You Need to Plan for Bad Times During Good Times

CNN is doing a series "about economic survival in this time of financial crisis." Most of their pieces are sob stories about how bad a person has it -- the foreclosures, the bad jobs, the marital problems, and on and on. They really pull at the heart strings in telling how bad someone has it.

Today's article follows this pattern and tells the trials of a Florida woman who has had a very rough time. I felt really, really bad for her and the unfortunate situation she found herself in. Then, about half way down, it says the following:

It hasn't always been this way for Lorenz, who said she used to be a "country club girl." There was a time when she spent money as if her financial well had no bottom.

She said she bought new homes when she became bored with the old, and bought Versace and Chanel at fancy department stores such as Nordstrom and Saks Fifth Avenue, often on credit.

She eventually appeared on Dr. Phil (of all places) and started getting her spending under control. However, for someone making $95k a year, it seems she didn't get it under control enough to have a decent emergency fund set up for herself. Now, she's paying the price for it with a very rough life.

Let this example serve as a reminder to us all that we need to prepare for tough times during the good years. We need to save, build up our emergency funds, invest in our career development and the like. Then, when times aren't so good, we'll have something to fall back on.

Comments

[Apex]

Times like this always remind me of Joseph's Interpretation of Pharoah's Dream.

The interpretation and the knowing that 7 years of plenty would come but would be followed by 7 "lean hungry years" gave them the motivation to save 20% of all the crops from the 7 years of plenty that got them and neighboring nations through the 7 years of famine.

My response to this is that you don't need the dream. Has history not taught us that boom is always follow by bust. 7 years of plenty do come and they are follow by 7 years of famine.

You are exactly right and the story in the Bible of Joseph is a perfect analogy of how this is supposed to be handled.

we are now in the famine. Those who didn't prepare during the feast are now starving. It will always be this way. As Solomon said, "There is nothing new under the sun." And this is nothing new either, yet most people never seem to get it.

[rwh]

"There is nothing new under the sun."

You said a mouth full there Apex. The more I read about our current economy the more similarities I see with earlier busts. I have no idea how long this current one will last or how bad it will get, but it will most likely be followed by better times. Until then, we continue to save. But I do wish I had a crystal ball to tell me how low the market is going as I continue to invest in it each month.

And hopefully her kid's feet havn't grown. If that's the case they don't need to buy shoes!

[MrAtoZ]

"The 42-year-old used to work as an automotive service provider, a commission-only position that helps car buyers with maintenance needs."
If I read that description correctly, this woman used to sell extended warranties for a car dealership, a high-margin (hence the huge commissions), high-pressure con that FMF probably hates. My guess is that this type of job, just like everybody in South Florida who was "into" real estate in the decade, is long gone and not coming back.