First Person: We’ve Been Financially ‘Treading Water’ for Years

Yahoo Contributor Network

It seems like right after I decided to become self-employed, the economy began falling apart around me. I left to make my career change in September of 2007. Shortly thereafter, the financial crisis hit; then the housing market collapsed, followed by the recession.

While there has been talk of a "recovery" since then, it sure hasn't seemed like much of one to me. And when it comes to trying to plan for retirement, my efforts just haven't been cutting it lately. The article, "'Treading water': Saving for retirement is harder", notes that "By now, many Americans know what they should be doing to save enough for retirement. The problem is that some just aren't able to do so."

This might be our problem; however, while we may be treading water for the moment, we haven't drowned just yet.

Real estate market implosion and my attempt at recovery

When the housing market collapsed, so did the value of our home. We ended up selling our home with an overall loss of nearly $100,000. It was a crushing blow to our personal finances; however, we did our best to re-evaluate, regroup and recover.

To make some sort of effort to recoup some of our losses through better property value retention and lower home-related expenses (while still giving us somewhere to live), we decided to downsize significantly. We moved from that larger single-family home to a much smaller condo. In this way, we reduced the cost of things like a mortgage, property taxes, utilities, and maintenance so that our overall home-related costs went from an average of around $2,300 a month to closer to $800.

A financial crisis that crippled my retirement account

The financial crisis cut our retirement accounts nearly in half. It was a severe setback to our personal finances at the time. While since then these losses have been recovered, it doesn't mean that the process of suffering such losses wasn't a learning experience.

During that time, I realized that the funds I held were not stable enough for my investing strategy or preference. Therefore, I transferred the balance of my IRA into a dividend reinvestment fund. While this fund moves with the flow of the market, it's not so volatile, and more importantly, it allows me to grow share total through reinvested dividends. With monthly dividends paid out on the fund, I've been able to grow share total by almost 20 percent since I made this move about three years ago without adding an extra penny of my own money.

Continuing to cut costs even when costs are already low

I've been a long-time fan of living sensibly. I wouldn't say I go to extremes in most cases, but I try to do things that make sense while also making our lives more efficient, more effective, and more economical.

I've been amazed at just how and where we can save money when we really start working at it, and in turn, even with adding two children to the family ranks, we've been able to keep costs fairly consistent over the years in many of our budgeted areas. Even as income as declined, we've been able to cut costs to compensate.

I've already mentioned the cost reduction efforts in the area of our home, but we also save on things like food, clothing, transportation, and more. By looking for new places to shop, trying new food products, creating meals plans, using shopping lists, and rotating stock by "use by" dates to reduce waste, we keep our average food costs at or below $300 a month for our family of four, which is lower than the average SNAP allotment for a family our size. And by shopping resale before retail at places like resale shops and garage sales, we manage to keep our clothing budget for our four-person family between $300 and $400 a year, a huge savings for us, especially with two young kids.

Therefore, while we've been treading water financially over the past few years, we're working hard and trying new and different things to keep my head above water.

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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.


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