savin' and smilin'

Posts Tagged ‘recession’

Q & A: living in the Depression

In Uncategorized on June 6, 2009 at 9:14 pm

Grandmother Jennie Maceyka of Granville, Mass. (born in 1928)

Grandma's throwing the peace sign.

Grandma's throwing the peace sign.

Q: What do you remember about life when you were younger?
A: My father, the mail carrier, had a “stage” [truck] and he gave rides to people to get into the city. There was also no formal kindergarten back then.

Q: What about money is different now?
A: Well, we didn’t have much — no allowance. We didn’t have the money.

Q: How did you learn to manage money?
A: It was automatic because I watched my mother. And Grandpa and I were careful, because we wanted to buy a home.

Q: What kinds of jobs were available back then?
A: When I was a teenager, the best job around was working in tobacco. We sewed leaves together and hung them up to dry. That was the best paying job in the summer, so that’s what a lot of kids did. I babysat next door, too. I’d be walking down the road, no flashlight, keeping an eye on the branches against the sky. You could feel the sand on your feet and realize you were off the road a little bit.

Q:
What was the transportation like?
A: We were lucky back then that we did have a bus that picked us up and brought us home. One city had a bus but a lot of students had to walk a ways to catch it. We’d also play baseball back then. First base was the telephone pole.

Q:
What resources were used in your school?
A: They were just basic: reading, writing and arithmetic. Later on there was art and music, as we got in the higher grades. I could remember there were these bells. A piece of wood with bells on the end, and we all fought over it. Later we had a gym. We had baseball, softball and basketball. We even had a horseshoe pit one time. One of the horseshoes hit me in the leg; I think I still have a dent! I don’t remember us having what you would call a library. But our school has grown; it’s been enlarged.

Q:
What kinds of colleges were around then?
A: Grandma went to a school for teaching. I wonder if they had Westfield State [a local college] back then. My mother was boarding in Springfield, and then went to “normal” school to become a teacher. They did a lot of traveling back in those days to get kids to those schools. We had basic to 8th grade. There was no high school in Granville. Later on, they had vocational high and their curriculum was enlarged. They have automotive and word working there; they also have science classes, bookkeeping and English. We had a gym teacher and a sewing teacher, for those that took sewing.

Q: What did you do after schooling?
A: I graduated in ’46. We [Grandpa and I] got married in ’48. After high school I worked in the office at Noble and Cooley Drum Co. They made toy drums, etc. It seemed the easiest thing to do because of transportation, since we lived right in Granville. People would be laid off, and then brought back. I don’t know if it was a demand for the merchandise or what, but for part of the year they were laid off for a few weeks. It was just certain people; some they kept on. Noble and Cooley do very little now. They don’t have many people there. They have opened a museum with some of the things they used to make, like tambourines and drum sets.

Q:
What other kinds of jobs were available?
A: There was a box shop in town, where people built boxes, and there was the orchard, with people picking apples and other fruit. A lot of people went to work in Westfield and Connecticut. There wasn’t much in Granville.

Q: Has the current economic recession affected you at all?
A: I’m pretty good about staying the same. I really haven’t had any problem. Because I don’t go out for a job, it’s what I have coming in. I’m OK. I don’t have any large problems. I get some from Grandpa’s retirement and Social Security. Thank my hubby; he did well. He had a good job and he worked hard. His boss really respected him. They respected each other’s views on things.

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2 professors sound off on saving

In Uncategorized on May 24, 2009 at 4:30 pm

The stock market is crashing. The economy is tanking. People are losing their jobs. Money is tighter than ever. We have entered the recession, but what do we do now?

“The first thing to start with is a budget,” said David Payne, a professor in Ohio University’s finance department. Payne currently teaches personal financial planning courses, but he lived and breathed business for 30 years, working as a senior officer and senior vice president at PNC Bank in Pittsburgh, Pa.

He suggests a concept called “pay yourself first,” which entails the setting aside of funds for future financial goals before setting aside funds for everyday living expenses.

“What most students do when they come out of college is say, ‘I’m going to get the nice apartment in Dublin and I’m finally going to have a car that I like,’” Payne said.  “And then they decide, ‘Whatever I’m going to have left over, I’ll save part of it.’” But Payne suggests that his “pay yourself first” approach, though less popular with the general public, is much more effective. “Not many people do this,” he said. “But it’s a way to actually be successful and reach your financial goals.”

Yes, even you can save up stacks of money. © Shirley Two Feathers / Flickr

Yes, even you can save up stacks of money. © Shirley Two Feathers / Flickr

An associate professor at OU, Andrew Prevost, agrees that saving is crucial to financial success. And the earlier you start, the better. He currently teaches investments to graduate students and market institutions to undergraduates, but his extensive knowledge of finance once brought him overseas to New Zealand, where he worked as a senior lecturer.

“When you leave school and you get your first job, that’s probably the easiest it is to actually save up a lot of money, because you don’t have any dependents or major responsibilities,” Prevost said. “Take advantage of not having a lot of financial responsibility to actually build something up in saving.”

According to Payne, savings should also be directed to a 401 K retirement plan, even when retirement may be 40 years down the road.

“Don’t tell yourself, ‘Oh gee, I hardly have enough money. I’ll start that next year, the year after that.’ That is not the way to do it,” Payne said. Although 401 K funds are not immediately available, the money grows exponentially and can be extremely beneficial in the long run. “It really adds up,” Payne said. “That’s just the power of compound interest.”

Early saving and 401 K investing are certainly important, but what about the stock market? Is the potential payback worth the risk? According to Prevost, it is.

“History shows that you can only really have good investment returns if you expose your money to the markets,” Prevost said. “If you’re 22 years old, you have 40 years out to retirement, so in that case it’s okay to start exposing your money to markets because you have such a long time to ride on fluctuations [due to the recession].”

Because of the recession, however, many people have turned to credit cards — instant money. Use them now; pay them back later. Although plastic serves a purpose in building credit, it can be an addicting little rectangle of debt.

Use these colorful cards wisely. © pfreviews / Flickr

Use these colorful cards wisely. © pfreviews / Flickr

“People use credit cards like cash,” Prevost said. “You should only buy things that you can actually afford, with money you actually have. Then you are never affected by interest rates; it’s irrelevant to you.”

Payne agrees that credit cards can be dangerous, especially if they end up in the wrong hands, such as those of an out-of-work teenager with a shopping addiction.

“People shouldn’t have credit cards who don’t have incomes,” Payne said. “All the credit card is doing is postponing the payment … if you don’t have an income, then it’s not going to be any easier to pay the cash later as it is now.”

In support of this idea, the U.S. government just recently passed the Credit Card Holders’ Bill of Rights Act of 2009, stating that any individual under the age of 18 may not be issued a credit card, under any circumstances. A similar bill in the Senate suggests the idea that individuals under 21 may not receive credit cards, unless they complete a financial literacy course and have a co-signer. The latter bill is still in debate.

Payne definitely realizes that credit cards can cause problems, but he said that he is not anti-credit card, by any means.

“If you use credit cards as a convenience, in other words, you pay them off every month, that’s fine,” Payne said. “But to use them as a way to borrow is not-so-fine.”

Money management is key, especially during an economic downturn, but will we ever see the light at the end of the recessionary tunnel?

Prevost assumes that it will take about 9-12 months to see economic improvement, while Payne remains a little more optimistic, estimating noticeable improvement in a shorter period of time than most people think.

“My crystal ball is no better than anybody else’s,” Payne said. “But one thing that we know is happening is that the American consumer (who represents about 70% of the American economy) is busy reducing debt right now in what is called ‘deleveraging.’ As both consumers and businesses get more comfortable with lower debt levels, then I think we will have some base for incremental spending and that will help lead us out of the recessionary times.

“I definitely feel that later this year we will see the economy begin to improve.”