Burn baby, burn

When the going gets old, the old talk about their health and money. The second quarter, April-through-June, was my worst money quarter since I started trying to track such things. Everything my wife and I were trying to squirrel away was escaping through one of a dozen holes the market was punching in the fiscal edifice.

In summary, every dollar contributed to the retirement plans was eroded by market declines. Every dollar adding to the balance sheet in savings or paying the mortgage was offset by reductions in the value of my employer's stock. Our net worth at the end of the three months was the same as it was at the start.

There just weren't many good places to hide during that market pullback either, particularly for the 401(k) dollars, which have to stay in one fund or another. Most equities (particularly overseas) were tanking, and bonds were doing the same in the rising interest rate environment. Our 401(k) management should have jokingly opened a mattress fund:

The John Hancock Mattress Fund operates exclusively by concealing shareholders' federal reserve notes in the mattress of fund manager (and retired rum-runner) Buford Davis "Butch" Tucker. The fund's objective is to achieve long-term capital protection and asset concealment by stuffing cash in a Stearns & Foster queen and brandishing a .50-cal smoothbore black-powder rifle against solicitors, trespassers, and government "revenuers". Mr. Tucker is in his eighth year of fund management.

Management fees for the John Hancock Mattress Fund are in the lowest decile for the mutual fund industry. Trailing returns for one, two, and five years are 0%, 0% and 0%, respectively, in every period meeting or exceeding the performance of the Buried Mason Jar investment class as a whole. Past results are indicative of future returns.

Fighting the good fight for planning and saving, and occasionally losing in this manner, does make me understand the appeal of just spending it all. It doesn't make me agree with it or actually do it, but I understand it. It doesn't help that there's such an enormous gulf between just spending your wages and saving to generate even a little new income. It can take a lot of forbearance to do the latter. For instance, to generate fifty dollars a month in new interest income at today's money market rates requires saving around $12,500 in the first place. That's 250 fifty-dollar increments that have to be saved instead of spent, just to secure a new fifty a month. Nevermind the added insult that the interest income on all those post-tax dollars will itself be taxed! Isn't it just easier to spend it, especially when your computer is nearly four years old, the car is making odd humming noises, and you haven't bought a DVD since you used your gift cards from last Christmas?