What I learnt from the 2008 recession about financial choices

In August of 2008 I was already part of a group but I just did not know it, I was part of a group of Americans’ that had made bad financial choices prior to 2008 the year of “The Great Recession”. Those of us in that group had single handedly accomplished this by living beyond our paychecks, daily living using credit cards and taking out loans.

In 2016, my fear is that the economy is looking and acting as those days prior to 2008, were everything looked like it was working for us but is really was a sign of things to come. Those bad choices sometimes I see them been made again, $0 down, no payment until 2020; over leveraging the family income, living above your means, not spending enough time with their family and having no savings for an emergency if one occurred.

So what have I seen? So far in 2016, what’s on the rise again?

In 2016, People have Over-Leveraged

1. Purchase of houses.
2. Purchase of vehicles.
3. Refinance both above and get a new loan.
4. Household items financing.
5. Keep three (3) or more credit cards.
6. Work, work, work no time for family.

Prior to 2008 recession I was living a not modest life as a newly separated mom of two (2); owing my own condo (I used my pension fund, for a down payment) bad move. I knew nothing about money, the hubby handled everything while married. In those days I drove an older model Cadillac Deville, and then I drove a Land Rover (yep! I love good things-we called my Land Rover “Betty Blue”), she was a lovely shade of blue also called a luxury car, and expensive to maintain.

Pregnant with child number 3, hubby was not really ready to stay. What to do, (Pro Life or Pro Choice) and I had been restructured out of my job while on maternity leave. Without an emergency savings, no child support and no health insurance ( I cried as I left my doctors office that day) she suggested Medicaid, but oh no, she doesn’t take them. She would not be seeing me anymore if I didn’t have corporate insurance, with a child due in November of 2008, I turned to the government for help.

The Department of Social Services, in Maryland were I lived, is where I ended up getting help for food, electricity, childcare assistance and health insurance and even referrals for other household supplies like; new crib and baby clothes for my newborn son.

At that time it was unusual, I felt ashamed and my spirit was low. Turned out I wasn’t the only one, more and more of us had to apply for unemployment and other assistance; as a result of the downturn in the economy as a result it was no longer unusual.

I remember hearing that the demographics for assistance had all of a sudden changed, no longer was it the people that where on the poverty line. You know, the one we always pointed to, the ones who had section 8 housing or who lived in the shelters, with their food stamp card, the ones who maybe had been grandfathered in by their situation and family or even their environment, the ones who wanted more but knew no different.

All of a sudden most of the working class of America had lost their jobs and they were on food stamps and all the other forms of assistance, they were the people who shopped at Target, BJ’s, Trader Joes, Whole foods, and as a result the revenue dropped at these stores too, because no one was shopping and the stores had to make a decisison to get on board and then they started taking food stamps.

I still wanted to keep the lifestyle I knew and be stylish enough not to be ostracized from society, hahaha. If you don’t fit a certain mold I think you get ostracized, not a wife or single girl. Out you go, nah a single mom does not fit in. I had to be creative; in those days sitting home on maternity leave. that turned into a job loss; I watched a lot of Oprah, Ellen and Suzie Orman Show, Crown Financial and Clark Howard taking in as much information as I could. I remember watching the “Oprah Show” on this day she had a family there, they dressed stylishly on a budget with brand name items, and after watching that show I was hooked.

Fast forward eight years (8); a bankruptcy, coupons, spending and shopping smarter. I have learnt to stretch my family’s monthly income. We have been able to dress in the things we love, well the kids anyways. For me not as much as I would have loved, and furnish our house without going into debt. We may not have everything we want but we have learnt to live without some things, knowing what our priorities are.

Family Priorities

• Always be under the same roof (except for summer vacations and sleep-over’s).
• Pay cash for all items.
• Drive a low maintenance car.
• Mortgage or Rent and utilities should be paid out of one paycheck.
• Never have all your services (financial or utilities) with one provider e.g. same bank for mortgage, credit card, car note, student loan).
• Buy your grocery from the 1^st page of the store circular.
• People over things.
• Time for God and Recreation.

 Financial Priorities Basic

• Housing
• Transportation
• Food
• Beauty and Clothing
• Electricity
• Cell Phone

Daily Habit of Stretching My Dollar

• The older your kids the more you will be doling out for expensive stuff. Doing that on a child support that barely supports is hard, my family are into brand names so, I shop name brand at a discount at outlet malls, online and at department stores.
• I buy one to two name brand pocketbooks and shoe a year, on sale or at consignment shop. And at the goodwill store, if I find name brands while shopping at a good price I snag it.
• I shop sales item at the grocery and drug store, I restock quarterly buying larger sized items using coupons for household and beauty supplies if I have extra cash, if not we shop the smaller sized items, bascic items at the store.
• Unplug all technology and electronics when leaving for work.
• Reduce degrees on BGE thermostat.
• Plan my shopping route around my trips, to conserve gas and save time.
• Always have powdered milk, chocolate mix, peanut butter, ramen noodles, bread and beans in the pantry at all times.
• Buy smaller sizes of household items like disposable cups, spoons, paper plates, paper towels and toilet paper, because I shop the smaller grocery stores. I don’t buy toilet paper and paper towel in bulk any more, I buy the smaller sized one to save money and increase cash flow, use storage space wisely.

Gloria

Change Watch – What  did you commit to that you can undo or pay aggressively towards reducing?