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401k and Personal Finance

The new normal

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The other day my wife asked me an interesting question: how long will the recession last? I think her implied meaning is how long the job market will be like this (with unemployment rate reach 10%)? I thought about it, and my answer is it could last 2 to 3 years. But on the other hand, I am not too worried about our lives. Because we both got our skills, and we will survive. A few weeks ago I read this article from WSJ titled “The ‘Democratization of Credit’ Is Over — Now It’s Payback Time”. Basically it’s saying the lower income consumers (borrowers) are having more trouble in terms of paying back debt, or getting new credit. The picture below (from WSJ) shows the problem well.

WSJ consumer credit default different income levels pic

Yesterday we watched the Buffett/Gates Columbia U. townhall at CNBC. Interesting stuff. The key takeaway from Buffett is “do the things one would do for nothing”. I know this is tough because we all have a family to feed. But the message is there. In the tough times one still needs to play his/her game. One interesting analogy from Buffett is “what if someone adviced him go to Bill Gates’ insustry when he graduated from Columbia because that industry has bright future”.

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