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Batten Down the Hatches
By Jay | January 19, 2008
I went to get my hair cut yesterday. My hairdresser is Brazilian, a friend of M.’s, and has been cutting my hair for years. Her salon is a block from Grand Central Terminal, and most of her clients work in finance.
When I arrived at the salon she was upset about something and, as she cut my hair, she told me about how, in the past week, 7 of her clients have been laid off from their jobs. Other clients have told her that they are worried about their jobs and are cutting their visits to her from once every 3 weeks to once every 6 weeks. With all the news of subprime crisis, I have been waiting for New York’s economy to show some stress, and I think I have just seen the first crack.
Some of the big NYC banks laid people off in October, but those layoffs were scattered and light. Now they’re cutting lots of jobs, and people are starting to become worried. I’m even beginning to sense nervousness among my coworkers.
It has been a long time since New York City endured a serious recession. The economy suffered after 9/11, but real estate prices soared, which helped to keep money in people’s pockets. In fact, the city has been booming since 2003.
But what I’m feeling now is more like the recession back in 1990-1994, when real estate prices plummeted and a lot of the big companies let go of many workers. In the end that was a painful recession: as the corporations pulled back, thousands of stores and small businesses closed.
This time it may be even worse. Back in 1990, people had more savings, and didn’t use their credit cards as much. I don’t think I even had a credit card then. Today many people have credit cards AND home equity loans. New York is expensive: if a professional couple pays $700,000 for a house or an apartment, their mortgage is close to $4,000 per month. Add another $1,000 per month for property tax and they’ll be under water in just a few months.
I worry about my finances, but I have to say, I’m happy that I didn’t buy real estate in the past couple years. My monthly expenses are low, and I can get by on $2,500 per month if I need to. Being laid off wouldn’t be a pleasant outcome, but with a standard severance package and a part time job, I could get by for a couple years.
At any rate, the recession is here, and it’s time to batten down the hatches. I The next thing to be eliminated out of my budget will be organic meat & produce. Last weekend I bought organic stew meat at Whole Foods goes for $6.99 per pound. I noticed that conventional stew meat at my grocery store was selling for $2.49. I think I can halve my monthly grocery bill by shopping at the regular food store, using coupons and timing my purchases to correspond with sales.
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Stumble it!
Topics: Recession |
January 19th, 2008 at 4:28 pm
As a fellow NY’r, I feel the same as you. I also remember the 90’s BUT the ‘kids’ today have absolutely no idea what is in store for them.
Yes, hold onto your hat. it is going to be a bumpy ride.
January 19th, 2008 at 4:35 pm
PS: I go to a beauty school/hair design to get my hair cut now. It only cost five bucks!!!!! I get the latest cut, the latest style. I am helping out the student( my live head) and he/she is helping out my wallet. I give them a 3-5 buck tip and I am done. Nails are $2!
I used to spend $40-60 on a hair cut. Big, big savings! Look in the yellow pages and make some calls. You’ll find something.
January 19th, 2008 at 8:40 pm
Wow, Jay. So you think a recession is here, huh? I hope not. Either way, I’m impressed with your potential severance level. Two years. Nice.
January 20th, 2008 at 11:08 am
Yeah, unfortunately I think a recession is finally knocking on our door, at least here in New York City. I just read an interesting Wall Street Journal Editorial here stating where the editorial board thinks we’re at.
Actually severance would be about 1 year for me. The going rate in the banking industry here in NYC is one month of severance for each year of employment, capping off at one year. Of course if we take another multi-billion dollar hit on subprime losses next quarter I could be very disappointed in my severance, so best not to count on anything right now…..
January 20th, 2008 at 9:58 pm
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