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Your thinking is very prudent and rational for someone living in the Bay area. I live in the Bay area also and find that people’s expectations are much higher here than in the midwest. Many make $200,000 a year and don’t save a dime. They assume that their retirement will be funded by housing and stock market speculation. For me it all seems very foreign. Very much like a false economy. Driven by debt.
I am presently saving 50% of my after tax income. I have no debt. Our economy is contracting so I feel that this is the prudent course to follow.
I just read a memoir by Benjamin Roth. He was a lawyer during the great depression. As he writes in his journal his main fear was not banks closing or unemployment. His main fear was inflation. In a collapsing economy he and his friends talked of inflation. Very strange.
So I would like to suggest that if The Federal Reserve is able to create any inflation during this collapsing economy it would be a good thing. Since the banks, the speculators and the government are “to big to fail” the only way for our country to get out of all of the debt that we are creating is thorough inflation.
Our nation is presently insolvent. We are paying interest payments to foreign nations to fund our excess. The public sector and the private sector are incapable of controlling their borrowing habit. There are only two solutions. The Federal Reserve printing press or major social change.
We can’t erase the 00′s but we can learn from them! I plan on making due on my promise to get out of debt so that I am not behind the eight ball in another decade. 2010 is sobering in that we are all a little bit more financially wiser – whether we chose to be or were forced to be.
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