There has been a lot of talk about the anniversary of the financial collapse this week. Most of it has focused on either the reporters who covered the story or the financial systems that were in trouble. I’m going to get a little more personal and talk about how my life has changed in the last 12 months.
We Paid Off Debt
Shortly after the beginning of the global meltdown, we completed the last of our planned debt reduction. We’d been working on it for months, and the changed financial system didn’t deter us from our path.
We Bought a House
We took advantage of low interest rates, the foreclosure boom, and the first-time homebuyer tax credit to buy our first house. It took us six months of looking to finally have an offer accepted, but we also managed to amass 20% down and make a good deal on a foreclosure in great condition.
We Kept Our Jobs
This is key – we were able to do all of this because we kept our jobs. My husband received a raise a few days after the crash, but other than that, our income has remained flat. We’re not complaining (too much) about that, because we’re happy both of our employers have survived without cutbacks in salary or benefits. We know we’re much better off than most people in that regard. We have friends who haven’t worked in months, but we also have friends who are independent contractors and are busier than ever.
I Didn’t Lose Our Retirement Completely
I kept investing in my 401K at the same level as before the crash, so I eked out a 0.8% gain over the last 12 months. Of course, the bulk of that gain is from my contributions, but the stock market rally has improved my balance slightly in the last 3-4 months. I had a fairly aggressive portfolio because I’m young(ish) and have a long timeline. That means my balance crashed more than the S&P 500, but also received more benefit from the rally.
We Have Some Savings
Even after putting 20% down on a house, we still have a cash reserve as an emergency fund. It continues to grow, despite the higher mortgage, insurance, and property taxes, because the mortgage deductions and first-time homebuyer credit significantly reduced our tax burden. Rather than file an amended return for 2008, or wait until next year, we simply adjusted our withholding so that we won’t be withholding Federal taxes through the end of the year. We’ll still get a small refund in March when we file our taxes, but we’ll get most of the money through the rest of the year, just as we start buying furniture. We actually would have lost some of the credit if we filed an amended return for 2008 due to our taxable windfall income. This year that’s not a “problem.”
All told, I think we did pretty well for the biggest financial disaster since the Great Depression. We’re grateful that we haven’t suffered the way some of our friends have. How about you? Where do you stand a year later? It’s time to finally open those 401K statements and take stock of your current situation so you can move ahead to the future.