Is my wife crazy?

[john blaze]

Ok, I'm new to this forum, but I need some feed back here. My wife seems to be under the assumption that we need to start emptying our savings account slowly (so as not to arouse suspicion). We need to keep the money at home in a safe. Then I need to start getting my checks from work, cashing them and only depositing a limited amount in our checking account to cover bills etc.

This is all to try help us prove "financial hardship". Should I lose my job and we need to try and qualify for the struggling homeowners program. This is also to protect us if the banks should become controlled by the FEDS and somehow we lose our savings if they close or sell our bank.

We currently have about $10k in savings. A mortgage payment that is 32% of our net income. We have no car payments and only a small amount of credit debt, about 5%.I am the only one who works, and live with my wife and 2 year old daughter.

So, Is my wife crazy? If so, how do I assure her that there are more secure options. What options do we have for savings? We had been saving about 10% each month after my 401K contributions and putting it in a seperate account.

[boosami]

Paranoia. And conspiracy to commit fraud. I swear I was ready to read that she wants to keep the cash in the mattress. Keep saving, and keep the money in the bank. The FDIC guarantees you will not lose your $10k, even if the bank disappears overnight.

[maat55]

Your money is safe at your local bank and any other account that is FDIC insured. If it were not, it will be worthless anyway. There is no telling what can happen to it at your home.

[Broken Arrow]

The anxiety is understandable, but I don't think making a bank run is a good idea....

If memory serves me (and it doesn't always), current national job loss rate is roughly the level that of the 1980s? And, the current Dow level is roughly that of early 1997. And yet, the country did survive those trying times and continue on right?

I hope that this chart will also help your case:


As we can see, while the current recession is undoubtedly bad, it's still within the ball park of the Oil crisis and Tech crash. And nothing has yet to even come close to comparing with the crash of the Great Depression, which managed to lose nearly 90% of all market value. And yet, we survived that as well.

I guess what I'm trying to say in a long-winded sort of way is that there's no need to panic, make bank runs, and stuff it all under the proverbial mattress. If enough people did that, it can and ultimately will cause banks to collapse, perhaps even stretch the FDIC to its breaking point?

On the other hand, if we don't let fear motivate our saving and investing strategy, there are some really great deals out there. My own credit union, for example, is paying 4.01% APY right now. That's pretty awesome just for parking my cash there.

[creditcardfree]

Split the difference. Let her keep some money at home...but not all? I can understand the fear and worry but prospective is needed. Best wishes.

Nice chart, BA!

[swanson719]

Sounds like she's been watching these fear-mongerers on TV way too much. The market isn't going anywhere. It will come back. Keep putting money into it. The FDIC insures your money in the bank. She's not crazy, just listening to the talking heads who got us here to begin with.

[Seeker]

She's not crazy. She's afraid.... and understandably so....

You work and pay a 32% of income mortgage. What happens if you did lose your job?

My understanding is that she has no work outside the home and the care of your child.

The fear is totally understandable, but there's no safer place for anyone's money than a bank where it does earn some interest.... versus in a house where are sorts of causes of nature could demolish without any reason, or stolen, etc. And also keeping cash on hand give you the additional losses that comes from not producing anything positive over that time it sits in your possession.

[Homebody]

Broken Arrow, I feel better already and I didn't even ask the question. Great chart!

[Beckybee]

Your wife probably suffers from some sort of anxiety. Does she have trouble sleeping some nights? I only ask because I am the budgeter in my household, my husband and I both work, and we both have fairly secure jobs with defence. Does that stop me from having sleepless nights? No. We are getting by at the moment without too much effort (no big holidays though, one car, a fairly strict budget).
The worry for me (and possibly your wife) is that there is no security or loyalty with anyone. Banks, employers, employees, friends and family - when it comes to money, everyone will be out to look after Number 1 first.
Maybe getting rid of some of her stress would be to negotiate with her. Don't put your money in a safe, but look for a bank with more competitive rates. Have a good budget in place, and perhaps go see a financial advisor to see what would happen if you lost your job.

[EEinNJ]

She's not crazy, but her strategy is a bit reactionary and potentially risky. Having some cash around in a safe place is not a bad idea.
If you are a W-2 employee, have a mortgage, bank account, credit cards, your financial life is pretty much an open book. If "they" want your assets, they will simply take them. Hiding is not easy.

If your bank crashes, you'll get your money- eventually. If the FDIC arranges for another bank to take over, that may happen sooner than later.

[swaymonae]

Originally Posted by boosami

I swear I was ready to read that she wants to keep the cash in the mattress.

Me too! Then the fire came.

[arthurb999]

Yep she's crazy.

The feds know how much money you make via payroll deductions. cashing it will do nothing and they are probably going to want to see your paystubs anyway.

[john blaze]

Thank You for your input. We have talked into keeping a small amount in our new fire safe. We are looking into investing into a CD ladder. $1000 in a 1 year CD, $1000 in a 2 year CD and so on. I tried calm her fears and show her some info on the Obama Plan that indicated we won't even qualify for assistance because we are over 105% LTV. I also called our bank and asked what was involved in proving Financial Hardship. They will want last years taxes, last 3 months bank statements, last 3 paystubs.

So, for now I think her anxiety has eased, until some news or talk radio gets her blood pressure up again.