I hope you are enjoying the holidays. Now that we’re in late December, a 2008 recap seems appropriate. Financially speaking, these were my top four financial moves of the last 12 months:
- Not buying a house. Although home prices have fallen in our area, prices have only retreated to 2004 levels according to most local reports. Unless you purchased in 2006, this is hardly a major correction. Furthermore, home prices are still expensive by historical measures (e.g., ratio of sales price to rent, affordability based on median income, etc.). As such, I believe (but cannot guarantee) that home prices will continue to fall for the near future. Yet when we do buy, we expect to stick around for a while. Add that to the size of my growing family and we just might purchase before the 2010 expected bottom. Still, not buying a home during 2008 is my top financial move.
- Visiting Boston during an ice storm – Like most New Hampshire residents, we lost power for at least two days earlier this month due to an ice storm. No way we were going to ride it out at home when the inside temperatures were expected to (and did) reach the thirties – we have an infant! So we planned on heading to a hotel 20 minutes away. Then my wife and I chatted: Why not make lemonade out of lemons? If we’re forced to use all these hotel points (I travel a lot for work), why not go somewhere fun? So off to Boston we went. Now we have family memories of being tourists in Boston (riding the subway, going to the Aquarium, pressing buttons to go up and down on the elevator) with two little kids instead of hanging out in the confines of a breakfast nook in Dover, NH waiting for the lights to come on back home.
- Not selling any investments as a reaction to the financial crisis – Other than a swap of very similar mutual funds for tax purposes two weeks ago, we made no changes to our investments this year. Yes, we got pummeled in the market like everyone else. Yet we’re adding to our stock market investments at this fairly low point in the market. I can afford the risk as a thirty-something, knowing I have decades until retirement. Still, stomaching the downturn without selling impulsively was a top 2008 financial move.
- Buying tickets to two Red Sox playoff games – Admittedly this might not have made the list had the Sox been blown out twice instead of rallying, in the bottom of the 9th, to win both playoff games I attended. This financial move serves as a reminder that money is only a tool to bring you things and experiences you desire. Money is not a thing or experience in itself. Some people would scoff at spending $150 (twice) on a ticket to a baseball game. They should. But I underpaid; each ticket was worth far more to me. Since I prioritize my spending (and limit or even eliminate it on things I don’t truly value), I can afford the rare extravagance of a $150 ticket. As a result, I have memories that will last my lifetime. I can see it now: “Yes, grandson, I was at that game when the Red Sox came back from 7-0 with two outs in the seventh . . .”
# # #
What were your best financial moves of 2008?