Dose of Reality

Last week was a tough one around chez watercooler.

Generally I’d been a mostly curious observer of the financial crisis. Oh sure, our investment accounts are taking a hit right now, but our fund manager has been great (recommended pulling out of AIG about 6 months before the crisis began) and I’m confident our accounts have plenty of time to recover before we even think of retiring anyhow.

Also, with our variable rate mortgage & loans, the dropping prime lending rate has been nothing but good for us.

But the magnitude of what’s going on hit a bit closer to home last week. Because of the current financial outlook there was some necessary restructuring at work, and a number of my colleagues on Tuesday ceased to be colleagues as of Wednesday. And it sucked. Still does. I’ve been on both sides of “restructuring” before, and it’s a crap situation either way.

There’s a big part of me that gets a huge charge out of the tumultuous nature of these things when they happen in startups – when some unexpected chaos hits and everyone needs to change focus on a dime and pull together and everything gets kindof rough and wavy and frightening and exciting for a while. I do love it.

But then there’s the bit that realizes what it means for those who are no longer in the lifeboat and puts a bit of a damper on the whole thing.

And while (for various reasons that make sense, that I’m not at liberty to discuss here) I’m not nervous about being laid off in the immediate future, I’m not naieve enough to think that with the current global fiscal situation, things couldn’t rapidly swing again – expected or not. So I’m a bit personally financially paranoid, getting slush funds and some padding in order that we’ve been a bit lax on building up, and putting some other projects on hold while we do it.

I’m still not entirely convinced that the world is a scary place, but it’s getting a lot less comfortable these days.

So that’s where I’m at right now. I have a job, that I still love, that’s awfully exciting right now – especially since an incredibly shitty week is finally over. But I no longer consider myself not-quite-affected by the current financial crisis.

How about you?

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8 thoughts on “Dose of Reality

  1. Chris

    I consider myself positively affected by the current economic crisis. I still owe student loans, and the interest rates have come down. My RRSP is way down, but that’s good, really, because I’m still adding to it and when the market goes up (which it will before I withdraw anything) my recent contributions will go up with it. It’s the classic “stocks are on sale” attitude, I guess.

    Also, not being a homeowner, I’m currently unaffected by the declining housing prices that have started to creep into Vancouver (as is anyone who plans on keeping their house long term). If Vancouver follows the trend of US cities that were overpriced, in a few years time when I’m considering buying prices will be way down, another plus for me.

    A worldwide recession for any extended amount of time would cause general prices to drop, which, of course, would be a positive.

    So… burn baby burn 🙂

  2. Beth

    A friend of mine pointed out the other day that a lot of universities have built up huge endowment funds and use the interest they make by investing those for things like scholarships. So that sucks for people on university scholarships.

  3. Hannah

    I am watching the value of the Korean won drop against the American dollar, which is already dropping fast. I pay my tuition in American dollars, and I’m earning won. My salary has lost about 20% of its buying power, and that’s taking a toll on my budget. I’m left wondering whether I should bail out now and take my chances on a different economy, or hang in there until I’ve got a little more cash saved up. Sigh.

  4. Riann

    I’m with Chris, with one small exception. My RRSPs will be going towards a down payment, possibly as early as a year from now. I have not enjoyed watching them shrink (although fortunately not that much, as they were in conservative investments because I knew I wanted to take them out within a couple of years). Fingers crossed the housing market tanks by this time next year.

    One thing that I’m pleased with is that despite our dollar falling precipitously it has not fallen as fast as the Aussie dollar. Since we were planning our trip with our money being near par, the 20% difference in our favour is a welcome surprise. We’ve ordered cash and travellers cheques, so even if it goes back up our spending money will have cost us less than we planned.

    Anyway, Brook’s job is safe, and being a teacher is fairly recession proof so we’re not worried about jobs. We’re still planning a 5 week vacation for next year, and we both wish that we had more money to put INTO the market for the reasons Chris outlined. I suppose canceling the vacation could accomplish that, but we’ve been saving for it for years so we’re going, global economic downturn be damned.

  5. Sue

    I was already in difficult financial straits from earlier this year, so I’d have to say that the latest crisis hasn’t been such an event for me. I do worry on the whole because… well… I’m a worrier, what can I say? Consulting has been said to be a good business to be in at any stage of the business cycle, but I’m (like you) not naive enough to believe I will be insulated from an economic downturn. Victoria is not a highly diverse economy – we have government, tourism and a little high-tech – so poor times tend to reflect themselves in a lot of closed businesses, which is bad for my industry.

    Fortunately, like Chris, I am in the “buy buy” stage of my retirement investing, and I don’t have a home whose value is affected. House prices in Victoria have only dipped *once* in the past forty years, and that was during the early eighties when interest rates were hitting 20%. However I don’t expect it to get any easier for me to buy a house, with lenders becoming paranoid about who they loan to. A self-employed business consultant is not your Class A mortgage applicant, know what I mean?

  6. Kirsten

    Well, as a migrant worker in an NGO at the end of the Celtic Tiger and the start of the Irish economic recession, I’ve unfortunately been laid off. Budget cutbacks are being made everywhere, and sadly it seems that in tough times, equality and human rights are considered “luxuries”.

    Luckily in all other respects I think I’ll be okay. I have a decent savings, still contributing to RRSPs from abroad, and we don’t yet have any mortgage commitments.

    With that said, if anyone has any Communications / PR / Marketing jobs going… let me know!

  7. dearheart

    We’re not worried (much) either.

    Our RRSPs have significantly decreased, but since we’re young and in it for the long haul, we’re pretty confident they’ll bounce back by the time we need them. And we’re in the same frame of mind as Chris and Riann above…lower prices mean that our RRSP dollars will go further.

    Our jobs are both as secure as anyone can expect in this millennium. Both our income streams are good, we get great raises, and my company has a pension plan.

    As we just bought a house (that we’re planning on staying in for 20 years or so), we don’t mind if the market slips. We did our research and didn’t over-pay for the market (even though it was a new build). We also know that we’re now living in a location that will continue to grow in the future, so that means that prices will rise at least as much (and if not more) than other locations in the Lower Mainland.

  8. Crissy

    I opened a lot of wholesale accounts with companies in the US of A when our dollar was doing well, and I’ve become dependent upon materials from these wholesalers … so, now that our dollar is hurting so is my business. To top that off, people have less to spend on what they consider to be “frivolous” (such as lovely wedding invitations and stationery) – which, obviously is not good news for me.

    I’m actually in the process of looking for a part time job to ensure that I can make ends meet over the next while. So to sum it up, the state of the economy is most definitely impacting me, and not so much in a good way … 🙁

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