Saturday, October 25, 2008

Global Crisis-my thoughts

I know that a number of people have thought this was coming for a long time. I guess the signs were there, I guess people should have been smarter than to spend way beyond their means. But the banks made it so easy. Credit cards with limits far exceeding income, sub-prime house loans, banks investing in banks that were investing in incomprehensible financing functions. Hey, while I may not be the smartest person around, I guess even I could see trouble brewing.

Until this week Singapore has been fairly well insulated. A few investments were hit, but these were the "ultra risky" investors in Singapore that actually invested in some type of banking shares. By ultra risky I mean it wasn't in your mattress nor was it in your savings account that earns no interest in Singapore. Let's just say that whole life insurance is the biggest investment vehicle in Singapore (and frankly much of Asia). The investment market for the average Singaporean just doesn't exist, they are beyond careful when it comes to investment. But with the market doing what it is doing, I guess I can see why. First, I should clarify, I believe in the stock market, I think it will rebound, I see that Jeff and I will take the opportunity to put money into the market now while prices are low.

But, I think this is a good time to remember why we invest with care, introspection and caution. I often thought that Jeff was a bit too conservative in our investment choices, but overall we have not really lost too much. We have most of our funds in a short term money market and we have a few conservative shares. Overall we have not lost the amounts that others have. And, more importantly, we are still earning and planning for retirement.

I see this as an opportunity, not a bad thing. I see this as a chance for us to further tighten our belt, to continue to save money, to invest with caution and to live within our means. Our current area of spending and concern is over the fate of my little side business for scrapbooking. Which, not atypical for the industry has failed to generate a real positive in the account books. But, perhaps atypical for the market, we have done it all with cash, nothing has been 'borrowed' in order to finance the business. No credit lines were attached and the business, a microbiz really, still has potential. As long as I don't need to go into a loan mode for now and continue to work the business we will continue. I still have lots of ideas and I hope that one of them will turn into a real profit generator for us.

So, tightening our belt, continuing to live on CASH. We have not had a credit card balance that was not paid off every month for over 10 years (excepting a month here or there for example when we moved this year). This has been key for us. We have gone through multiple job layoffs and readjustments, we spend more than the average family on good and quality food and we travel more than the average family. But we have done it all on cash. If we can't afford the trip, we don't go. If we can't afford a car (which we can't) we don't buy one...even if we want it. Our house is filled with largely used or Ikea sourced furniture, the kids still have WAY more toys than they ever play with. We are very happy even as the economy plummets.

So, our long term plans include investing, now if possible (again depending on J's job). I plan on running my business purely on Cash. We reevaluate our spending habits (which I think will be this weekends activity and should be under constant re-evaluation) and we look to the future with guarded optimism.

So, tomorrow I think I will post what we came up with for cost saving ideas based on our "spending habits".

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