The 5 Worst Consumer Finance Events of 2008

There’s no doubt that 2008 presented a plethora of financial challenges to companies around the world in a way we haven’t seen in a very long time. The residual effects of those problems that could no longer be quietly and effectively dealt with in the corporate boardroom came crashing down into the living rooms of folks just like you and me. And sadly, many of us just weren’t prepared. It’s very difficult to find anyone unaffected by the economic downturn of 2008 — often affected in some very significant way. Whether it be loss of a job, increased healthcare expenses, foreclosure of their home or the slaughtering of the value of their home or retirement plans — most of us were hit and hit hard.

2008 was chock full of financial events that left almost all of us concerned about our financial future. Depending on the seat you hold, your view may be slightly different, but here are my top 5 financial events for 2008.

1. Retirement Accounts Slashed. I could talk about Bear Stearns, Lehman Brothers, the federal takeover of Fannie Mae and Freddie Mac or even the proposed auto bailout, but for people like you and me, the reality that hit us was that our retirement accounts were slashed in half or perhaps even worse. Wall Street closed out with the worst year since the Depression. No one can deny that 2008 was a dreadful year for the stock market and for consumer pocketbooks. Their retirement savings (401k) dwindled to an all-time low, with the DOW dropping 33.8 percent, the S & P 38.5 percent and Nasdaq 40.5 percent.
2. The Real Estate Crash. If you owned a home, chances are you were affected by this in one way or another. If you were lucky, you sat there watching the value of your home drop, but you continued to be able to make your payments and live in the place that you called home. For those not so lucky, they were upside-down on their mortgages, owing more money than their home was worth. They were making interest-only payments on an Adjustable Rate Mortgage (ARM) that they can no longer afford, and they either have lost their home or might be close to it. Real estate experts predict that it’s going to get worse before it gets better and that it will indeed take years for home values to recover.
3. Unemployment. If you haven’t lost your job, I’d bet that you know someone that has. 2008 was a terrible year not only to find a job but to keep the one that you’ve had for years.
4. Credit Crisis. Credit became scarce, with banks not even lending to other banks. Small businesses struggled to get the credit that they needed and normally were able to get without issue. Consumer credit lines were lowered, interest rates hiked, and unless your credit was perfect, lenders weren’t willing to lend.
5. Energy Crisis. I’ll admit that I am not a gas price watcher. Yet, it’s incredibly difficult to look at 2008 and not feel obliged to add the high cost of energy to the list of my top five financial events for 2008. While I don’t know exactly what you paid at the pump in your neck of the woods, I paid well over $4.00 per gallon. And it wasn’t just the cost of gasoline that skyrocketed — energy costs associated with home heating did too, leaving many in quite a tight spot that they won’t forget anytime soon.

Tags: consumer finance, consumer finance events 2008, financial events 2008

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