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How are you doing compared to 5 years ago?

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April 10, 2008 – Comments (7)

I like some surveys and I like to contrast them to myself.  This one is about how people say they are doing compared to 5 years ago.

I think I have progressed immensely in the past 5 years.   We had a few hardships, both of us saw our incomes decline in the middle, but we are both doing better now.  Going into teaching right around 5 years of cuts was a disaster to my career and resulted in years of under employment -- I completely under estimated the hardship to the profession or I'd have left the day the cuts came in.  We both have excellent jobs now.

I would say that I was feeling like that survey about the finances being so tight before we sold our place in January.  It was a struggle to make ends meet.  We'd significantly reduced our mortgage payments because of the wage cuts and it wasn't feeling good at all that it was going to be years to pay it off.  But now with better jobs and reduced expenses that stress is gone.

I fault the artificial lowering of interest rates for the problems and out sourcing jobs.  I am becoming a believer in tariffs.  Everyone must contribute to the costs of society and right now "free trade" means that income taxes on those products are not collected, they don't pay a fair share into the infrastructure, and the list can go on. 

Is my standard of living better than my parents? 

My parents were divorced when I was very young.  I still could not afford the home my mom had bought a couple years before she died and my mom never finished high school.  As a couple I could afford it, but she was a single parent when she bought it.

My father made very good money, but he was a walking disaster when it came to managing it.  He taught me about budgets, and about half was allocated to his hobbies and vices.  I have never had anything close to the opportunity in income that he had in life, but my standard of living has been better because I looked at how he lived his life and held it as an example of how not to live my life. 

He had a 34 ft boat, a 43 ft boat, at different times, both of which I got to go out on exactly once.  He also had a 20 ft boat that he owned at the same time as the 43 ft boat.  At the same time he'd owned a place for a year and a half and decided it was too expensive and did a jingle mail.  He never sold the place, he just gave the keys to bank and told them to take it back. 

So, how is standard of living defined?

The biggest losers in the survey, young adults 18-29.  With today's economy I suspect they will continue to be in the "losers" category in their 30s.  The biggest gainers -- those over 65.  Young people should completely enjoy the continuing transfer of what they don't have to seniors through government programs. 

7 Comments – Post Your Own

#1) On April 11, 2008 at 12:35 AM, Sloan500 (68.29) wrote:

well my family used to be very very poor as immigrants coming in to canada. My mom and dad realized how hard life was starting from scratch. They taught me the true value of money especially when you don't have a lot of it to waste. Food was really precious and you had to eat every last crumb of it or else you would starve. Im living much better now...doing IB in high school..public school of course can't afford private and live in a pretty decent house and  a condo investment as well. Life was really hard... for my mom and dad when they first came. They had crappy jobs, low pay and there was barely enough to eat. Both my parents now make around 100,000 each. Life is much better.

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#2) On April 11, 2008 at 12:48 AM, TheGarcipian (60.73) wrote:

Hi D,

I think you've got that right on the nose. It's going to be bad for us moving forward, especially over the next 10 years if we can't stop the bleeding of the US Treasury through wars and needless devaluing of the US$ and overindulgence of Big Business at the expense of Labor (as has been the case for the past 7 years), not to mention the wanton disregard for maintaining any sort of semblance of fiscal conservatism. But as bad as it will be for us, it's really going to bite the 18-25 year group very very hard. Who's to say if there will be fewer or more jobs (seems like more and more are being shipped overseas, though), because I think there will an influx somewhere. Ya know what they say: space abhors a vaccum. Yet, I don't think those new jobs (if any are created) will be better paying ones. With more financial burden being thrust upon their elders due to higher health costs (and lower quality care) and they being unable to cope with these higher costs, this younger group will be able to "completely enjoy the continuing transfer of what they don't have" to their parents and grandparents, to quote you. It's a sad thing to see, really, this once great nation of the USA being tossed out on its ear from so many angles: diplomatically, economically, fiscally, internationally... Whoever the next US President is, s/he's going to have a hell of a time trying to unwrangle the mess the Republicans (and some unbridled Democrats too) have gotten us into. But I digress...

Your question: how am I doing compared to 5 years ago? Hmmm... Well, using my Quicken data as a resource, I see I've done OK, mostly with respect to my real estate and stocks. Salary has not changed that much (a rather sucky 7% total increase in all of 5 years; geez, no wonder I don't feel like I'm getting anywhere!), but with a combination of (a) living below my means and (b) investing wisely (sometimes, sometimes not!), I've been able to almost quadruple my non-IRA stock portfolio value, raise my IRA portfolio by 4.5X (it wasn't much to start with though), and almost double my 401k holdings. I like working in the field I'm in (computers, consulting, aircraft and automotive) but I don't want to work forever. Thus, I'm pushing hard to store money away like some manic squirrel in the hazy days of November. Still got quite a ways to go, though. Still trying to figure out how to transfer what I've learned (correction: am still learning) in CAPS to the real-world so I don't have to continue to work so many long hours...

Thanks for your blog entry. It forced me to sit down (if only for 15 minutes) and contemplate my financial navel.

Cheers,

--Gar

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#3) On April 11, 2008 at 3:07 AM, MakeItSeven (32.26) wrote:

I'm among the lucky people, I guess.  My income last year was about 6 times my income 5 years ago, mostly thanks to the bad economy which gave me a lot of good oppotunities shorting the stock market.

The biggest and riskiest financial decision I made was a year and a half ago.  Even though I don't go out and buy expensive stuff (I never buy a new car, for example, only used cars), I'm horrible at keeping track of the household budget.  WIth my wife going to school and two young kids requiring babysitting (plus an older one going to middle high), in just a few years my newly-opened HELOC account grew quickly to over 80K in debt despite my decent salary as a senior engineer in Silicon Valley.   Since I did pretty well with my existing stock account, I took the risk and borrowed a huge amount more from the HELOC and opened a new stock account.  That new account was up around 150% last year and I can pay off my HELOC as well as my first mortgage with it if I choose to do so.

One of these days, I will have to figure out where my money goes.  For now, I just hope that the stock market will continue to treat me well otherwise we will be in big trouble.

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#4) On April 11, 2008 at 8:34 AM, Gemini846 (50.38) wrote:

I think younger people are more likely to adapt to the changing economic current than subscribe to the same "get good grades - get a good job - work for 40 years" garbage that sustained our grandparents but was hit and miss for our parents.

Whether you like him or think he's a quack, Robert Kiyosaki's latest (Increase your financial IQ) points at the problem in the introduction. I'm not 100% convinced that you can point the finger soley at Nixon for removing us from the Bretton Woods system which wasn't working either at a macro-economic level, but it did make it a LOT easier for the government to print more paper money to do it's bidding.

I have no doubt that the Gov will be making up it's shortfall in SS taxes by printing more money and causing serious inflation 20 years from now when I'm 50 and the "surplus" is gone.

Aristotle said it best, loosly, "Democracy will only survive until the masses determine how much they can vote themselves from public coffers."

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#5) On April 11, 2008 at 10:47 AM, MakeItSeven (32.26) wrote:

SS "problem" is really hyped up.  Even if nothing is done, there's enough in the SS fund to pay the retirees until 2042 or so, around the time when the majority of baby boomers have already died.  Continuing on, it will cause a 4T deficit by 2086, i.e. some 80 years from now.

Just in the 8 years Bush is in offic, the debt he incurred was more than 4T.

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#6) On April 11, 2008 at 3:53 PM, DemonDoug (80.85) wrote:

5 years ago I was just starting my career, so I didn't have much, but I was already saving money.   This is an approximation:

5 years ago:

Salary: 53k (full time) 

Debt: 40k

Savings: 5k

Today:

Salary: 57k (making more per hour but working less hours)

Debt: 23k

Savings (including cash, stocks and bonds in retirement and taxable accounts): 70k

I've had a few wins and losses and have generally performed about where the market is, but more recently I have been making better investment decisions.  Like the fool.com philosophy, to this point all of my share purchases have been LTBH, with the exception of my big mutual fund holdings, which I sold out of last year expecting the bear market.

Overall my quality of life is way better, which can't be measured in dollars.  I weigh less, look better, have more time to do all the fun things in life I love to do (travel, camping, sports, video games, research and participation in investing, fire performance), plus my overall mental health is better.  I am pretty much living my dream, life is just pretty freakin awesome for me all the time. 

FYI SS: It's the Medicare thing that's more messed up than SS.

 

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#7) On April 11, 2008 at 9:39 PM, dwot (41.46) wrote:

Here is something I'm not sure about, is the US SS indexed?  Canada's pension plan goes up with the CPI.

Seems that people taking time to say how they are doing are doing better... 

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