just how easy it was to let her down in that regard when we were both too consumed with keeping up with the Joneses.

I hear about this from lots of couples our age (late 20s). They got married way too young, found they weren't sure they could make it work and now should probably divorce. But this economy is forcing lots of them to stay together, and many of them are finding out what made them click in the first place. Obviously, there are cases where divorce is the best option, but it strikes me that one of the unintended factors of the "you can have whatever you want, whenever you want" culture I grew up in was that it made EVERYthing disposable, including spouses and relationships one once cared about.

I still only have a part-time census job. All of the writing I'm doing is for purely personal reasons. I can't break back into the newspaper business, even with a stellar resume. We have basically stopped spending money on non-essentials, and we may soon have to shut off the Internet. But, as the saying goes, we still have each other, and in a way that we might not have if not for the economy cratering. The recession has taken away everything, but it has also given me, indirectly, so much more.

A reader writes:

I'm an American in my early 20s, the ink on my Ivy League diploma not yet dry, plunging into my first job. I'm writing to say that I am doing just fine in the recession. My company is hiring, the economy is still growing at an impressive clip, and the hope and optimism that tomorrow will be even better than today is palpable.

I can say this because I didn't follow my fellow college grads to Wall Street in search of money that was so abundant and so certain that it seemed too good to be true (as it turned out to be). While my friends went to Manhattan; I went to Mumbai, opting for a management trainee program at an Indian conglomerate that is looking for Americans to bring fresh ideas into the company.

I would be lying if I said every day weren't a challenge in matters corporate, cultural, and even culinary. India is a sea of cultures wildly different from my own, and it is still a developing country that is rife with mind-numbing "Slumdog"-style poverty. Communal and class tensions simmer and occasionally boil over, exploited by greedy politicians for their own short-term gain. And I am getting paid Indian wages; while I live very comfortably here, the US government considers me to be living below the poverty line (which, as it turns out, doesn't stop my beloved alma mater from asking for money!)

And yet, in spite of all of this (perhaps because of it in some ways), my experience has been unrivaled. It is as exhilarating as it is enlightening to be here. Working in India, I stand on the frontier of the flat world, the Wild West in the East, watching what will soon surpass China to be the world's most populous nation drag itself, kicking and screaming, into modernity and prosperity, and the broad, sunlit uplands of its destiny as a superpower and a pillar of the Free World.

Judging by the flood of applications our company received from the Class of 2009 (a four-fold increase in applications over the previous year), it looks like the recession is compelling other students to look beyond their own country (and comfort zone) for career opportunities.

America may lose some of its best talent now, but in the long-term I know I will return to my home country, and I think America may gain from the small, but growing number of American's best and brightest who are learning first-hand the often-innovative business practices from other countries (you wouldn't believe how much more Indians have learned to do with less!), becoming more familiar with cultures of the world, and increasing the exposure of the world's people to real live Americans, who (much to their delight) are not like George W. Bush.

A reader writes:

I'm an author of European historical romances. I've been published for more than ten years now and write for a major New York publisher. While publishing companies are taking pay freezes and handing out lay-offs as much as the next company, and while it's true that book sales across the board are down, including those of other genre fiction, the romance imprint of my particular company is making money (if only a little), as are those of other

companies.

Torstar, the company that publishes Harlequin category romances, actually made money in the fourth quarter due to Harlequin sales.

In the report, it states: "Harlequin finished the year strongly with another good quarter that drove earnings for the year up 11 percent. This is the third year in a row of business growth for Harlequin which is making important gains in both print and digital products. We are very pleased with Harlequin's performance and prospects." And, "The outlook for 2009 is mixed and marked by uncertainty due to the economy. At Harlequin, we expect continuing stable results building on the success and growth of the last three years. Overall, we anticipate Harlequin will deliver a fourth good year in a row. Harlequin's results have held up well to date despite the recession. Subject to trends in employment advertising, we also expect continued good performance from our online businesses, but with lower rates of revenue growth than in previous years as overall advertising expenditures are constrained by the economy."

Although the romance novel industry is constantly derided from the outside, made fun of and considered "trash" by the uninformed, these are not the romance novels your mother read, nor anything like the Barbara Cartland books gathering dust on your grandmother's bookshelf. This is a HUGE business of numerous sub-genres for all tastes, and regardless of what anybody thinks, romance novels SELL. Romance fiction generated $1.375 billion in sales in 2007. And while other forms of entertainment suffer economically, romance novels usually sell better during economic downturns. Why? Probably because it's cheap — anywhere from $4 to $8 for several hours worth of escape in the privacy of your own garden, bed, or bathtub — and best of all, when times are awful everywhere you're guaranteed a happy ending. 

A close friend and fellow mid-list romance author just signed another contract last week and received a raise. Yesterday, along with my ongoing contract for new books, I signed new contracts of my own so my publisher will reprint my backlist. We're not a huge stars, nor are we rich, but there are a lot of people out there who are going to spend seven bucks on the next one– if only to help them forget the tough times we're facing right now.

A reader writes:

I'm in my late 20's, and have spent the past 6 years working in systems engineering and operations.  I've worked my way up the ladder to the point that the next logical jump is a management role.

The current economy means that the jobs that I would have been applying for had I gotten to this point 2 or 3 years ago no longer exist, or not many of them.  There aren't nearly the number of smaller tech companies that want to take a bit of a risk on someone untested in a management role, so it would be hard to move up the ladder at the moment.  On the other hand, I have enough experience/skills that I have a high level of job security, and an active job market for my skills should I choose to leave my current employer. 

So I'm looking at this downturn as an opportunity.  I've spent a few years saving with the idea of putting a down payment on a home, but prices haven't softened in my area (Boston) as much as they have elsewhere in the country, and renting is still a better deal.  So instead I've taken those savings and started aggressively building an IRA, built on conservative (but historically successful) investments like S&P 500 tracking funds.  It means putting off some of those milestones for a few years, like buying a house, but making even pessimistic assumptions about the economic recovery, should mean I get to my mid 30's with retirement savings that are in pretty good shape, and more than enough to make a down payment at that point.

As of a year ago, all of this was a stretch.  This part of the country is one of the few that has a large number of jobs in my field, but all of those areas of the country have been very expensive for a long time.  No one in my position has been able to afford a home here in this decade, unless they had money from their parents to fall back on.  And trying to save for a reasonable(!) down payment (in this area that means needing $50k or more) almost entirely eliminated retirement saving as an option.

The point is, the recession is hurting a lot of people.  But for those of us who are young and lucky enough to work in growing fields, it's putting us in a position to pursue some of the goals that were until very recently apparently out of reach: household savings that will provide for us in retirement, home ownership well within our means, and wealth building based on something other than our parents' largesse or good luck with options — in short, financial independence. 

A reader writes:

My husband and I have had our income cut in half. He has been a real estate investor, steady and fiscally conservative, but the downturn has been brutal even for those who did everything right. His equity is

halved or more, his income is negative.

My own job (I'm a biologist) is fine for now, but not assured. It doesn't help that our marriage (we are a gay couple with two children in California) is not recognized federally and might be 'annulled' soon. It makes for very complicated financial planning and much reduced support (social security, benefits, etc, etc).  Because of the loss of much of our income and tentative feel of the rest, we've had to make drastic cuts: selling a car (of two), cutting out cable, cutting our grocery bill in half, canceling periodicals and newspapers, not dining out, we had a garage and ebay sale of all our unnecessary stuff, turned off the heat (we live in SF bay area, so it's chilly, but not cold) and, something my grandmother said her family did during the depression, we are taking on boarders, renting our our downstairs rooms (cutting our living space from 2400 to 1500 sq ft for ourselves and our two children).

We have two major places to cut left, but we have put those off as a last resort. Housing and health insurance. We could move to a less expensive city to live in, but at this point we are not sure we could even sell our home in this market or break even. Or we could cut our insurance coverage, which we have to pay in full (company doesn't cover). We've already cut my husband's last year because the price of insurance went up 20% and he's the healthiest of the two of us. Neither of those choices will be easy ones to say the least.

We know we are lucky, there are those that had to give up so much more or lost all their income. And, on the bright side, up till now we are actually beginning to enjoy the cuts, more time with family  and friends and around the dinner table, less life-clutter. It won't be good for an economy based on consumption, but I think many, if not all, of these new frugal habits will stick. We are enjoying them.

A reader writes:

My wife and I are the owners of a small, neighborhood adult boutique (ok, ok, a SEX shop) and website in Los Angeles, CA. Each week, we nervously watch as small business after small business on our

stretch of Venice Blvd folds up and calls it a day.

It started with the video store up the street, then the female-owned surf shop, a restaurant or two, the auto parts store… you get the picture. Empty storefronts now almost equal occupied spaces. Each day, our few customers ask us how we’re weathering the downturn. “Hangin’ in,” we tell them. Inevitably, a comment comes forth to the effect that the adult industry is somehow immune to the economics of other businesses; that, somehow, people tend to have MORE sex in lean times, like drinking alcohol, watching more television, and going to movies. We just nod.

Why bother telling them our sales are down 35% from last year, that we’ve racked up 50k in credit card debt to keep our doors open, that we’re barely making mortgage each month, haven’t taken a vacation in over five years, or that we had to lay off our two employees and increase our hours to 12 per day, 6 days per week in the HOPE we’ll make it? Immune to the shrinking GDP and rising unemployment figures? Hardly. Gawd help us if we get sick as we gave up our health insurance to save $600.00 per month over two years ago.

Truth is, we ARE faring better than most small businesses around here. No one’s rushing to bail us out (indeed, Bank of America laughed at us when we asked for a loan to consolidate our high interest debt), but somehow, we soldier on, the ulcer-like pain in our guts a constant reminder bankruptcy is one bad month from reality. Ironically, though in the business of promoting sex and intimacy for the last nine years, our own sexual frequency has hit an all-time low. Despite all this, we have faith that things will turn around, eventually. It has to.

A reader writes:

My recession feels a whole lot like the last 7 years.  My employer's business is way TOO good.  I would like it to die down A LOT.  I am constantly offered opportunities for positions allowing 24/7 work for 12 months at a time.  When I decline to volunteer anymore – I still am afforded the position anyway.  No pay increase with those positions of course, but damn, business is good.  I still accrue 30 days paid vacation each year but I can't find time to use it – that's how good business is.   

But then I mount up and roll out just like yesterday…and the day before…and the month before…and the year before.

My employer?  You guessed it.  The U.S. Army.

A reader writes:

At the risk of sounding somewhat obnoxious, I am finding this economic crisis rather soothing.

Back in 1999, I was earning a decent salary (about 60k a year) and had good career prospects at a major daily newspaper. Then, pre-millennial angst crept in: Is this all there is to life? So, I cashed in my savings and dropped out. I moved to Paris, I worked with an art project, I wrote a couple of books, I spent time living in Beijing and on the Greek Islands.

My philosophy was that the one thing a person can’t afford in life is regret and this mantra carried me off on adventures I couldn’t have even imagined back when I was slogging away at the newspaper. The doubts and panic started last year. I am worth nothing: no assets and a bank balance that rises into four digits on only the rarest of occasions. I find myself approaching 40, a less romantic age to live hand-to-mouth. And then my girlfriend became pregnant. All of a sudden, I was sneaking longing glances at those who had stayed in the game and had pensions, homes, and the wherewithal to give their children a decent start in life. I became very very nervous.

Now, thanks to the plummeting economy, I realize that I would probably be just as anxious if I had never gone off on my odyssey. If I had stayed at the newspaper, I might be jobless with a rotted-out pension and a house that wasn’t worth its mortgage. Though I am still worried about providing for my child in this dismal economy, I am more confident than ever that I made the right decision when I abandoned my safe career to taste the broader glories of life. Because, as is now so overwhelmingly clear, nothing is ever truly safe.         

If this recession serves as anything, hopefully it will be a reminder that you should never compromise your ambitions in favor of the chimera of financial security. If you are inevitably going to end up in the poorhouse, you might as well get there by chasing the wildest of your dreams.