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moneysense.ca, 12/02/09
How is the recession affecting you?
Our equity portfolios took a huge hit last year. It looks like this year, the bad news will hit a bit closer to home. Here’s how the recession has personally affected me so far:
- My employer went through one round of layoff last fall; fortunately, I survived but many colleagues didn’t.
- There were no bonuses last year. In bad times, variable pay is almost certain to be cut.
- There will be no salary increases this year. In this economy, that passes as good news because I know a number of tech firms that have announced temporary salary reductions.
- My spouse is one of the lucky ones: working for the Government means it is business as usual despite talk that the Tories are planning on legislating wage controls and rolling back salaries.
How about you? How is the recession affecting you?
moneysense.ca, 12/02/09
Well… if it weren’t in the news everyday in a big bold font – I really wouldn’t have known we were in a recession…
I know we have all heard the bad stories – here’s a good one…
1. I haven’t changed or reduced my personal or family economic activity
2. I don’t check out my porfolio – I hold it for the long term
3. I am mortgage free and my wife and I are car payment free
4. I don’t need credit
5. My wife is a teacher (ie. cash for life, only works 9 months a year for 12 months pay @ 6.5 hour work days)
6. I work for a high tech co. that is one of the few that posted double-digit growth – even during these “said” hard times – I’m lucky that I am a specialist in high demand
7. We have one 16 month old child and my wife is 5 mo. prego – after 1 yr mat leave – she plans on taking another 4 years ext. leave without pay to be with our two children while keeping her status as a teacher to return when both are in school.
8. Everything is peachy-keen!
Recession isn’t affecting me too much. No worries about job loss, housing prices are down which is good for me (I will be buying this summer), and I have many years for my investments to recover.
So really, it hasn’t changed anything in my life (for which I am very thankful).
Loki, Xenko: It’s nice to hear feel-good commentary among the doom and gloom. Compared to the 2001-02 recession (it technically wasn’t a recession in Canada but in high tech it sure felt that way) when I lost my job and we had just bought a home and my wife was in the private sector as well, this one has only been a minor bruise so far. I suppose being conservative with finances helps (small mortgage, no consumer loans, a bit of cash put aside etc.) us survive bad times.
Everything is good for me so far. My fiance is a teacher so her job is secure. My company hasn’t really been affected by the recession thus far. I recently got a 4% raise. We are cutting back on our expenses mostly because we want to pay down the mortgage quicker as well as a test to see what we can cut out. The only thing that’s hurting are our investments which we can’t do anything about because its the same every where. We just continue to contribute to take advance of the low market
Not really affecting me. I have a friend (engineer in construction industry) who will get laid off soon. Wife is a teacher with a full time contract, so no worries there. Won’t be a bonus this year, and raises are debateable, but other than that, no worries at my workplace.
Lineups and help wanted ads (for service jobs) are still everywhere out here in Alberta.
Hmm, I’ll add a slightly negative to neutral story.
Good news -(1) wife’s bonus was bigger than ever, she works at one of the pipeline Co’s so raises in her salary, big bonus, and the Co. has continued increasing dividends.
Bad news – (1) my job is not secure, may be gone in a month and a half (not exactly related to the recession – it’s possible even if the economy is booming). But who knows, if I survive I’ll get a 4.5% raise – go figure (2) our rental unit is unoccupied, and we’ve had to drop the rent by $200. Viewings are down, people are pushing hard to negotiate a reduced rent so we’ll see.
Everything else, we’re getting hit on housing values and investments like everyone else.
My employer was already prepared for the crisis, since the employer has had financial difficulties for some time. We just finished a third round of layoffs for a period of 1 year, decreased spending as much as possible, to the event that even office supplies are no longer purchased. Very funny.
My investments are down, but not as bad as the indexes, mostly due to moving to a USD strategy last year when CAD was at par (didn’t plan it this way, just lucky). I don’t work, so I have to pay expenses out of my investments. I’m trying to wait a little while to cash out stocks for expenses, in hopes that things will recover a bit. So far, 2009 has been a decent investing year for me.
I listen to a lot of business podcasts, including Bloomberg. All the negative news gives me the blues. There’s a lot of people out there losing jobs, which reduces spending, which causes more job loss. I feel bad for people losing their livelihoods.
Admittedly it’s a small sample size, but so far I’d say people who read this blog are faring much better than the average Canadian during this economic downturn! Maybe financial literacy says something about job security/prospects.
I have not been significantly affected by the recession. I’m an MBA student right now and I’m one of the fortunate few who have a job waiting for me when I finish. Job prospects for my class as a whole are pretty dismal though and more than one of us is questioning the wisdom of investing $60,000 in a degree that is no guarantee for a job. My wife is a physician which, mercifully, is one of the few legitimate recession-proof jobs out there. I think for people who have spare cash flow, 2009 could be the best buying opportunity of our 30s.
We haven’t been affected yet either. My girlfriend works for a lawyer who handles bankruptcy cases, among other things, and unfortunately that means she has plenty of work. I’m in a fairly recession-proof job as well (government contracting on a high-priority issue with lots of contract money already committed). All of my investments are long-term so I’m not concerned about any losses in current value. In many respects we’re in better financial shape than we’ve ever been, but we’re keeping our noses to the grindstone and living frugally. Seventy-five percent of my net income goes toward paying down our mortgage early and investing for retirement. We get by fine on the remaining 25 percent.
some work-related, and one home-related issue.
1. my employer had some layoffs last year, though mostly from a business unit that was about to be closed anyway.
2. there is a bonus being paid out at work, based on last year’s results, but it is effectively getting clawed back by a 5% pay cut for 2009. no bonus or pay increase for 2009.
3. employer has also cut rrsp matching–adds 2% to the other 5% pay cut. Also, having company-wide shutdown weeks, effectively telling us when to use our vacation times. But, at least I have a job for now (at least for the next few months, anyway)
4. I do have an elderly relative who has run into health problems; their house will likely need to be sold later this year, which I expect will be difficult in this market for sure. (I am less worried about what price we’ll get, but more worried about finding a buyer at all). I’ll be responsible for taking care of this, so it will be a potentially big problem.
Unless I get laid off, then #4 will be the biggest problem, mostly because of the time coincidence between health problems and the economy. If I do get laid off, then the employment situation would obviously become the biggest problem very quickly, though, since we have 3 small kids and my wife is at home with them (though, I suppose, we don’t have child-care expenses as a result).
Otherwise, we are in not-so-bad shape—only a small mortgage outstanding (only not paying it off, to maintain non-RSP cash reserves for emergency, and low-interest mortgage rate anyway, but mortgage will be gone in 2.5 yrs if nothing changes), no other debts anywhere, assets still in rsp’s. In an emergency, I see no issue with using rsp money; that would become necessary if my wife and I are unemployed for an extended period; hopefully, it won’t come to that, though.
The biggest way the recession is affecting me is that I am much more conscious of my spending and my financial situation. The fact that I don’t have an emergency fund is something I now worry about. I don’t expect to loose my job nor does my wife but stranger things have happened.
My partner and I have not been affected yet…
Luckily, she works as a controller at a hospital, a very stable, recession proof job. My job is in the aerospace industry, and I’m just waiting to be let go. I’ve been one of the few lucky ones, I would say about 70-80% of my coworkers have been let go in the last month.
I’ve been sending out resumes, preparing for the inevitable. We are young and don’t have much of an emergency fund yet, but I think we could get by on my partner’s salary for a while.
- Wife is a nurse with a strong entrepreneurial spirit. Whatever happens she will bring some $ home.
- Portfolio is down only a limited amount since in early to mid-2008, I greatly increased my cash component and became much more defensive.
- Job is ok. This is not a government job so there is always a risk.
- Bonus got cancelled this year. Not fun but a pay increase is possible. I should know relatively soon. Cross fingers.
- We have always live quite frugaly, so no change in our standard of living.
- I own a house, so lower real estate prices affect me. On the other hand, we are thinking about buying some land for a cottage so it helps.
CSC
My company announced a plant closure which takes effect around July of 2009. Production is being moved to the US. My wife is not working currently by choice but could be as she is very employable (CA). Investments are down quite a bit cause we own lots of Cdn bank stocks. I have just started my job search and so far there seems to be quite a few jobs for my qualifications. The economy is making me a bit nervous unlike any other time in my life. I would like to see more good news in the media as all the negativity can get you down even more. Thankfully I am going to Hawaii for 2 weeks next month to forget about everything for a while (it was planned over a year ago). I hope the Cdn dollar strengthens in the next month so the exchange doesn’t kill us. This economy puts things in perspective; that most of us are better off than most and that family is the most important thing we have. Heres to an improving economy in 2009. Bring on some good news for a change!
The recession hasn’t been too much of a concern. My husband is a transit driver for the city and I’m about to start maternity leave. My company is undergoing some changes in ownership so it will be interesting to see what I get to return to in the fall. As it is the insurance industry, I’m sure there will be something to return to.
Otherwise, our financial concerns are the same as before – to pay off the huge consumer debt we owe as quickly as possible.
Other than conversations with individuals who are affected from an employment perspective any recession hasn’t affected me directly as of yet.
My fulltime job is very secure (Nursing) as there is an obvious shortage in skilled individuals to do my job. Even on the business consulting side I’ve found that a number of businesses, despite their hesitation for large capital expenditures, are eager to seek out assistance for positioning their company for this current downturn by focusing on protection of revenue and decreasing costs. This is an environment where many businesses are looking at protecting their market share rather than growing it so many business owners I’ve been talking with are seriously concerned about future demand for their goods/services.
My partner’s former company essentially collapsed. He found a new job but required moving to a new city. I’ve found it difficult to discover employment opportunities here, as no one is really growing – but I’m still keeping optimistic.
Before I left my previous job, people were getting laid off like crazy.
Still, we are in better shape than many others and my heart certainly goes out to those who are struggling.
I am focused on cutting back on my spending. I know Keynes’ Paradox of Thrift, but I don’t think I can help out the economy much.
I am still expected to graduate in 2010. I am still focused on passing my CFA level 1 exam in December 2009. I hope I can get into a Masters of Economics program in 2010.
I am expecting the recession to be very long. I visited a job fair recently and the only full time positions that were available were insurance salespeople or brokers. A finance position in a corporation seems to be impossible nowadays.
I am thinking that if the job situation stays the same, then I might pursue an Edward Jones financial adviser position. Edward Jones is a full service brokerage that provides stocks, bonds, mutual funds, life insurance, and annuities.
Phil S gave me the idea that under some situations like government bonds, it is a better idea to buy it directly than using a mutual fund. Buying bonds directly is something an Edward Jones financial adviser (broker) can do much better than a bank rep selling bond funds.
I think that it is possible to provide low cost investment solutions as Edward Jones financial adviser (broker), because there is also income from insurance products. I know that Dr William Bernstein says that the average broker has very little financial knowledge and has severe conflict of interests. I am hoping I can be a good broker with strong financial knowledge and high professional standards as required by Chartered Financial Analyst destination if being a broker is the only job that I am able to get.
In the last year:
- I’ve hired 5 people in my department, 2 starting since X-mas (software development)
- I’ve given (and received) pay raises greater than inflation
- I have not missed any of my bi-yearly bonuses (most recent was a few weeks ago)
- My RRSP is down over 35%, so I skipped contributing for 2008 and paid down my mortgage instead
My investment account balances are down, but it’s not money I need now. I’m also getting screwed on the dollar to euro exchange rate. And it seems my property taxes are going up. Otherwise I’m not affected yet. Glad to see I’m not the only one.
Workwise, I got a hefty bonus at Xmas, which tells me I’m not on the chopping block. I just hired two guys from Ireland – we’ve never been busier than we are now as the owners are scared of what’s round the corner and aren’t turning work down.
Like Canadiansmallcap, I’m married to a can-do person who always has at least one job of one sort or another on the go but his firm is very busy too and he just got a promotion and some education money through.
I’m not immune to the scary press though, which is probably driving us to save even more and spend less. So we’re doing well.
We are not affected much. My hubby won’t get salary increase this year and we were hit hard with our investments. We are mortgage free and our household spending can be supported by one income.
However, I have thought to stay home with my daughter until she is three. Now with the uncertainty I decided to go back to work when she is one.
We are pretty conservative financially.
We live within our means. Both my husband and I take public transit to work.
While not mortgage free, we were conservative when we bought our home (at the peak no less – you can’t win them all) so our mortgage payments are manageable.
Both of our jobs seem to be secure for now…. not fortunate enough to be in one of those “booming” or safe sectors. Maybe a little bit more attention about discretionary spending… but other than that, it’s business as usual.
My wife and I are fine, I work for one of the big banks and was surprised to get a decent bonus and raise for last year, and they are starting a pension plan this year at no added cost to employees. My wife has been on contract with the provincial government for the last three years, but now has a decent chance at a permanent position. Sadly, my father and her mother have both lost their jobs, both connected to the auto industry (parts plant shutdown and dealership downsizing respectively), but my dad will at least be able to retire with a decent pension. House prices are coming down so we hope to get into home ownership some time soon.
Good insightful comments – nice to hear the personal stories.
So far so good for us, both still working, building up the emercency cash fund, and then directing the excess funds to the mortgage after that. In consulting, there is quite a bit of uncertainty with capital spending, which we rely on. We havec some major contracts in the office that have hung on, and as long as they continue, things will be fine for some time.
We are even more conscious of our spending than we were, and moving to more of a budget plan than a tracking plan.
[...] Canadian Capitalist asks How Is The Recession Affecting You? [...]
Except for our retirement fund we are OK on an everyday basis, but my retirement just got pushed back considerably. Neither my wife nor I have a company pension and therefore will have to rely on RRSP and gov’t sponsored plans when we retire. Our combined portfolios took about 40% hit but I can’t blame anyone but myself. I knew I was riding the bubble, just didn’t get off when I should have. But having said that I really haven’t changed much as all the companies and funds we own a re solid with good fundamentals.
On the positive side we will have our mortgage and one car paid off in the next month, so that’s like getting a $2K month raise. Hopefully put some money in the house and increase RRSP contribution to get back to “Freedom 65″. If not, I’ve got my health so working to 70 or beyond doesn’t frighten me.
Investments down of course but I’ve got my eye on a couple of stocks I went to get in on as well as increase positions in others. I’m in the oil patch, things are still busy but breakup may be coming a bit earlier this year. Not too worried about layoffs at my level but you never know. I’m a compulsive saver and cheapskate anyway, unfortunately I made a bad decision on going into business for myself last year which fell through, not enough to kill me but something I don’t really need hanging over my head right now. My wife stays home at the moment. I still have a mortgage but no car payments and no consumer debt. I can weather it out if I were to lose my job as I have been putting money aside for some time. Oh yeah! I paid my property taxes early this year so saved 2% (about $50) but at least that is one big expense this year I don’t need to worry about. You wouldn’t know there is a recession here really. If I start to worry I turn off the radio and quit listening to the experts!
This recession has greatly affected our revenue stream:
1) As a one “employment” income family (I’m visually impaired, we live out in the boonies), my partner survived the first round of lay-offs just prior to Christmas;
2) Her year-end commissions and bonus were cancelled, although she was the only sales manager to exceed her oroginal annual target;
3) Of course, no pay increases or bonuses for the current fiscal year and as such represents a 27% decrease in pay (and the teachers still threaten job action – no offence / disclaimer: I was in the educational profession, but had to “retire” without severance or benefits);
4) Projected investment income stream (dividends, fixed products) will be approximately 50% lower than last year;
5) Our surviving parents were forced to retire before 60 without employer pensions and rely on us for assistance;
6) Our three siblings (all in their 40s) are constantly trying to plead as “family welfare” recipients for our parents.
On the positive side:
1) We have always lived well within our means;
2) Mortgage and totally debt free since our mid-thirties and prior to having a child;
3) Still able to max out on RRSPs, RESP, TFSAs and plan for vacations;
4) Our diversified portfolio incurred <1% paper loss last year;
5) Wife still has the option to “retire” whenever she wants;
6) Great investment buying opportunities on the horizon.
Cheers.
Poedin
I’m holding my own. The main way this recession is affecting me is that it’s really put into perspective just how greedy some people are and how ungrateful they are for what they do have. (I read too much news out of the US).
I don’t have much, but I’m trying to keep things in perspective and keep in mind how lucky I am. Sometimes it’s easy to feel sorry for myself because I can’t afford to save a lot or buy a home, but I have to keep reminding myself that I’ll land on my feet somehow. There’s always going to be people who are better off, and there’s always going to be people who are in worse situations.
Mass layoffs in December which my entire department (VP level and below) somehow managed to escape, no salary increases for FY09, mandatory summer shutdown the first week of July (so employees are forced to take vacation time).
I still got a bonus at the end of December.
I never count bonuses or profit sharing as part of my budgeted income (even though I’ve never had a quarter without a bonus or profit sharing), so if those things disappear I won’t really feel it. I just won’t have those once-a-quarter splurge days where I let myself go crazy on a piece of art or a designer handbag.
I’m young (24) and just started saving for retirement a couple of years ago, so while my portfolio has taken a hit (-14% growth), I figure that just means now is the time I’m buying low
What WILL affect me is if my employer’s RRSP contribution matching goes away. I’d have to up my contributions and I can’t really afford it right now (I’m going through a breakup that involves a jointly-owned house).
[...] Capitalist asks how the recession is affecting you and got quite a few responses. How about you? Did you even feel [...]
Wow. This is great to read about everybody’s personal stories!
For me, my portfolio took a massive beating like many of you out there… I had mainly invested for income and that investment income has taken a massive hit – I was previously clearing $2K a month and that has dropped to just a couple hundred a month now. Part of it is due to reduced or suspended distributions but the rest is due to my selling off of assets to pay off leverage, thankfully before the massive correction in the market. Regardless of the reason and despite being thankful of eliminating my leverage before the crash, it still does hurt to essentially lose that $2K per month of extra income.
My employer recently announced some pretty massive layoffs but I’m still OK for now. But since my job is in the collapsing manufacturing sector, I did build up a sizeable rainy day fund… Albeit the interest rate on that rainy day account is now a pathetic 2.25%. I am just starting down a path to finding a new career since I know this one is going to result in a dead end – but it will be a long journey. It has taken me 20 yrs to get to where I am today as an engineer and I shouldn’t expect to become something else on an overnight basis.
So, in summary, while I am pessimistic about my future employment, I think that I am financially prepared for it and I am trying to get mentally and emotionally prepared for it. I am currently completely debt free with some additional cash savings in the bank. Right now my cash flow = my expenditures mainly because I’m sinking a lot of money into tuition expenses. Luckily it is tax deductible, so a good chunk of it will come back to me when I file my 2009 taxes.
[...] Capitalist asks how the recession is affecting you and got quite a few responses. How about you? Did you even feel [...]
I was lucky to get hired before the recession really hit (This is my first year on the job) and negotiated a decent salary. So I’m still enjoying the dramatic increase in income, compared to the one from my student days. My employer has recently announced hiring freeze, but my job is *very* secure.
I have no debt of any kind (still renting though), and my monthly overhead is less than 50% of my take home, and I keep saving (even though I can’t quite save 50%).
My investment has taken some hit (percentage-wise), but the size of my nest egg is quite small, so the actual dollar amount is not bad. I’ve been pumping more money into my investment and increasing my equity positions.
This is my first recession experience, but I think I can comfortably ride out this one.
Its great to see how everyone has positive news. I’m quite surprised.
Hi Poedin,
Can you enlighten on
“4) Our diversified portfolio incurred <1% paper loss last year;”
I can see how a portfolio could have only sustained <1% paper loss. But not one I would consider ‘diversified’.
Hmm, well I lost over half my mutuals, but this year, I have almost doubled my income already with new business. (I’m a business communications consultant/writer.) So, I think it’s a case of desperation prompting action!
Sampson,
You’re right re: “diversified”. I moved to <15% equities prior to the decline – our portfolio is heavily skewed towards non-equity assets. Dollar cost averaging back into the market.
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