Monday, April 14, 2008

"Ow. Ow. Ow. Ack."

That was me, looking at the quarterly "earnings" statements from my three retirement account statements, and then looking at the interest rate trend on our savings accounts. Crap! I wasn't feeling all that bad about the economy (in spite of everything costing more all of a sudden) until I tallied up how much freaking money those accounts lost. Dang. I realize it is just ones and zeros in some computers somewhere until I decide to cash it in, but man, that stings. I got a whole lot less ones and zeros than I did before. It is a pretty high price to pay for a mortgage crisis and credit crunch that we had no part in bringing about.

And if those "glad tidings" in today's mail weren't enough, we also had a letter from the county informing us that they increased the assessment on our home by about 15% (in spite of the fact that real estate values have stagnated over the last year). I guess they need more money, probably because of the shitty economy. Grumble, grumble, grumble.

Update: Now that I think about it, and am wondering how the county can increase my assessment when our propery has the "homestead exemption + freeze" that is supposed to keep assessments from going up. I'm gonna have to investigate that. Seems fishy to me. Hey Dave... care to comment?


TheWriteGirl said...

I have pretty much stopped looking at my IRA and such. In fact, I've decided to call a personal moratorium on following financial news. Not that I did a lot of it, but I paid a few crumbs of attention. My mantra is, "it's a long-term investment." Daily fluctuations are to be ignored. Yes, I know the economy is circling the bowl, or at least appears to be. But thankfully I won't need to dip into retirement funds for a good long while yet. And I'm not a day trader. So I just let it be and know that this too shall pass. It always does.

I just wish I could save more. It's really hard.

fermicat said...

I don't pay any attention to daily stuff. But monthly ups and downs, I definitely notice. Especially when they are this significant.

It would be harder for me to save as much if I were single. When there are two earners splitting expenses, it makes things a lot easier. That being said, we still are not saving enough - toward retirement or toward other goals.

fermicat said...

I should have said quarterly ups and downs. I never look at the stuff until I get my statements.

LL said...

What is this... IRA of which you speak?

My experience tells me this... if you're in the stock market, you're losing money.

Minnesotablue said...

The market value of our home went down and according to the paper this morning, our taxes will be going up next year due to the mortgage crisis. Not a good time to be home owners!

Kathleen said...

I know the feeling. I started an IRA last year and I would have more money now if I had just transferred that money into my savings account.

fermicat said...

ll - that is certainly true right now. Over time, those accounts have done well.

minnesotablue - ouch.

kat - true. I try to console myself with the knowledge that each contribution is buying more shares with the lower prices. Plus there is the tax advantage of investing pre-tax earnings.

LL said...

"Over time, those accounts have done well."

Only in terms of static dollars. In purchasing power, they haven't even stayed close to holding even, and 90% of the time have lost big. You have to figure inflation into the mix, aka adjusted dollars.

Dave said...

No comments on the retirement accounts, I'm as depressed as you are.

As to the increased valuations, there's a process for appealing and you probably have pretty good grounds for an appeal that I won't go into here. There's a lawyer in my office that is familiar with it. Send me an Email tomorrow to remind me to ask her about it. It may take a day or two to get to her as today was the end of her tax season, except for all of the people that filed extensions.

An aside, which of the cats were you channeling in the title to the post?

fermicat said...

ll - unless inflation is much higher than the published figures, the accounts have indeed kept ahead of it, even considering the short term losses here and there. The mix is diverse - most of my funds got hammered over the last six months, but my energy fund went up 25%. I'm OK with the 5-year results. It is just the quarterly ups and downs that can be dizzying.

dave - will take you up on that. My understanding is that if you have the freeze, they cannot increase the value over what you paid when you purchased the property, but the county did just that in our case. The county website was not helpful in getting anything more specific than how to apply for the freeze. The only thing I can think of is that our application for a permit to build the porch somehow made a difference, but the construction is not complete, so I don't see how it would be fair to increase the assessment for that reason until it has passed final inspection.

fermicat said...

Oh, and which cat? Silvio is the obvious choice. I am continually sporting half-healed scratches from his over exuberant play.

Kathleen said...

I'm not panicking or anything, but I'm not pleased.

LL said...

In the last year... inflation (or the loss in purchasing power) was around 35% in real actual numbers that you can feel. Did you do that well?

fermicat said...

35% does not match my experience. Our household spending on routine stuff was 6% higher in 2007, compared to 2006 (hat tip to Quicken Reports for making it easy to determine that figure).

MW said...

Our savings/retirement situation is probably only going to get worse. I worry about my own money that I have "invested" in simple CDs at the bank (I hate the more complicated financial responsibilities; they simply aren't worth the hassle and worry and expense to me; I just worked in a "tax-and-investment business" for the past two months, so I know what I'm talking about). Certain incredibly intelligent people have been trying to warn us of this looming monetary crisis for the past several years, but most Americans, including (and especially) those in the American mainstream media, were not willing to listen. We are only just now beginning to pay the price for having kept our heads in the sand.

The next paragraph is a necessary lead in for the paragraph after that. I'm not trying to insult anyone's intelligence. Until the past year or two, I hated this subject area:

When a desired commodity, like gold, is rare, it has great trading value for the few people who can afford it. When a desired commodity, like silver, is not exactly rare but is still fairly limited in amount, it has a healthy trading value for the majority of people. When a desired commodity, like paper, is so common that billions of feet of it per year are actually used as toilet paper, it has very little trading value (unless you just ate at a cheap Mexican restaurant and need to borrow some Charmin from a neighbor who doesn't like you).

In order to pay for the Iraq War and other corporate welfare projects without taxing the American people to the point of an all-out rebellion, the Federal Reserve has quietly been creating trillions of additional dollars out of thin air (known as "fiat" money) and quietly borrowing trillions more from China (which we will never be able to pay back). Naturally, this official method of inflation is quickly making the dollar as worthless as the (toilet) paper upon which it is printed (that is except to the corporations that get to use those new dollars first, when they are still "hot off the presses"). The more worthless our dollars become, the more of them we all need to buy things (cheap crap from American factories in China is still mostly exempt, though, since China is so tightly tied to our own economy). In fact, the Fed's idiocy is having a terribly negative effect on the economies of many other countries (a recent report in a Sri Lankan financial newspaper says it very well). Some countries are even considering abandoning the dollar because the Fed's irresponsibility is destroying their economies too.

Naturally, the drastic devaluation of the dollar by the Fed (aka "inflation") is also having a negative effect on the average American's investments, and, as I say, the worst is probably yet to come (I sincerely, and with all my heart, hope I am wrong; but I haven't been wrong so far).

Furthermore (finally), the Fed's policies, contrary to popular opinion, are also directly responsible for the mortgage crisis and similar problems that are now plaguing the giant mortgage, investment and banking firms. Don't be fooled into thinking the Fed, by lowering interest rates (and bailing out those firms), is helping to slow down the descent into a recession/depression that was caused by "just a few irresponsible firms." The Fed eagerly gave those firms the rope they needed with which to hang themselves (and us) in the first place. Every time the Fed "lowers interest rates" to "fix what ails us," they are, in actuality, simply printing even more dollars, and of course that will only make things worse in the long run. An expert recently used an excellent analogy to explain this: "So what good does the new money do? From the perspective of Wall Street, it forestalls a recession. But what if a recession is needed? That is to say, what if a business downturn is what the economic fundamentals call for? In that case, new money injections do positive harm by preventing a correction and only add to the eventual problems that we all must face. It is no favor to the drug addict to keep him high until he is a corpse, and it is not good economic management to keep an economy drugged up until it hits the wall."