The real impact of the economy: Batting down the hatches.

[debbierlus]

First, we thought we would have to sell our home, we found HUGE problems with the foundation work & a couple other problems. Fortunately, my parents are springing to fix our foundation & some work that HAS to be done. I applied for a loan to renovate, but they would only give me a adjustable rate (I am currently locked at 6.5). I was thinking about it since I could refinance in a year with no penalty, but watching the dollar & the economy - forgive my French - but NO fucking way.

I don't care if it takes me another five years to get this mess together paying cash. I am not putting my mortgage at risk. I think, busting our butts, we can get the exterior painted, do some interior fixing up for sanity's sake (paint & floors), & put off the installation of the kitchen we ripped out for a while (we have one upstairs, it was a duplex)...

Not taking the loan means another five years of living in renovation, but better that then losing our home. I am disappointed, but at least I HAVE a home, & I am in a good neighborhood in a nice town. I am going to count my blessings.

This economy frankly scares the shit out of me. I think we are seeing the beginning of the big crash (not the incremental torture by a thousand cuts we have been living through for several years now). This economy has already been in a recession for those of us who live in the world of reality & not the talking pundits bubble of spin.

We are going out & buying as many materials as possible while the dollar still has SOME value. Cars are getting tuned up (thank god we paid those off - no car payments make a huge difference - they are both 9 years old, but they have lots of life in them yet). I am buying extra-thick cashmere sweaters, not as a luxury item, but as something to wear as we keep our heat at about 55 degrees this winter. (It is amazing how warm you can be, if you layer, wear a hat, & some snuggly socks). Lots of homemade soup.

And, we are supposedly MIDDLE CLASS Americans. God help & bless all of us, especially those who don't have any room left in their budgets to cut.

I am hoping that the reality of the situation Americans' now find themselves in brings about the change we need. Not having enough heat & food might just get people off their butts, if for nothing else then they are trying to keep warm!

[Hobarticus]

1. I think that's wise...I'm putting off some reno's, as well

Scaling back on spending may be counter-productive, but what the hell else are we supposed to do?

[NMDemDist2]

2. I hear ya

we were lucky (thanks to DU) and sold our over inflated property in AZ and bought a property CASH in a rural area where we have good neighbors, enough land to keep chickens and a large garden, water and salt.

we have less than 15 months left on a car note, then everything is paid for.

If we can swing it, I'm looking into adding a couple wind turbines to the house in the next year (i'll put off the cosmetic changes we'd like to do in order to get a bit of energy independence)

battening down the hatches is right.....

[debbierlus]

7. Good move!

I am going to try to pay off my house early, if at all possible.

[bain_sidhe]

3. There is more than one definition of "middle class"

AT least in my opinion. There's the one that economists use--the "median" family income, which is around $40,000. But that, these days, in many places in the country, isn't really enough for the *emotional* definition of "middle class" -- emotionally, "middle class" is more a state of comfort than a specific amount of money. If you feel you can cover your bills, provide a few luxuries for your family (at least once in a while) and will be able to *continue* doing so in the forseeable future, you're middle class.

$40,000 might well be enough to feel "comfortable" in low-cost "heartland" rural areas, but it's on the verge of poverty in higher-cost cities. I'd say it takes about $60,000 in most cities, more in the large coastal cities.

I think it's *much* harder to be part of the emotional middle class these days. One, a sense of job and health security are hard to achieve these days, which takes away the "can meet my bills now and in the future" component, and two, the rising cost of higher education makes it seem harder to move up the ladder. I.e., if you know you can't afford college, you're more likely to feel that you can't improve your lot in life.

Stories like yours are just the tip of the iceberg, and it's a very large iceberg. And yes, I HOPE it means that more people wake up, but I WORRY that people will feel so much uncertainty, so much of a "siege" mentality, that they'll turn to the first authoritarian who'll promise to "make it all better." Sad but true that one of humans' first instincts when fearful is to look for someone "strong" to "protect" them.

*P.S.- not to be a spelling authoritarian, but it's "battening" as in "to furnish, fasten, or secure with *battens*" which are small strips of wood. This concludes our lesson for the day. ;-)*

[debbierlus]

5. I didn't think my batting down the hatches looked quite right...

Lesson learned...

Thank you!

And, excellent post. You are right. It takes about 60,000 a year here in Western MA in Berkshire County. Average home cost 250,000.

With 60,000, you get to go out to eat once in awhile, you can get a good grocery order every week (being frugal), & you can live a MODEST comfortable life. This is buying most stuff second hand, btw. That is provided you have health insurance. If you have to pay out of pocket health insurance for a family of four, up that number to 75,000 & 80,000 dollars. And, with the cost of heat, up here in the Northern States, that number may soon require another five to thousand dollars tacked on. And, with the decreasing value of the dollar, add on some more.

[Warpy]

4. I think you're being wise

because we all know we're in for a period of economic discombobulation, if not downright depression, as the wages of this administration's sins have to be paid.

Anything is better than taking on an ARM right now, no matter what the motor mouthed salesman says about converting it in a year. We all know you could be stuck if you signed on that particular dotted line.

My hatches are also battened down. I will be doing my renovations, it's getting to the eleventh hour on some of them, but I have the money sitting in my checking account because I've been living as frugally on a moderate income as I did on a starvation budget. Should I run out of money midway, I'll be living in detritus until I save enough to finish them. I will not be dipping into my principal, nor will I take on debt.

I just hope I'll be able to continue to help folks who haven't been as lucky for the duration. I keep having nightmares of an economy so fouled up by GOPs that I'm left living on loan repayments from KIVA.

[Joe Fields]

6. very well put. Thank you & recommended!

[earth mom]

8. I'm in a similar situation.

We have a fixer upper & need a new roof & heat pump to the tune of $8K for the roof & about $6K for the heat pump/air con. Last spring, a bunch of stuff broke around here within a couple of weeks of each other-computer, washer, dishwasher, t.v. and we also had some things we wanted to do to the yard-fencing, paths etc., so we looked into taking out a small second or just refinancing the whole house. The good news is that we have a lot of equity, the bad news is that our credit isn't stellar due to previous years as the working poor so it should be no surprise that we also were offered a goddamn adjustable rate. The mortgage broker wanted us to take out extra money as a cushion to keep in the bank to help pay for the larger payments until we refinanced at a lower better rate in 2 years. My hubby was all for the deal until I showed him just how much of our equity the loan would eat up. Then I said to him "What if we can't get a lower fixed rate? What if we can't get a fixed rate at what we're paying now? We will be totally screwed if that happens!" So we came to the conclusion that it would be better to fix one thing at a time and do it all "the old fashioned way" by saving for what needs to be done as we go. We figure with our tax return early next year plus some saved cash and shopping around for some better price quotes, we should be able to get one of the big things done. This winter it'll be layers of clothing, space heaters-which work surprisingly well-and also some new down comforters that I've been trying to find at a good and reasonable price.


The way things are going in this country and with all signs pointing toward the Great Depression 2, I can honestly say that I am grateful that we have a roof over our heads and that hubby finally has a decent paying job after years of hardship. I really feel for those who are living on the edge with adjustable loans and about to or have lost their homes due to the greed of others. Sure, some of those people are shallow fools who asked for it by trying to keep up with the Jones by insisting on owning a McMansion and my sympathy doesn't lie with them. Instead, my sympathy lies with the majority of people who may lose their homes or who have already lost their homes who are just like my hubby and I-just good people with a shattered dream of owning a little place of their own to call home. :(