Thank you, someone, for the snow storm, however mild… it is November 22nd and our drought stricken area is already way behind historical averages in measurable precipitation again. I admit to being a skier so maybe that explains my delight in seeing snow… Santa Fe thrives and prospers when blanketed with a layer of snow. Its physical beauty increases and its visitors, many from warmer climes, can brag that they saw snow when they get home. It also means that you might be hesitant to buy a parcel of land when there is a layer of snow on it. Guessing that is just human nature, but if you cannot see it, you probably will not be ready to buy it. Here is an idea: all of the parcels of land that are for sale should miss getting the snowfall and everything else can get dumped on.
Your instincts are correct about the real estate market. Whatever it is that you think is going on seems to be correct. There are bright spots among the news reports and there are reasons to hunker down and plan to stay where you are for a while. The so-called recovery in our national/world economy is unfortunately tied to employment numbers. As long as the official unemployment percentage in the US is above 9%, it is going to seem like we are not making progress in coming out of the economic funk we have found ourselves in.
What is your perception of what individuals are doing about their future prospects? It seems to me those with jobs are trying to save money and have all but stopped spending money, just in case they find themselves unemployed or become hurt and cannot work. Disposable income is being carefully hoarded just in case of emergency or waiting for that truly special occasion – the birthday or the annual holidays. The fact that it is Saturday and the mall is open is no longer a valid reason to spend money. Salaried workers are holding on to the job(s) they have, not wanting to chance it and try for greener pastures on the other side of the mountain. Are they greener anyway? Or just different? And where do you stand on taxes – up or down? If down, will we spend the money we don’t ahve to pay in taxes? If up will it help our government solve the financial crisis and reduce the national debt? What about stimulus spending – yes or no? Or on Federal Reserve actions to get our economy going again? Is it possible to get it going again in the manner we were used to? Consumer spending was the engine and the petrol. Since that has slowed to a crawl, how can our economic future improve unless we all go out there and buy a bunch of stuff we don’t need and resume spending more than we are making? Is there a way to recast our thinking and our behaviour to put us right for whatever the future holds?
Some anecdotal information seems to point to deeper problems for almost all of us. Most states and counties and cities are running in red ink and don’t know how they will balance their budget next year or the years after. If unemployment benefits run out for many people, what will they do to survive? Move in with relatives for starters… and what else can they then do? Sell their vehicle? Get rid of debt by declaring bankruptcy? Finally get a job, however menial.
There seems to be a very large adjustment coming for almost everyone, but the highest percentile of those with liquid assets and wealth. Cuts are messy and painful by definition and nobody wants to be the one that has to spill blood… but are not cuts in spending absolutely necessary now? What is the train of thought that says no cuts are necessary? Probably the most effective thing one can personally do today is think through carefully where their money comes from and where it goes. Once you have a solid grasp on your spending habits and a list of where it all goes, start by taking some things off the list. But where do you start? How about your annual vacation(s)? Cable TV? Your phone land line? Cut back on dry cleaning and purchase and use a clothes line at home? Switch to generic labeled goods and drop your habit for heavily advertised brand names. Small luxuries can be left behind. I am not a coffee guy but a $4 cup of coffee? Wow! Try saving $3 a day for 365 days and you have a thousand bucks to do something constructive with. Sushi? It’s difficult to get in and out for less than $20 per person, and just how good can it be? But I love sushi! And sake! You mean I have to start drinking generic beer? Well, it’s up to you to choose where to cut.
Long time readers might know that I usually raise just as many questions as I answer. Today the 3 layered question is: what will you be doing in five years and what will you be earning then and what will you be spending money on at that time? For some, you might answer those questions now, since you are in control of your own destiny, you are the master of your universe. If you feel you are a victim and are subject to the fickle winds of change and have a completely unpredictable future, I suggest you build one of those bomb shelters in the back yard. And stock up on canned goods. At least you will be safe, if not happy.