Are You Better Off Now?

Apparently many Americans see themselves as better off now than they were seven years ago during the last economic downturn, according to an online poll administered by CNNMoney.

CNNMoney was so surprised by the positive reactions to their question that they are asking readers to talk back and share their stories.

Personally I am much better off now than I was in 2001. My savings and retirement contributions have increased dramatically, I’ve gotten several promotions and raises, and I’ve entered the real estate market – with fixed rate loans that I can afford even if I suffered a decrease in pay or short term lay off. I’m excited and optimistic about my future prospects, and I’m not really worried about the economy (most days at least). I have plenty of time to ride out any storms.

Some of the increase in my standard of living and financial status can be attributed to hard work and making financial success a priority. But I also am in my mid 20’s, so it doesn’t take as much to be “much better off” – seven years ago I was a college student working for $8 an hour with minimal retirement or liquid savings.

So what about you? Are you better off now than you were in 2001? And to what or whom to you attribute the change in your situation?

More from Meg at The World of Wealth

24 thoughts on “Are You Better Off Now?”

  1. Perhaps, but all of the circumstances providing us with an illusion of prosperity are set to expire.

    The Iraq situation (it’s not a “war” if Congress never formally declared war) has been paid for on credit and we’ve only started to begin paying that off in the form of massive inflation.

    The banking system that offered us great mortgage rates extended itself WAY too far and the bailouts and bank failures have only just begun. Taxpayer funds will undoubtedly be required to meet the FDIC obligations of failed banks and whatever is done to rescue Fannie Mae and Freddie Mac’s obligations will come directly from you and I as well.

    D.

  2. My family income since 2004 has dropped by 27%, 2004 was our peak year. We had hoped that through my spouse going to school, then starting a business that she would have her income replaced (and more) by 2008 . . . so far it hasn’t happened. Hopefully 2009 will be nicer to my family income. If you use 2001 as the model year we have pretty much doubled our family income, so I guess it’s all how you look at the numbers 🙂

    Beyond that we’ve recently moved from an Apartment to our own home, purchased for less that 2 times our income. We live in a fantastic area of our city. I have a job that can support my spouse while she tries to get a business up and running. Though I feel miserable having to sacrifice all my wants for her growth, I guess when you write it out like that things aren’t as bad as I feel sometimes.

    I have my family income tracked since 2000, so if I made a ‘family income index’ with 2000 being my 100 point base year we would look like this:

    2000 = 100
    2001 = 140
    2002 = 212
    2003 = 295
    2004 = 386
    2005 = 324
    2006 = 354
    2007 = 281
    2008 Somewhere near 300-320 possibly?

    I guess it’s easy to post big gains, when you start from 2 people working at entry level call center jobs.

  3. I am much better off than I was in 2001. My debt loan is alot less (thanks to paying off my credit cards and car loan) and I have a little money in the bank.

    My job is pretty secure and there is a good chance that I’ll be getting another raise this year.

  4. We’re doing much better now. In 2001, we were both working, but didn’t know not to live on credit cards; after I quit to go back to school and my husband got laid off, we were up a crick with no paddle. In 2008, we’re both graduating with our Bachelor’s degrees, I’m pursuing self-employment, and he’s making twice alone what we did together – while we spend less than we did 2001, and none of that on credit cards.

    So personally? Yes, so much better. But 2001 taught us how not to be, so we could get to 2008.

  5. Are we “better off?” Well, we have two grown children who are off on their own, two wonderful grandchildren, and my Mom is 93 and still living on her own. Monetarily, we might be making a tad less, but I really don’t see that as the biggest definition of being “better off.” I guess you get older, you see a different definition of “better off.”

    Have a nice day.

    Yours,

    Bozo

  6. It’s been an improvement.

    I’m in the same boat as you, as 7 years ago I was still in school. After learning more about budgeting and personal finance, I feel more optimistic. My husband and I are trying to keep expenses low ($1300/month).

    I have noticed that my mother is better now than 7 years ago. The biggest change is that she sold her townhouse in an expensive city and moved to an area with a lower cost of living.

    She wisely paid off her credit card bills and car loan with the money from the sale. She now has a single family home with a bit more land. I think the better finances is due to better planning.

  7. I’d say we’re about the same. In 2001 we bought our first house in New Jersey. Both of us worked, had no kids. However BETWEEN 2001 and 2006 we struggled as we had two kids, our property taxes almost doubled and my husband was downsized out from his job. Twice.

    But we took the bull by the horns and opted to move to SC in 2006. We sold our NJ house (for a VERY healthy profit) and bought a bigger house in SC for significantly less money. Our mortgage dropped by half. Our property taxes went from $10K to $1K. So even with a loss in salary we’re doing better now than we were for a while there between 2001-2006, but I think we’re on par with 2001 as far as debt/wealth status.

  8. I would not say that I am better off, but having graduated in 2003 in one of the worst job markets in history would make just about anything better than what I had to go through back then. Having said that, I am better off (and making a higher salary) compared to when I first started out of college. But I still consider myself far behind on many fronts in comparison to my peers and that’s what keeps me motivated to continue my studies and focusing on career and financial success.

  9. Really, that question depends on what you consider “better off.” We have less savings and a much lower annual income than we had 7 years ago. We have more retirement savings and our cars paid off. But why are the cars paid off? Because my mom died and I used the insurance money to pay off the cars. I’d rather have her alive and car payments. And why do we have less savings and lower income? Because we now have two children and my partner is a SAHM. So we have less money but life is wonderful and perfect and we get to be with our children all day.

  10. Two years ago my income dropped by 55%. But my dept load went to zero. I retired at age 55. Although most of my investments are down it doesn’t matter as I won’t touch them for a couple of years. Of course plenty can change in an election year.

  11. Financially the answer is definitely no. My income has not kept pace with the significant price increases in fuel, energy, food and healthcare.

  12. Interesting question. As a nation, we are clearly NOT better off. But personally? Yes, I’m in a better financial position. My job is secure; my real estate has gone up dramatically in value (and down some recently, but still well above what I paid for it in 1975 and 1993); and I am finally paying attention to and reducing my debt.

  13. I can answer this two ways. In purely monetary manners, no I am not better off than I was in 2001, since that was the peak year of my salary thus far in my life. However, based on the way I was living at the time compared to today, were I to compare the same habits and attitudes, I am on more solid footing today than I was back then.

    In 2001, while I had a very high paying job for my line of work at that given time, that level of pay was virtually erased when the dot-com bubble burst. What followed was three layoffs in three years, my going back to school, and effectively rebuilding my career after graduation.

    Borrowing from a previous post, if we were to take just my base wages (no stock options or any other side perks) my trajectory would look like this (using the 0-100 index from Traciatim):

    2001 – 100
    2002 – 84
    2003 – 56
    2004 – 25
    2005 – 48
    2006 – 51
    2007 – 65
    2008 – 80 (projected)

    2003-2005 was a particularly rough period, but that was because I made the choice to go back to school full time, and worked to offset the savings burn rate, if just a little, not for any truly big career moves. 2006-2008 has been a career rebuilding period.

    Still, comparatively speaking, my personal spending and total lack of attention to it, while not putting on any consumer debt, we weren’t saving much of anything either (plus, due to accumulated stock options, we were spending those faster than we were earning for several years). Today, we are saving way more of the percentage of our money than we did at the peak of earnings in 2001, and we have few complaints with regard to standard of living. Granted, we don’t get to do *everything* we want to on a whim, but the act of planning for it lets us prioritize what we really want to do.

    Finally, we had a mortgage payment in 2001. I don’t have that today (home is owned free and clear, and even with the recent drop in prices is still worth close to 80% more than what we paid for it in 1999), hence we have a slightly higher “net worth” today, plus the ability to save more of what we make. Career trajectory looks to be on the way up again, so by this time in 2011, I may be back roughly where I was at the peak of the dot-com boom earnings wise. Time will tell :).

  14. Definately yes! Not that I was doing too badly in 2001. In the past 7 years:

    – Turned 40
    – Celebrated 15th wedding anniversary
    – Sold property; bought property; realized big gains (despite current mkt), though also incurred a rather scary looking amt of mortgage debt
    – Advanced in career; made some career shifts to improve long-term prospects & keep skills relevant, as well as gain more personal freedom
    – Cashed out substantial appreciation on stock options
    – Made several extended overseas trips (things we always wanted to do and finally got off our rear ends and did em)
    – Increased charitable giving by 10x; Joined charitable boards
    – Greatly improved extended family relationships

    Other than basically working like an insane dog these past 7 years, I don’t have much to complain about. The past 7 years have been important wealth building years. I am very concerned about the country’s economic future, but feel that the past few years have provided an oppty to prepare.

    Next few years, I hope to have the oppty to reach full career and personal potential, as well as devote more time to building on personal/family relationships. Add to that, taking better care of my health (at wife’s insistence), so that I can stay around to enjoy the fruits of my labor for another few decades.

    It seems like I spent my 20’s and 30’s laying a foundation based on education and hard work, but not feeling like there was a lot of economic progress. Durinig my late 30’s, & 40’s, basically the past 7 yrs, all the prep work finally generated a lot of momentum. I read something somewhere that said during your 40’s is when you’d better make your F-you money. I’d have to wholeheartedly agree with that sentiment.

  15. Yes – I’m better off, but like you, I was in college 7 years ago.
    I think it’s easier for twentysomethings with no children to feel pretty good, despite the threatened economy, because most of us don’t have responsibilities like children and some aren’t homeowners either.

  16. Yes, way better off! In 2001, I was 2 years into a mortgage and suddenly having to pay it myself because of divorce. Since we hadn’t gone out to buy the biggest/best house we could afford, it was still manageable.

    Nowadays, I am married to a wonderful man. Thanks to finding personal finance blogs, I got the idea to start paying off the house early as it was our only debt. It really motivated me to be more frugal. We cut off cable, ended subscriptions, switched to powdered milk, drove less, got rid of a storage unit. Once the house was paid off, and our lifestyle was even more frugal, money just started flowing like mad. I save as much as possible. I know that the economy has the potential to get extremely bad, which is why I feel so much more secure having no debt, a paid off house and a lifestyle that doesn’t require a big paycheck every month.

  17. We are definitely better off now than we were in 2001. Income has increased substantially over the years and we paid off most of our debts (we still have an outstanding car loan and I financed our TV because it was 0% for 2 years, which was a no-brainer in my book).

    I’m sure there are people who are worse off but the media has done a wonderful job of making things sound much worse than they really are.

  18. Our net worth is higher (it’d better be or something would be REALLY wrong!–in fact it will soon reach a milestone.) However, debt is MUCH higher due to new house & its renovations, along with carrying the “small” mortgage on our unsold prior home.

    However, income is significantly higher so we are able to continue to save and pay down the debt…just not fast enough for my liking! (Won’t B**** about taxes as the topic’s been beaten to death last week!!) But the expensive years for our 3 sons’ college education are around the corner (5-14 years left to save.) We’ve done a good job saving so far, but the downturn in the market makes the finish line much harder to reach. No 6-8% returns to help the compounding process along…Yeah, I know, we’re buying stocks “on-sale”….somehow, I’m not as warm and fuzzy as I was when seeing the higher balances on the 529 statements…

  19. During the past 7 years, I enrolled and completed an MBA and took a lateral move at my company (no promotion/raise). Annual raises have been about 3-3.5% per year, although my costs are increasing at a faster rate. Just last year, my medical insurance went up 56% (and it was *only* that much because I switched my family to a high-deductible plan) and my food costs are up 40% over last year. Granted my kids are growing (and eating more) but still, the costs are rising.
    On the plus side, over this time, I have consistently maxed out my 401(k) contribution, and two Roth IRAs.

    I’m still saving for the future, but I’m slowly sinking.

  20. Not much better off, really.
    Keeping 2001 as 100%:

    1998 19% graduate school financial assistantship
    1999 53% graduate school financial assistantship + internship
    2000 24% graduate school financial assistantship
    2001 100% salary
    2002 111% salary
    2003 112% salary
    2004 188% salary + inheritance
    2005 233% salary + home appreciation
    2006 231% salary + home appreciation
    2007 134% salary + slight home appreciation

  21. Much better off. My salary is more than double what it was in 2001 and my networth is 4 times what it was.

    My salary and net worth are also higher than they were this time last year.

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