Can One Choose Not To Participate In A Recession?

Dave Ramsey thinks so. Let me preface this post by saying I’m a huge Dave Ramsey fan.  I’ve read nearly all his books, attended a Live Event, and listen to his show at least a couple times a week.  Every now and then he says something that tweaks me just a bit.

Over the last few months I’ve heard him (and others) toss around the idea that one can choose whether or not they participate in this recession. I know what he’s getting at, and depending on how your personal economy is going you might even find it inspirational.  However, if you just got laid off, and suffered some setbacks in the weeks and months leading up to it which melted your emergency fund, you may think differently.

A few months ago I wrote a post titled the Serenity Prayer For Finances.  Basically, it broke down the words of the serenity prayer and applied a financial spin.  Ramsey’s comments caused me to reflect on those words again, and wonder what things I have control over, and what I don’t.  Here’s what I thought a few months ago:

Stop and think for a moment about all the things that are currently causing stress in your financial life.  I bet there are quite a few you have control over, like overspending or expensive car payments.  But if you are like me there may be other things that are outside of your control, yet they continue to cause stress.

I still believe that’s true, and I’ve lived it for the last eight months.  My mom suffered an aneurysm and stroke at 53 years young last September.  She did things the right way – had a good job, good insurance, a little (very little) socked away for emergencies.  But nothing could fully prepare someone for 162 days in the hospital out of the last eight months, being reduced to disability pay, and watching her retirement savings be decimated in a bear market.  It was a perfect storm in her financial life, and it will probably affect her for the rest of her life.

The silver lining (and believe me, our family has had to long and hard to find one), is that watching her go through this has had a profound effect on us.  For the younger ones, it is a sobering reminder how quickly the carpet can be pulled out from under you – just when you thought you were hitting your stride.  It was a reminder that no matter how well you prepare, there is always that unknown lurking out there that can knock you off your feet – quite literally.

So I take exception to what Ramsey says.  Not everyone can choose not to participate in this recession.  The single mom working a part time job because her ex got laid off and no longer sends child support certainly is participating in the recession.  The husband and father of two delivering pizzas at night because the plant he works at reduced his hours is participating in the recession.  The kids feeling depressed and anxious because they overheard their parents fighting about money are participating in the recession.

I chose not to participate, too, until the recession found me and participated in my life.  Sometimes, that’s just the way it works.  Whether it is fate, or just bad luck, we’ll never know.  But to suggest our family, or any other family, chose this fate is naive.  Sometimes bad things happen to good people.  It doesn’t make them bad people.

Comments

  1. Well said. It is important to plan for the future with regard to your finances. However, one’s financial situation is never 100% in their own control and it is important to remember that. This is not a good reason not to plan or prepare – because good planning can reduce a lot of financial pain later on. However, we all know what the say about the best laid plans of mice and men…

  2. Thanks for this post! Sometimes we forget that that there are things that we can’t really control, and that sometimes circumstances just wipe you out. But I also like your take of looking for the silver lining. Because we can control how we react to things…

  3. I’m with you on this one. I like Ramsey and listen to his show quite a bit. But this is simplistic. One caller said she sold her house the first week it was listed and thus “they were not participating in the real estate collapse.” That’s nice, but you can’t just decide “not to participate” and sell your house right away. Unless you are willing to give it away. I should know – we’ve had our house on the market for about a year with very few lookers. I suppose if I decided “not to participate” it would sell right away? I don’t think so.

  4. Plan for the worse and expect the best.

    Things will always happen, one day or the other, so you can’t be paranoid about having everything in place.

    But at least for me, although I pay attention to the news, I don’t let it scare me or get me down. I think logically and plan on what needs to be done.

    Too many people seem to be sitting around, complaining and pointing fingers, and expecting others to change things.

  5. The idea that you can choose not to participate is, frankly, silly. I live in a city that’s been in a recession for a decade before this national recession was even on the horizon.

    Yes, you can choose not to emotionally partake in the depression that goes along with it, in the attitude, but that’s easier said than done.

    When there are no jobs, when even McDonald’s isn’t hiring in your area, you have no choice but to participate in the recession. People act as if it’s simply a matter of finding a job or moving to an area where there are more jobs, but that’s easier said than done. That means moving, which requires money, which a person at the bottom of the barrel doesn’t have.

    I love your post Frugal Dad, very sensible.

  6. I like Dave Ramsey. He is right. You are broke because you want to be. As a christian I have a promise from God to care for my needs, not my wants. We have become such an entitlement society. Tithing and giving to others will help you see what is important. The Bible say in Malachi 3, Prove me now. Give tithes and offerings. Whenever I have gotten in a bind, it has been my fault for not following God’s principles. Try God, if you don,t like Him, the devil will always take you back!

  7. This is an important topic. The cause of the economic crisis is emotional. We all knew on some level of consciousness that stocks were going to crash at some point because we all possess common sense and know that price increases not justified by the economic realities cannot be sustained indefinitely. But prices are now at fair value. There is no economic need for further price crashes. But we probably are going to see further price crashes because people have not yet come to terms with what we have all done to ourselves by investing so recklessly for so long.

    I very much agree with your basic take, Frugal Dad. Bad things do indeed happen to good people. Some of us are getting killed in this crisis and some are just getting bruised and some are even profiting and the difference is often just a case of happening to be in the wrong place at the wrong time. It’s a bit glib to say that people can choose not to participate in the recession.

    I do think there is something to what Ramsey is trying to say, however. If the cause of the crisis is emotional in nature, the key today is helping people cope emotionally. Doom and Gloom stuff pushes people in exactly the wrong direction. We need to try to be uplifting. Letting people know that by changing their thinking about the crash they can overcome some of its worst effects is a positive in general, even if Ramsey’s presentation of the idea was a bit too glib.

    My belief is that there is a 30 percent chance that this is the end of our economy and possibly the end of our system of government. That means that there is a 70 percent chance that we will pull through. If we pull through, I believe that we will do so by learning things that we could never have learned any other way. I believe that there is a good chance that we will someday look back at this crisis as having been a wonderful thing in an overall sense, something that caused more positive stuff than negative stuff in the long run. The trick is surviving the hard times until we collectively are able to accept what it takes to tap into all the opportunities that have been opened to us because of all this.

    Rob

  8. Can we get a link to Dave Ramsays original comment and in what context it was made?- would like to read that before i could make a fair assessment of whether it might be true or at leats hold some truth. Am a firm believer in us all having total control over our fate. It could be one small act, which we made months or years ago, or many acts- which put us in the situations we are in today, in relation to todays circumstances. We cannot control the circumstances in THE world, but we have some control in OUR OWN world. Anyway a link to Dave Ramsays comment would be much appreciated by someone in UK who hasn’t the first clue who Dave Ransay is!

  9. I’ve thought about this many times over the past couple months – pretty much every time I hear people talking about these “tough economic times” and so forth. Personally – for me, my wife, and my family – this past year has been the most economically sound and positive of our 23 year marriage. We have developed fiscal responsibility, knocked out a tremendous amount of debt, built a strong base of savings, opened two Roth IRAs, opened a 403b though my employer, eliminated a bunch of unneccesary spending, and increased our income. Although we overextended on our mortgage when we bought our home five years ago, we make all of our payments early and are in no danger of losing our house. We heat exclusively with wood that I cut from our own woods, so fuel costs are not much of a concern. We are cognizant of money for the first time in…forever? My job is incredibly secure. My wife is halfway through her nursing program, in which she is excelling, and is sure to land a good paying job in a high-demand field. Things are looking up!

    For us, these are the best of times. No economic woe here. And I believe it’s by our own choice – it’s completely due to decisions we’ve made.

  10. After reading the link, I think he is talking more of a mental state of non-participation than a financial state. To be optimistic always, and not let the negative thoughts enter in. To be upbeat and striving to find a new way, rather than let the doom/gloom outlook sink into our minds. Gratitude (for what you do have) and not resentment. ie, look for the silver lining.

    Obviously, that is not always easy to do.

  11. After reading the post, some comments and the link to what Dave says, I feel that that are many valid points to take away. I agree with Frugal Dad in that sometimes things just happen that is beyond your control. I also agree with the commenter, Marci, that I think Dave is talking more about a state of mind or attitude of “pulling up your boot straps”, so to speak.

    However, I think that attitude is oversimplified, especially from someone in Dave’s position. It’s not so easy if you are that person with very little education/skill base or with other issues to work around such as being the sole provider/carer for young children or whatever. I don’t think it’s as easy as, “well, go out and get another job”. I live in an area where working parents often have two or three jobs already and are still barely making it. Whether it be their spending habits, lack of education in terms of how to save/spend/buy, whatever, I don’t know. The working poor are often the last to know about the right way to dig themselves out. Things like buying new cars because they need to get to work and don’t have a cash base to buy a used one, keep them in a cycle of never being able to save.

    My husband has a great job. We have no debt except our house. We have made good financial decisions. But then, I was raised by parents who taught me these skills. Both my husband and I have college degrees and various skills we could draw upon. We also have a good support network that many lack.

    So, am I choosing not to participate? Yes. Am I also grateful for where we’re at and still hoping and praying life doesn’t throw us into the mix? Yes.

  12. FD! Refreshingly real post. Thanks for always making me feel better about where I am financially and where I want to be. I needed a reminder that no matter how well we prepare, the inevitable bad thing might happen.
    I didn’t know your mom was 53. I am 50 and this post was a real eye opener for me today.
    Thanks for sharing!

  13. Thanks – Clicked the link, and read on. Am now a subscriber to Dave Ramsay – i know who he is and I say he is definitely worth knowing.

    By saying ‘choose not to take part in the recession’ i think Dave means, don’t let anything which is happening around you or to you, now, actually impact more than it initially has to on your life. So by bad things happening to you – such as loss of job, reduction in interest on savings, loss of house, loss of savings, loss of emergency fund, loss of custom for business, blady blady bla – you are not participating in them, they just happen to you.

    It’s what you do afterwards that denotes whether or not you are participating. Its a tough one to explain, but let me put it this way. Think of any one circumstance individually – try these or make up your own!, ‘hit by a car, broke leg’ ‘robbed of cashcard at the cashpoint’ ‘husband left wife or v v’ ‘hurricane’ even ‘missed the last bus’, you can go down one of two routes for each and every one of those scenarios – and any other you can think of -ROUTE 1, oh no, its all over, play the victim – even genuinely, take the pity, source all ‘help’ for each scenario, waste your time ‘living’ the dreadful circumstances, OR say yes to ROUTE 2 TAKE IT STANDING UP, ASSESS WHAT HAS HAPPENED, REVIEW ALL ASPECTS OF WHERE IT HAS LEFT YOU – DEAL WITH IT EMOTIONALLY QUICKLY, MAKE SOLUTIONS FOR IT IN REAL TERMS, MAKE A CLEAR PLAN OF WHAT NEXT AND GET ON WITH IT!!

    Basically, don’t be saying in 2030, that your life was ruined by the recession you ‘took part in’ in 2008/9. Instead in 2030, be saying that the recession’happened’ to you in 2008/9 and then you did THIS THIS THIS and look where that got you! Not sure if i am being clear here. But i think it is how we interprate what we read that affects how we view it.

    Furthermore, a little extra comment. When something terrible happens, we can waste a lot of time figuring out the whys and wherefores, rather than the ‘what nows’ and lets get on with it then’.

    KEY COMMENTS form Dave Ramsays newsletter –
    ‘Let’s take a minute to look at the true reality of the situation and what we can do about it.’ – We should all apply that as a first step to our own circumstances whether reduced or improved.

    ‘People have lost their jobs and houses even in a bull market.’- so if you are NOT participating in the recession, then you will be one of the 93% of people who stay employed, by finding a new job and not using the receission as an excuse not to find another one.

    ‘I’m just putting the situation in the proper perspective.’

    Dave says that those ‘not participating’ are those people who are ‘not going to form our lives around the negativity coming out of the media and government. We’re intensifying our efforts and going to have the best year of our lives in spite of things slowing down.’

    ‘job losses are actually blessings in disguise.’
    Sometimes people just don’t make enough effort to take enough control over their own future, and a shot in the backside from losing a job, can really get people moving!

    Dave is also offering a ‘call to action’ – right here he tells you what to do next….
    ‘So think about your skills and interests. How can you leverage those passions into something you enjoy doing every day while earning money for it? If you haven’t lost your job but dread going to work, maybe it’s time to fire your employer and go in a new direction. When you have a game plan for your money and career, you will have a sense of empowerment because you aren’t a slave to the lender (or employer).’

    ‘You can have fear or hope. It’s your choice’

    My own tip for all of us, whether we are doing well towards our financial goals AND SECURITY or have recently hit, or soon expect to hit, a temporary blip.

    The key is to widen the gap between your incomings and your outgoings.Reduce what you spend, increase what you earn.
    How is up to you.
    But don’t sit around being a victim to the current recession – ie by participating in it. Don’t wallow in it, get up and move on.

    Toni

  14. You wrote what I have been thinking since I started to listening to Dave daily about 3 months ago. These people that phone in and “refuse to participate” seem smug and pompous and the implication is, if you just plan right you won’t have any financial problems. That’s not only not biblical, but it’s unwise.

    I understand the the concept of planning ahead and not falling for the hysterics of the media. But it’s one of Dave’s ideas, that I can’t agree with.

  15. Toni, you are dead-on. It’s all about attitude. “Not participating in the recession” means I don’t define my problems by blaming them on the recession.

    I knew a guy who was graduating college just after an economic downturn. He went to ONE job interview, complained that no one was hiring and decided based on that to give up on the job search and go to grad school.

    Compare that to a friend who recently was laid off. Within a week, he had hustled up a temporary “good enough for now” position so he could pay the bills. By buying himself some time, he can now explore some other opportunities.

    People who participate in the recession ALLOW THEIR SITUATION TO DEFINE THEM. Others take the hit, then pop back up and get to work.

    Jason, I would say that the father delivering pizzas at night because his company reduced his hours IS NOT participating in the recession. He has taken control of the situation. The person who sits around and complains because his hours were cut and doesn’t react — that guy is allowing the recession to define him. Big difference.

    Great topic. I can’t wait for the Town Hall for Hope that Dave is doing in a week.

  16. thank you for your experience (albeit very sad) and honesty. a few years ago, i had surgery and was bedridden for several months, than had physical therapy. thousands in savings lost. unemployed for a long time.

    so, yes, we are participating in the recession, though sure not willingly!

    we do the best we can…

  17. I agree with you 100%. I haven’t been affected by this recession as of yet, but am (and have been) preparing, at least mentally, for a layoff coming within a couple of weeks time. If there isn’t another layoff, there will be reduced hours. I have been working hard towards eliminating my debt and am fortunate that I was able to eliminate my credit card debt. If a layoff does happen, unemployment benefits will cover my expenses, but will leave me in a difficult situation.

    I have done all I could to minimize the impact to my immediate life of this recession, but the future brings uncertainty of things which are beyond my control. Not to mention that my 401(k) account took a huge hit and I lost nearly half of my savings in 2008. Luckily I have time to recover from that, but there are so many people who won’t be able to, and have lost their life savings.

    This recession is real, even for those people who have done everything right.

  18. A person can get sick anytime – during a recession or during strong economic times so I don’t see really how your mom getting sick changes your view of whether or not you are “participating” in the recession. It seems to be that your mom had bad luck, which happened to happen during the recession but not because of it. Regardless, I hope she is improving.

  19. Yes Tom
    Plan for the WORSE definitely and HOPE for the best.
    Basically no matter how much you plan in advance, life will just keep happening. Thats what this is LIFE. We can only control our own environment, everything else ‘happens to us’, so we can be ready for it or not – but we need to react well to it when it does. There are lots of things we can’t PLAN for as we haen’t a clue they might occur. That is LIFE. Life happens and we need to respond the best way we can! Keep positive.
    Toni

  20. One word: DENIAL.

    Frugal Dad, I am glad you had an honest response and differ from Ramsey on this matter. It shows you value critical thinking.

    The self-righteous types who posted here: Good people are suffering. Good people who did not go into debt, overspend, buy inflated-priced housing, take advantage of loans they knew they couldn’t afford, etc. People who showed up and did the job every day and then some. People who didn’t complain about their lots in life and strived to be good parents and citizens; who don’t moan and groan about the inequities of life.

    Hello. God loves, them, too and they are not broke because they want to be.

    I am OUTRAGED at the so-called Christians who would embrace such a belief.

    That’s like saying everyone who has money, made money (no matter how) is “choosing” to be rich. Trust me. I know a lot of rich people. The majority did not earn their money by “active” choices. But a lot of plain luck and in some cases, inheritance and very, very favorable opportunities. Even they would admit it.

    God does not always provide, people–he relies on man to help his fellow man–therein the problem on this planet. Look around the world. There IS enough to go around, but it is the greedy and the criminal and such who make this world what it is. Because they hold on to wealth and do not share and disperse it (No. I’m not a communist. I was raised a Catholic who believed that the more you had, the more obligated you were to share. That if you didn’t, it was a misuse of what you were given. And totally unacceptable. Giving back to charity? Absolutely. It wasn’t about having the most money in the bank, but what you did with it to help others.)

    Not the hardworking Average Jane and Joe who are not rich because they “like /choose” being poor.

    Life is making the best of what you have and helping others to the best of your ability.

    Now, let’s see. How many folks who made money (lots) off the sweat and $ of others. How many of those people give to charity, tithe, etc.?

    You’d be amazed how selfish and greedy many of those people who “choose to be rich” are.

    And if you need anything? Don’t ask your “rich” friends. Ask your worker bee pals. They are the ones who come through in a pinch.

    Ramsey and all these folks who go around talking such C _ _ P are not giving hope, or encouraging growthor personal development. They are just making money off the fools who buy into their stuff, with their inane and insulting drivel.

    yes, people make decisions that can affect their personal financial situation. But there are plenty of people in this world who simply do not have the opportunity for education, jobs, etc.

    Of course, if more people knew these people, and helped, maybe this would not be the case.

    Sign me, fed up with people like Ramsay saying nonsense like this.

  21. I totally agree with what you say here. Things happened to your mom that were not in her control and you cannot be made to feel bad (nor she) for that, which was the unintended consequence of Ramsey’s statements.

    Ramsey was, of course, thinking more about the type of situation that one of my friends got into 6 months ago: The husband was working 5 days per week but they made him go down to only 4 because business wasn’t good. Their mortgage (in CA) was such that they were stretched to the max on his previous income. When he went down to 4 days they couldn’t afford the mortgage. Why in the world they couldn’t change their situation is beyond me because they had a lot of options. The wife could have stopped home-schooling and let the kids go to public school while she worked (she has a skill and has worked previously). Or she could have worked in the evenings and weekends while the husband was home with the kids (her skill was something you can do evenings and weekends). Nope, instead they chose bankruptcy and moving into a much worse home that they don’t own and on their parent’s property.

    But I am glad you called Ramsey out on his assertion because not everyone is making bad decisions, sometimes there really isn’t anything you can do.

  22. I hear what you are saying. Recently my dad got sick, was hospitalized and my world was flipped upside down. I didn’t want to do anything. I lost my will to do things that I enjoyed or what I had to do.

    I understand how when something bad happens to you, you just want to tune everything else out. However, how we got through it as a family scared about what was going to happen was pulling together. And laughing. And finding little bits of things to feel good about. When I was with him at his bedside, I laughed with him. At home alone, I cried. I believe my dad’s recovery was quick because his spirits were lifted. Things have since turned out ok.

    I’ve had some dark times in my life that I never thought I would get out of the trouble I was in. But I kept trudging through, finding ways to find something to be positive about. You cannot fully appreciate the good times until you have survived the bad.

    I took a paycut and my employer is stopping 401K match for the rest of the year. I can’t do anything about it, so I have to figure out how to deal with what I have been given.

  23. A lot of this recession is regional. People who are living in areas accustomed to prosperity and opportunity (California and New York state come to mind, as does Phoenix and Las Vegas) are likely to be hit regardless of whether they “choose” to participate. It’s impossible to opt out when all the traditional avenues of employment and income suddenly disappear and there’s simply no work to be had.

    However, many regions such as New Mexico, Louisiana, and the panhandle part of Texas are chronically depressed to begin with. They did not participate in the boom so much, and have been in the same economic condition for decades. Here, success or failure has more to do with personal initiative because times are pretty much *always* bad. That’s why individuals living in chronically depressed regions or rural areas *can* often choose not to participate in a recession.

    There’s an absurd amount of work in places like this; it’s just that 100% of it is tied to the level of value a person creates for a customer or an employer’s customers. That means a lot of work is unpaid work or compensated at a lower rate than people believe they’re entitled to earn based on incomes from more prosperous regions where it’s not customary to tie income to the employer’s bottom line or the benefit received by the customer.

    Also, people in these places tend to bank locally with credit unions that don’t issue subprime mortgage loans because the credit unions don’t care about the government imposed penalties. Because they’re local, they lend to the people who live here (many of whom are minorities or low-income). It’s possible to do that without going into subprime territory. Low-income doesn’t automatically mean high-risk. Similarly, the majority of the population isn’t heavily tied up with derivative based investment because we just don’t approve of it.

    These chronically depressed regions are where most of the actual opportunity resides. Forget following the money… follow the available work and the available creation of tangible value.

  24. I think the recession has hit different people in different ways. The recession has been a hard lesson for those who overrelied on credit. Maybe it was less of a hit for those who were already living within their means. The infair part of it has been the thousands of hard workers who have lost their jobs and seen their investments tank. Bad things do happen to good people. I think the quick answer is to be adaptable and make the best of a bad situation. My family and I have been fortunate.

  25. In today’s global economy, there is absolutely no way to “choose” not to participate in a recession. It affects every part of your life, from commodity prices, to job availability, to taxes and property values. You can, however, choose to ignore it and look down your nose at those who have fallen on hard times and accuse them of making mistakes that put them where they are, even when you don’t know their story or how they got to where they are now. God or no God, life isn’t fair and no amount of planning or praying, financial or otherwise, will “save” you when things get rough all around. We’re all in this together, whether it’s affecting us obviously (job loss, lack of home sales, loss of retirement savings, etc.) at the moment or not. The choice that matters is what we do when the chips fall that makes the difference in our lives and the lives of others, no matter our beliefs or our station in life, chosen or supposedly assigned. Be judgemental or be helpful; be a complainer or be a do-er. No one can make that choice for you. I’m choosing to be thankful that my family has not been crushed by the state of the economy (despite a 20% reduction in salary and a 15% drop in the value of our home), whether by our own financial choices or those of our employers, Wall Street, the government, etc. What will you choose to do?

  26. Hi frugaldad,
    Love your blog!
    “Participating” in the recession is as much about attitude as it is about what happens to you. I have lost my job when times have been booming and struggled to put food on the table when everyone is spending without worry.
    Not participating in a recession is about opting out of negative media hype and focusing on taking control of your own situation. External events affect our lives, but that doesn’t mean we have to become victims. As others have said, bad things happen in the best of times. We could look at the current financial state as a time of woe or a time a time full of opportunities. It’s not about being naive, but about being proactive.

    That being said, those who truly suffer and have no choice but to “participate in the recession” are those living in extreme poverty in third world countries. Losing your job or your house in the burbs is nothing to losing your child to malnutrition, starvation and war.

  27. Jason,

    I hope that your mother recovers physically, financially and I’m sure emotionally (must be hard to stress so much about money because you got sick). I agree some people have no choice and will participate in that the recession will make their financial situation far worse, others will be unaffected and some will receive a boon from the recession (pawn brokers, repo guys, etc.) So all you can do is try to prepare for life and if you are lucky you kept both your financial and friends/family situations strong. If so you have two cushions and you should survive most problems and then be prepared to repay your emergency fund and your friends/family.

  28. To me, this begs the question of how much of our economy is psychological/emotional and to what extent media presentation plays in the economy as a whole.

    I think one can choose to not participate in that aspect of a recession by simply doing what is best for him and not reacting emotionally or out of fear because he hears the sky is falling every day on the nightly news.

    For example, if you need a new car and can afford it, then buy it. Buying too much house or a new car you don’t really need is foolish regardless of the economic condition as a whole. In my opinion anyway. ;-)

  29. @Mary: Thank you. She is making strides, but still has a long recovery ahead. It has been a long, grueling eight months for us all – no more so than for my mom. She often tells my wife and I, “I just want my life back.” A sobering reminder of how quickly things can be snatched away.

  30. Those of us who beleive you can ‘opt out’ of ‘participating in’ the recession, are NOT by any stretch of the imagination ‘sef righteous’ or ‘looking down our nose’ at those who are struggling not to participate.

    I agree there are many factors to each of our situations which we cannot control, and therefore have to react to, but it is how we react, as i said in my post above, that denotes whether or not we are ‘participating’.

    I have read all your comments, and some of you are quite open indeed about your personal situations. So here is mine if you might like to know – its i touhg one in my opinion. I went form private school mum with 2 companies, to a debt swamped homeless person living at parents within 3 months.

    Up until just under 2 yrs ago, 3 of my children attended private school. Our children are now aged 17, 15, 10 and 20 months – they had done so for 4 years, we had a retail fashion shop in a surfing district in england UK, i have a small specialist company which has been running for 15 years, its not a great profit maker, but it earns me an income and covers its own costs – i am fortunate to still have it.

    By summer 2007 our shop sales were dramatically falling month on month. By August 2007 we were getting behind on payments for things – both for the shop and at home, we realised it wasn’t going to change very quickly. The kids had to come out of private school at very short notice as we couldn’t afford the fees any longer – these were about 12k per annum per child at the time, we cut back on all our costs DRASTICALLY including our rented home, and retreated back to parents, with 3 children and a brand new baby – born in August 2007 in order to keep the shop open.

    By Novemeber 2007 we were at 30% of previous years turnover, we couldn’t continue. we returned stock, closed down and pulled back. We have 120k debt from closing the shop. We had 89k personal debt – loans credit cards – all sorts, suddenly we didn’t have the income to pay for any of it.

    We are still at our parents, my eldest son is living away from home and working instead of heading to Uni as he would have liked, our other three children are at new schools, i am still working, we are clearing debt slowly, we are saving for a deposit on a house. Its almost like starting all over again. The news might say the recession started in September 2008 – if you ask me, it really started a great deal sooner than that, but noone would admit it.

    It’s a frustratingly slow recovery for me and my family. Its cost all of us, and not just in money, but i follow this and several other blogs to get tips om what and how to save and clear debt more quickly. As far as i am concerned i AM NOT PARTICIPATING in the recession. It hit me, and i am now in recovery – albeit slow! I got off my backside and made a plan, and i am trying to implement it. I have less money and a lower level of lifestyle in some respects now than i did before BUT I am not adding to my debt anymore, i am living within my means, i am reducing what i owe, and my carbon print,a nd living frugally, and ‘making do and mending’ and so on and so on, and i am widening the gap between my small income and my outgoings. The gap is for emergency fund debt clearance and savings.

    I have learned alot from having been hit hard and knocked sideways. My dad was giving me frugal tips when i was in my twenties. I am now 38 and only just starting to think about being frugal – what time I have wasted! Now i have to claw back and be frugal for the 50 years ahead. This clean up game will take me another couple of years i think. Then i can live a bit more comfortabley, but i will never again take any more debt on -outside a mortgage. I will instead make do and do without and save until i can afford it – whatever it is.

    I feel like i am doing something positive, despite the slow progress. I knocked 32k off my debt in the last 18 months. I haven’t gained any more debt. I have saved a small emergency fund – but emergencies keep happening – life keeps happening to us – at least its waiting for the emergency fund to be big enough to cover it each time though! Manifold has just gone on the car – yes today – as i write!.

    So – to come full circle, by no means am i in a comfy position, looking down my nose at strugglers who are participating in this. I am a struggler too striving to get out. I don’t class myself as ‘participating’ in this recession though. I class myself as ‘participating’ in doing something to get out of it, and hopefully eventually teaching – if only my 4 children – how not to get in the same sort of mess i did, by making the choices i made.

    Another thing that occurred to me form reading all your posts is that we all talk about ‘getting another job’ – that means finding someone who can afford to hire you, well most companies – much like my shop , can’t afford staff. Staff are the first thing to go if you try to keep the company going. So actually i should mention the people whose lives I affected by having to lay them off from work in my shop. That is not nice to have to do, and know you have put all those people in that situation – but there was no choice. And ‘staff’ often don’t realise their functioin is to increase the profitability of the companya nd to do a good job. Some staff (not mine) think it is their ;’right’ to have a job, and to keep it. Well no its not – no-one has a ‘right’ to have a job anywhere, we might deserve our jobs – that is different. If you have a job now, do your best to keep it, don’t view it as your ‘right’ view it instead as your reward for doing a good job, which keeps you in your job. Also those wihtout jobs, find something else to do. Be self sufficient.
    Before the industrial revolution, jobs were not really heard of for the masses! People had to maintain themselves. Money was something which was saved if earned as it wasn’t really needed to live. Food, shelter, clothing, thats the basics. I personally think the world – the western world has reached ‘saturation point’ – thats why we are having this recession. things slowed down at the top – not because people couldn’t afford things anymore but because they already have everything they need – take cars for example – but their old car lasts longer, they are already maxed out in debt and don’t NEED to geta new car, and the follow on from that is nor do the people with the older cars. Cars are better and last longer, so noone NEEDS a new one. Now apply that to most LONGISH LASTING white goods, electrical items. Then everyone has had all the credit they can get their hands on , so no more credit to spend on this stuff which we don’t need more of. then the jobs go, then the income goes, then can’t pay credit. Its a vicious circle.

    We all need to go back to simpler living and the manufacturers will have to cut back accordingly, this is causing a shift in lifestyle and possessions etc. Now we need to move towards ecological power production – which is where i see the next revolution. Everyone who can’t think what to do to get out of their bad situation, start learning about this and spend your time on coming up with ideas to provide for all your needs, without money and without non ecological power.

    With that, i had better get on with some work in the hope of earning some money to allow myself my hour a day to learn about stuff which could improve my life or finances!

    Speak to you all again soon
    Toni

  31. This was a very powerful post. I agree with you completely. There are things beyond our control. Not everyone who is broke is broke because they want to be IMO.

    The most important thing is I will pray for your mother and family.

    Neal

  32. Toni,
    I loved reading about your personal journey, and best wishes for a speedy financial recovery! I think you hit the nail squarely on the head with regard to consumers having reached a saturation point. How many of the same items does one need? People have not one but three or four TVs, computers, cameras, cars, video game systems, etc. Unfortunately, once consumers stop and think , hey, I don’t need an upgrade to the next ipod, or, my car runs fine even though it’s eight years old, it’s rather the workers on the lowest end of the totem pole–those in the shops who sell the merchandise, such as Circuit City staff for example–who tend to suffer the most. Unlike you, who have had to take on a tremendous amount of debt when you closed up shop and actually feel terrible about letting their staff go, we hear of CEOs with millions in their back pockets bidding their companies good-bye–such as Rick Wagoner of GM with his $20mil package–while their former employees see their pension funds go up in smoke. It’s frustrating to say the least.

    Frugal Dad, I do hope your mom recovers quickly and does indeed get her old life back. I lost my mother at age 57 due to a stroke. I know exactly what you mean about appreciating what you have and preparing as best you can for the future. Best of luck to you and your family!

  33. I enjoyed reading this article. So much so, that I in fact, have addded your blog to the very small blog list on my own fledgeling blog.

    3 years ago, an industrial accident caused me to lose my job, (6 weeks in the hospital, 7 surgeries, just so I could walk again), and at the same time, my wife saw her job outsourced to an offshore company.

    With very little income, and very little prospect of any, we faced a harsh reality. But we refused to give in or give up.

    We pulled together and decided that there was nothing that life could throw at us that was stronger than we were together.

    The last 3 years have been rough, But we both have refused to let the economic crisis become our own personal financial crisis.

    Resources like your blog provide us with information and inspiration as we continue our battle.

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