I’ve always been a decent “saver” when compared to most people. I’ve diligently saved in my 401K and have tried to save in other places as well. I always considered saving to be a responsible thing to do and it gave me peace of mind when I was worried about my employment, or other instabilities in our lives.
As a 37 year old, this current economic crisis is really the first one I’ve witnessed. Sure, there was a decent crash in the 80’s and then there was the dotcom meltdown but neither of those really hit me like this one. So far, we’ve been financially unscathed by this ugly economy because we’ve both stayed employed. I’ve actually viewed this as a great opportunity to buy additional mutual funds and a couple stocks. As Warren Buffet would say, “it’s all on sale”. So, we’ve increased our contributions to our 401K’s to nearly the annual maximum. We have also increased the amount we are putting in our daughter’s 529 plan.
What I haven’t done as well as we could is increase our general savings account balances. Sure, we have a decent amount in there but it’s not at the level that gives me the options I want when it comes to real estate. Had I been more diligent about saving, I’d probably have enough to buy an additional property with cash right now. As it stands, I’m short and we are taking a more aggressive approach to saving in hopes that we’ll be able to amass enough cash to buy a property that is near us at the lake.
Never before has it been more clear to me why it’s so important to save aggressively. While many people are suffering in this downturn, there are a group of people out there that are salivating at the opportunity to buy property and investments at prices they wouldn’t have dreamed of a couple years ago. Money is power.
As I was saying, we are taking a more aggressive approach to saving so that we can get our cash balance up to a level that we haven’t seen before. The main reason for this is that we’d like to buy (and control) a rather dumpy property next door to us at the lake. This lot has an old single wide trailer on it and was occupied by a 77 year old man until he passed away last year. His kids have used the place a couple times but they’ve made it clear they plan to sell it at some point. With the real estate market in the tank, it’s likely that whoever buys it will rent it out instead of clearing the lot and building a nice, newer home. Frankly, we don’t want to see the place rented out. The two people that have a lot of capital to buy places like this out there would both love to buy it. Both of them have a track record of renting to shady characters where drugs, partying etc are a normal part of their routine. We don’t want to live near that kind of situation so we’ve decided to try to buy it. Our thought is that if we own it, we can either fix it up and use it as a guest house for people to visit us, or we can clean it up, paint it, throw some cheap carpet in and rent it out ourselves. The beauty is that if we rent it out ourselves we can be more picky about who lives there and if we have trouble, can just send them on their way. If we hadn’t been saving and were living paycheck to paycheck, we wouldn’t even be able to dream of doing this. We’d simply have to sit in our place out there and complain about the situation. Anyway, I have seen the light, so to speak. We will be working hard to increase our account balances so that we can make this deal work. At the same time, we’ll also be working hard to stay employed. 