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October 13, 2008

What, me worry about the economy?

J0422203 The Wall Street bailout package that was supposed to save the day for the American economy doesn't seem to have helped much yet.  In fact, it looks like Wall Street has decided to go into free fall instead, and we're all getting mighty nervous, because if there's anything we Americans want, it's for things to get fixed NOW. But it's only been a week, and something my Weight Watchers leader used to say seems to be a fitting analogy: you didn't gain the weight overnight, and you won't lose it overnight either. Even though it feels like the crisis has happened very quickly, it took a long time to build to the point where it is now, and it will take a while for it to adjust and regain its footing. When it does - and I do believe it will, eventually - it's probably going to look different from what we knew before all of this happened.

For some families, chances are it will look a LOT different, but right now I don't see that being the case for my family. We may be a little better off, or at least slightly less worried, than some folks, though, because we just might have a bit less risk exposure.

We owe some money on our credit cards, but we have enough in the bank to pay them off at one shot if we needed to, and we'd still have some left over (but not much). Other than that, we are debt-free. Our cars are older, but they're pretty reliable - why else would you buy a Honda Civic, anyway? - and they're long since paid for. The kids are in public school, and even our luxuries usually aren't that expensive, although we'll be keeping a closer eye - and a shorter leash - on them for awhile, I'm sure.

"Debt-free" in our case includes property. We're not worried about losing our home to foreclosure, because we don't own our home in the first place - there's no mortgage to foreclose on. My husband and I both became former homeowners when our respective first marriages ended, and we don't see joint home ownership in our near future. We've been priced out of our Southern California market for a long time, and even though prices are dropping, there's nowhere near enough in the bank for a down payment - especially now that down payments actually matter again. We were too traditional (old-fashioned? cautious? cowardly?) to go for one of those creative-financing mortgages that have caused so much trouble. While some might say we've been "throwing our money away" on renting, I could never see a mortgage that didn't build equity as much different from renting, anyway. (We'll actually be renting a new place as of next month - paying a little more, but getting a LOT more for our money - and we're hoping that turns out to be a stable, long-term arrangement.)

We do need regular paychecks coming in to pay that rent, though - and we need TWO of them. I tend to believe that "job security" is a thing of the past, but both my husband and I have transferable skills and work in industries that I think may be pretty safe for now. I'm in the nonprofit social-services sector, and economic troubles tend to create even more demand for those, although the fact that our programs are mostly funded by government contracts may mean cutbacks when we're most needed, and donations to my organization are almost certain to drop. My husband's job is in the health-care industry, and he has skills that he could freelance if it comes to that. We have the potential risk of job loss - not unlike plenty of other people -  but we're salaried professionals in a dual-income family, and I think there are far riskier employment situations one could be in these days.

But assuming we do keep our jobs, we'll be working at least another twenty years anyway, and we were getting skeptical about retirement even before all this blew up (or sank). I'm a pretty conservative investor - balanced index funds for me, thanks - so I'm not feeling the market drop too badly yet, at least according to the one retirement-fund statement I received this week (although I am a little more concerned about the other fund - the one with AIG - and I haven't gotten that statement yet). My husband has more invested in stocks than I do, and he's felt more of the pain. All of our investments are in IRAs or 401(k)s, though; while it's tough to watch them lose value, it really doesn't affect what we do on a daily basis. We're leaving them alone, and I believe they will eventually grow back, just like a bad haircut. The kids' college funds will grow back too, although since the elder one is only four years away from her freshman year, starting out at a two-year community college is looking better and better. (Hey, both her dad and I did that - it's really not that bad.)

I might just be kidding myself, but right now I'm not all that worried about us - and I'm a pretty accomplished worrier. Our bank doesn't get mentioned on the news, so I hope that means it's pretty stable, and we can rely on our cash. Everything else is just "on paper," and as long as we don't need to turn it into cash very soon, I'll try not to stress over it too much. I think we're OK, and I feel like we're going to continue to be OK for now. Depending on what happens on November 4, though, I may find a LOT more to worry about next month.

An original Los Angeles Moms Blog post

Florinda Pendley Vasquez is a fiscally conservative accountant who blogs about her various worries at The 3 R's: Reading, 'Riting, and Randomness.

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