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COMMENTARY | The American Dream is still alive and kicking! Excuse me while I stop laughing for a minute.
After seeing the stock market take a dive last week, it was a breathe of fresh air to see it come up a little and rally this week. However, my 401(k) is down. Bad. I was up a couple grand when we had a burst of success earlier this year, following our decline from Greece’s economic status. However, all the money I made, plus a couple extra grand, went away from this recent depression-like month. I run my own outplacement business and rely on my savings and 401(k) investments as a means to save for my children in the future. With the notion that our generation won’t have social security, it’s scary to think I have to rely on the stock market as a means to generate a retirement income. Well, this recent decrease in the stock market has me scared. I couldn’t sleep the other night I was so worried.
With rent and bills piling up the question remains, when do I pull out and put the money into a CD or some other type of investment that’s less risky than a 401(k)? I mean, do I risk it when the market will surely rise again? Do I risk it when I really don’t need a penalty for withdrawing my 401(k) too early? Do I risk it when technically I’m as far down as I could possibly go regarding my balance? The answer is No. I’m going to keep my 401(k) and know that at least I am saving … something. The idea of pulling out the money and transferring it into a CD that will only generate half a percent of interest sounds more depressing. The odds of taking the 401(k) out and putting it into a checking account or savings account, and then not touching it, is slim. I have to keep it and that’s the end of that discussion.
However, what if I can’t pay rent? What if I can’t pay my car payment? These are the thoughts that keep me awake every night. This is the reason I can’t stop looking at my 401(k) and stock investment’s balance. But knowing that at least I am trying to do something relating to saving money for my future and my family’s future is the only silver lining. I have a friend that decided to utilize all his savings, 401K and other investments, for a mortgage and down payment on a new house, before that market crashed. Needless to say, he lost out. He lost out bad. He now has to take loans out against the house and it playing catch up with his credit cards. I said “are you sure renting wouldn’t have been smarter? Are you sure by taking out your 401(k) and using it for a house that has lost value was smart?” He replied, “No. I screwed up, man.”
But, he is living the American Dream, right? He has a wife and three kids, a white picket fence, two cars and a house. That’s what we all want, right? Well, if you think that by having no investments, an income that barely is above the poverty line, one vacation a year to Myrtle Beach, and a mortgage with three loans tied to it is living the American Dream, then I say “live it up!” I’m fine with weathering this storm.