Response about my W-2, and a note for Mely5862…

Posted on February 16, 2009 7 Comments

I just wanted to take a minute and say thanks to everyone for participating in such a great discussion in reaction to Why My W-2 Makes Me Cry. Despite how often I think, read and talk about finance with friends, family and readers, I was definitely hurting as I considered my 38.8 percent drop in my retirement fund. But I’m thinking more positively now thanks to your comments and have a more rational (or optimistic) point of view that during the next 30 years its value will recover. I’m also thankful that this is happening now as opposed to when I’m close to retirement. The experience and knowledge will make me a smarter investor in the future.

That said, I wanted to take a second to respond to a comment from a reader that I think is worthwhile to share because it can help you all to learn a little more about me, my level of financial knowledge and my approach to writing the blog. Mely5862 said:

After thinking about your post, I became mildly irritated. You have a blog read by tons of people and that has, I believe, been featured in articles and magazines. A finanical babe right?

Yet, computer savy as you are, you have not been following your 401K declines on the that company’s website? I check mine at least weekly and once it began to drop I decreased my contribution. Sure I lost alot and you may end up ahead of me when the market recovers but I knew what to expect on my W-2.

The first point she makes is about my level of financial knowledge. I hope everyone reading The Budgeting Babe does understand that I am a public relations professional with a degree in communications and fine arts (and minors in marketing and Spanish). I slept through Econ 101 in college and never took a finance class. I’m not sure I ever took any math classes beyond “math for the communications major.” So, I’m actually not a financial babe in that I work with the industry, nor am I someone with any sort of financial aptitude. I’m a finance newbie fumbling my way through the ups and downs of balancing a checkbook like a lot of other folks. I have a hard time not paying bills late and until recently kept track of my accounts in a homemade excel spreadsheet (just started using Mint.com but I’m still scared of it). I don’t own real estate, and I’m still paying off my student loans. Most days I’m still proud of myself that I have a growing savings account. I still use Google to look up finance definitions when I read the NY Times. But I’m well on my way to being in a good financial place as I continue my journey to learn about finance here.

With regards to my knowledge of my own 401K, did I know the value was declining? Yes. I used to check my 401k once per month, but given that the market was declining rapidly I stopped on the advice of some folks who know finance better than me. They were right. I typically freak out when I see the ups and downs. Had I been checking, I would have had a greater desire to reduce the contribution. Which runs counter to the goals I set for myself. And despite being very upset about the negative change, I’m glad I kept my contributions in. It’s better for the long run.

That said, I know a lot of people who have contemplated decreasing their 401K contributions – like I have (I even posted about it last year) – during this time despite their better judgment. In creating the post, part of the writing was just a reaction to seeing a number on paper. But I wanted to share that frustration with other financial newbies and offer a place to dialogue about it. I want people to know that it’s OK to be frustrated and scared right now. There’s an emotional reaction that I don’t always feel is addressed when financial gurus say “just don’t look at it,” and I believe there’s some release in talking about those emotions. I’m not the only one feeling it, nor is the girl in the cube next to me or the 30-year veteran who’s losing her retirement. It’s important to talk about it. Or cry about it. Or freak out about it… whether you’re paying attention to your monthly statements or not.

But despite all the emotions, my actions are in the past and I have faith that the market will come back and pay off my patience sometime in the next 30 years. It’s a risk I’m willing to take.

Category: Money
   Tags: Retirement

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