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Old 12-28-2016, 11:30 PM
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Default Lost money?

Have you lost money on your house in the 2008 bubble? Or another period? Have you lost money on stocks? What did you do?

When DH and I graduated in 2000 many of our friends couldn't find jobs with the tech bubble burst. We had many friends just grabbing anything because engineering jobs weren't happening and just jobs in general were going by the wayside. The money we had invested in stocks $5k tanked and I think I had $1500 in my Roth IRA by 2002 when we bought our first house.

That house we sold in 2005 and bought another and then we had to ride out that bubble bursting until maybe 2013? It didn't drop really and we put down 20% so we could get out at any time but it might have been breakeven with selling fees. BUT most of our friends in Southern California either foreclosed or went underwater for years. I can't tell you how many walked away in 2008. Many put nothing down as well.

In 2008 I was looking back to at our NW tracker DH's 401k started in 2007 at $9300 and ended at $24k after maxing out and a match. That means he lost money around I believe 10%? Maybe more. All I know is that I saw our contributions being less than what we ended the year at for 2006-2008. And even now we are contributing even with the possibility of losing a big chunk of our money.

I guess I figure a lot of our money we don't plan on "retiring" even if it's not in retirement accounts for another 10 years so we'll gamble. Of course this year we've ended better than ever. I feel though I'm only in my 30s that i've experienced quite a bit and swallowed hard learning these lessons.

So I can say I won't turn away from the markets or housing. Did you?
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Old 12-29-2016, 12:00 AM
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That house we sold in 2005 and bought another and then we had to ride out that bubble bursting until maybe 2013? It didn't drop really and we put down 20% so we could get out at any time but it might have been breakeven with selling fees. BUT most of our friends in Southern California either foreclosed or went underwater for years. I can't tell you how many walked away in 2008. Many put nothing down as well.
We've lived in the same low-cost house for 18+ years (in an area that's economically middling), and don't plan on moving.

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All I know is that I saw our contributions being less than what we ended the year at for 2006-2008.
But the shares you purchased in the lean years are worth a lot more because of DCA.

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So I can say I won't turn away from the markets or housing. Did you?

Nope. We're closer to retirement age, though, so worries about equity-bond balance are pretty important.

I wish I could buy 7% bonds...
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Old 12-29-2016, 02:35 AM
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Default Long term mindset

Hey LivingAlmostLarge,

I love the reference to riding out the storm. Although I'm relatively new to investing (2.5 years in) I've already witnessed the value of holding strong through low times. For about a year and a half, the growth of my investments had been slow and some of my investments had even gone negative. Since January, I've started to see my investments begin to pay off. Holding on and riding it out was a great decision and I'm confident it will continue to be a solid strategy in the future.

Raphael
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Old 12-29-2016, 05:43 AM
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So I can say I won't turn away from the markets or housing. Did you?
I live in the Midwest. Housing prices are much more stable here. Did property values drop here during the crisis? Sure, but not to the degree they did in other parts of the country.

As to markets - I am a buy and hold investor (bogleheads), so no, I did not sell during the great recession and plan to ride future market fluctuations as well.
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Old 12-29-2016, 05:44 AM
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The stock market is cyclic, just like RE, just like so many other things.

Once that's understood (which isn't easy for me actually!), then I was able to investment with much better long term goals and with better returns.
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Old 12-29-2016, 05:46 AM
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Hey LivingAlmostLarge,

I love the reference to riding out the storm. Although I'm relatively new to investing (2.5 years in) I've already witnessed the value of holding strong through low times. For about a year and a half, the growth of my investments had been slow and some of my investments had even gone negative. Since January, I've started to see my investments begin to pay off. Holding on and riding it out was a great decision and I'm confident it will continue to be a solid strategy in the future.

Raphael
Hate to say this, but if you've been investing for 2.5 years, you haven't seen any low times.

I hope you will follow your plan when rough seas actually do come.
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Old 12-29-2016, 06:35 AM
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We've owned our home since 1994. It was modestly priced then and is still modestly valued. That didn't change much in 2008 as this area is pretty stable. Plus I have never viewed our home as an investment. I don't care what it's worth. When we are ready to move, we will move and get whatever we can get for it.

As for investments, as I posted in another thread, I've lived through 3 bear markets where the S&P 500 dropped as much as 56.4%. No, it hasn't turned me away from investing at all. Each of those drops has been an opportunity to buy more shares at a lower price. The market is a long term investment. The daily or weekly or monthly ups and downs don't bother me.
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Old 12-29-2016, 09:49 AM
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I lost over 40% in my 403b after 9/11. I couldn't do anything about it because I wasn't working at that point. I haven't touched it or added to it, and it is more than twice the amount I had when I quit.

I'm set to lose about $60,000 if we sell our current house in Feb (which it really isn't looking like it at this point!). I'm ok with it. We must have bought the house the day before the RE market tanked, but we also sold our last home for much more than it is going for now. We are planning on downsizing and staying put for a while, so it will even out sooner rather than later. What doesn't kill you makes for a great learning opportunity.
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Old 12-29-2016, 11:18 AM
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MSomnipotent why are you selling your house?

Nutria maybe I did get shares cheaper I never bothered to figure out. I just keep sticking money in high and low. I'm only old enough to have gotten hit by 2001 and 2008. Sadly it these past 15 years have not done well for MANY of our friends who lost money both in stocks and homes.

Feh and DS are older by 15 years and I feel like many of my contemporaries have nothing saved. They lost big in the housing crash 2007/2008 and because they were too busy trying to save for homes 2002-2007 they neglected to save into investments. Then since then they've been trying to buy homes again and are in worse shape with a new home but nothing saved.

I know very few who have money in both like Feh and DS. I'm not sure if it's the nature of being in my 30s or the crashes of 2000s.
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Old 12-29-2016, 12:27 PM
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MSomnipotent why are you selling your house?
Many reasons. We thought we would have more kids, but it is just the 3 of us and we don't need a McMansion. We hate all but one the neighbors for a variety of reasons. The taxes go up significantly every year. We were lied to about what school district our daughter would be in, who the builder was, what the insulation grade in the walls were, and other things. The house is basically a nice looking crap shack that was slapped together, and the inspector somehow didn't catch several problems. Lastly, I'm looking forward to getting a cheap, small house that we can pay off early and take exotic vacations while still adding to our savings.

We bought when this sort of info was not commonly available online and we relied on the sellers and our agent. I can say that we learned many valuable lessons after buying this house. We were able to choose a really well-built vacation home using what we learned to look out for, so at least there is a silver lining.

The area we are looking at is basically right across the street, although it is a major street and is in a different town. It will be nice for my daughter to be able to walk to school and her friends homes without having to dodge high speed traffic. I think a change will be good for us because we have had nothing but bad luck since moving here. I would not be surprised to find out that this house is cursed!
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Old 12-29-2016, 01:48 PM
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Nutria maybe I did get shares cheaper I never bothered to figure out. I just keep sticking money in high and low.
If you were contributing to a 401(k) in 2009, then you did buy shares cheaper.

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I know very few who have money in both like Feh and DS. I'm not sure if it's the nature of being in my 30s or the crashes of 2000s.
Yes.
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Old 12-29-2016, 02:58 PM
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Msomnipotent why do you think you'll not be able to sell the house?

Nutria we did buy shares all the way through. We never stopped our investment strategy. Turned out okay. Same as before but with less money.
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Old 12-29-2016, 06:00 PM
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thanks to the housing market rebound we sold our home last Sept with a modest equity. We were patient after being there for 13 years. We couldn't just walk away when almost everyone in our neighborhood were strategically defaulting.

One reason we didnt move, we didn't over extend ourselves in mortgage payment. More importantly we both had jobs a big factor in riding the storm instead we just keep investing and paying down debt.
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Old 12-29-2016, 07:04 PM
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We couldn't just walk away when almost everyone in our neighborhood were strategically defaulting.
What really happens to the credit ratings -- and ability to buy houses later -- of people who strategically default?
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Old 12-29-2016, 07:41 PM
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A friend of mine did just walked away but then found another home a lot cheaper and affordable within a year of defaulting. My point is as long the lender are willing to lessen lending standard a lot more can find a more with bad credit It's been a years now so most are ready again to get back to the market. Restart the stupidity once again.
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Old 12-29-2016, 07:46 PM
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I bought a rental right before the bubble and it went down about $50K in value. I'm probably still underwater, but I've gotten about $80K in net rents back after all expenses so it's all good.

I had a 401K at work once with over $500K in Vanguard Energy. There was then an energy slump and it dropped about $250K. In the depth of the slump, my employer changed 401K administrators, and wouldn't you know it, they liquidated all of my vanguard energy because "we don't offer sector funds." Nice timing. Not only did I lose the money, but couldn't ride the next energy bull to get the money back. This event was and is the single most devastating financial event in my lifetime and there isn't a close second.

I decided right then and there that employer sponsored 401K plans were not for me - despite their benefits, other people are holding too many cards.

So when you hear me diss 401K plans, realize I have some serious unpleasant baggage.
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Old 12-30-2016, 04:51 AM
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Originally Posted by TexasHusker View Post
I had a 401K at work once with over $500K in Vanguard Energy. There was then an energy slump and it dropped about $250K. In the depth of the slump, my employer changed 401K administrators, and wouldn't you know it, they liquidated all of my vanguard energy because "we don't offer sector funds." Nice timing. Not only did I lose the money, but couldn't ride the next energy bull to get the money back. This event was and is the single most devastating financial event in my lifetime and there isn't a close second.
I really wish you would have shared this story when you first started posting here because it would helped so many of your posts make sense. Now I understand why you are so against 401k plans.

You've pointed out one of the biggest problems with the plans. You have no control over the investment options. You can only choose from what they offer and they can change their offerings at any time. This is just one of the reasons that the standard advice we give is to invest enough in your 401k to get the full company match but then move to funding a Roth. With a Roth, you totally control the investment choices and your choices are practically limitless.

It totally sucks that you got screwed like that by your 401k and had no recourse.
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Old 12-30-2016, 05:49 AM
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I lost a significant amount during the 2008 crash.
I don't remember how much it was, but it really doesn't matter.
I made it all back and then some by just staying the course over the years.
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Old 12-30-2016, 08:09 AM
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LAL - I think I have a different definition of "lost" than you.
Yes, although we've never had our total net worth go down in any year, we've had individual funds go down for the year. But I didn't consider those "losses" because we weren't selling. We were buying and holding. I wouldn't consider something a loss unless I sold it for less than I paid for it.

But if your question is about whether our portfolio is such that we have been able to weather any market dips, the answer to that is yes, so far we have.
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Old 12-30-2016, 08:16 AM
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I wouldn't consider something a loss unless I sold it for less than I paid for it.
Same here, but we have lost money on investments, specifically individual stocks that we sold for less than we paid for them. I don't mess with individual stocks very often but every now and then I get an urge to play a bit. I have a small account that I use for that. I usually get a winner or two and get encouraged and then find a loser and that gets me to stop... until the next time. As long as I stick to doing it with small amounts of money, it really has no bearing on our overall situation. I'll use less than 1% of our portfolio for those trading bouts.
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