Too bad 2008 lasted a second longer then it needed to

Sat, 10 Jan 2009 23:07:57 GMT

Boy, 2008 was a punch in the collective gut. The year started out much like any other, but I soon saw a repeated decline in my 401k and decided to act. I was unwilling to accept any loss due to a downturn in the economy. It was two quarters late - I had not been keeping an eye on the market in the latter half of 2007 (when this all started). Fortunately I acted quickly enough to avoid taking a big hit on my 401k through 2008. I have only taken about a 6% loss in my 401k since the downturn started in 2007. Most of that occurred in 2007. I've since regained all loses, essentially adding the exact money I'm putting into my 401K now. This is my tale -grateful for the chance to know woe.

Back in Jan to March 2007, I looked at my previous two 401K statements and became alarmed that I lost thousands in those quarters. That was outrageous. I immediately began looking into what made up my 401k and found that mutual funds are posted just like stock is. I was stunned (and VERY angry) I never realized this before so I set out to keep an eye on things in general. I began analyzing the Dow index and the mutual funds I was invested in. It was clear that a downturn had started, and I'm not a big believer in random turnarounds. The media and market folk were starting to talk negative. A voice in my head had begun to tell me to "get out". Every time I kept hearing this negative chatter I felt more compelled to find ways to protect my money.

I quickly moved over half of my monies to "stable" options in my 401k. I then made a boneheaded move in spring and lost more money. That loss became my final straw. I was livid at my failure to protect myself financially. Now, I'm not a paycheck-to-paycheck type, so this is all relative to my experience. I was simply angry with the fact I was potentially facing a financial loss for the year, when I was the one in control of my financial destiny.

As summer closed, I became calmer, knowing I was doing the things I should. Then the US economy became handbasket sized . That was instantly alarming to me. I had been doing the right thing, but apparently the big boys hadn't. I could easily be dragged down by them.

I actually managed to move the remainder of my investments out of risky options the day before the market starting its big drop in September. I quickly moved all my money into the only option that was intended to maintain existing wealth. I was very fortunate. But I think it was also a good helping of common sense, and a little voice in the back of my mind that was getting louder.

I've just reviewed my finances for 2007 and 2008, and it turns out I've saved $33.88 relative to 2007. :) So I feel like I've done well in these tough times. I cannot complain about my financial position right now. My recommendation - REVIEW YOUR FINANCES! It is very easy and will give you an idea of where you put your money. Why so easy? Banks and credit card companies give you the ability to download the data right into a program like Money or Quicken. You are a fool not to take advantage of this free service from them. Just go to your banks website and download all the files possible RIGHT NOW! YES RIGHT NOW! It's taken me ~2 weeks to go over 2 years of my bank accounts and credit cards. Most of that time was learning quirks of the software. Don't expect much for planning your finances, focus on reviewing usage.

I easily could just look at the summary data from my pay slips, bank statements and credit cards to figure out the basics, but financial software like Money or Quicken let you see the categories of transactions - like gasoline, groceries, CDs, etc. That is where this software shines. Showing you what categories you spend on.

I have been grateful for my persistence in 2008 to watch the market closely and listen to the big grumblings. They were all clearly signs that anyone could have heard and acted on. Too bad 2008 lasted a second longer then it needed to. Just remember that you always control your destiny. Trust no one but yourself.

ydns' blog - Finances

Too bad 2008 lasted a second longer then it needed to