Chuck SalettaThe recession and its aftermath have been particularly brutal to typical American families.

According to a recent Federal Reserve report, median household net worth fell an astonishing 39% between 2007 and 2010, and real (after inflation) incomes dropped, too. It's a devastating combination that has lead to large swaths of people running out of the maneuvering room needed just to keep their heads above water.

In dollars-and-cents terms, the Fed report calculates that the average family is worth about $77,000. To put that in perspective, that's roughly the same place we were back in 1992.

Chuck SalettaBut How Did My Family Do?

The Fed's numbers were so astonishing that they inspired me to look at my family's financial records from Quicken to see how we fared during those dark days from 2007 to 2010.It turns out that, like so many others, our income failed to keep up with inflation. Yet we managed to buck the other trend and actually saw a slight increase in our net worth over that time. Better yet, we managed to do that while having our third child and buying the minivan needed to cart our expanding family around.

Don't' get me wrong -- it wasn't easy, and we're incredibly fortunate to have continued to make forward progress during those troubling times. But looking back at where we are versus where we could have been given the overall economy, it was certainly worthwhile.

Better yet, the way we made it work is by doing some straightforward things that anyone can do.

Simple Steps -- Amazing Results

If you're looking to recover -- or at least keep from slipping even further behind -- here are the simple steps we followed that you can use, too:

1. Cut back on expenses: We knocked several hundred dollars a month off our base living expenses by doing things like dialing back on cable and phone service, adjusting our thermostat, and switching to bulk sizes and store brands. We also curtailed eating out, and our vacations became driving trips to see and stay with out-of-town family. I even taught myself basic plumbing and carpentry skills to tackle the little projects around the house -- including money-saving projects like caulking door and window leaks.

There was no single, major expense that we got rid of -- but trimming a lot of little things gave us a much-needed cash flow boost that enabled us to aggressively pay down our debts.

2. Pay down debt: During those three years, we knocked down a little more than $17,000 of our debt. That may not seem like much for three years' worth of effort. But our financial needs also changed significantly during that window of time when we were blessed with our third child.

We were smack dab in the middle of the recession, our income was losing ground to inflation, we had another mouth to feed -- and we needed a vehicle that could hold three car seats so we could cart our family around.

So we bought ourselves a minivan, a brand new Honda Odyssey.

Sounds crazy, right? But the only reason we were able to both buy that van and continue to pay down debt over that time was by dealing in cold, hard cash.

3. Save for emergencies and expected purchases, and pay cash when possible: You're probably wondering where we got the cash. We knew we'd need another vehicle at some point. We had a few months' living expenses socked away in an emergency fund, so we used a common trick to save money to pay cash for the car: We made a monthly car payment to ourselves.

After my wife's previous car was paid off, we kept making the car payment -- but to our own savings account rather than to the bank. A few years of socking away that money got us more than halfway to what we needed to buy the van. We did have to temporarily pull some cash from our emergency fund to make it an all-cash deal.

That $17,000 in debt we paid down basically ignores money we spent on the van -- and the money we "borrowed" from ourselves and paid back to our emergency fund. Our debt level actually dropped during the worst of the recession, in spite of that major purchase.

Paying down debt and saving for life's expenses certainly kept us from sliding backward during the worst of the recession, but what also helped us make forward progress was continuing to invest.


4. Invest regularly no matter what the market is doing: Yes, even during the depths of the recession, we still managed to invest a little bit every month. It was easy -- automatic, even. Money came straight out of my paycheck and funded my 401(k), which in turn bought stocks and stock funds based on paperwork I had signed years earlier. I hardly even thought about it, but the new money invested and the automatically reinvested dividends were working together to help build our net worth, even during the economy's roughest times.

It wasn't rocket science -- or even a particularly brilliant strategy. In fact, the best I can say about it is that by making regular investments, we were essentially dollar-cost averaging and getting more for our money when prices were cheap. Still, it meant that during the same three-year period when median household net worth fell by nearly 40%, ours actually wound up a little higher than where we started -- and by the time we're ready to retire we'll be really glad we didn't put our retirement savings plan on hold.

We Did It -- So Can You

Moving forward during a period of time when the typical family moved backward took four straightforward steps: cutting costs, paying down debt, saving, and investing. They're not the most exciting concepts on the planet, but with diligence, consistency, and the dedication to stick with them over the long haul, they work wonders. Best of all, if you want to follow a similar path, you don't need any special skills or training.


Increase your money and finance knowledge from home

What is Inflation?

Why do prices go up?

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Add a Comment

*0 / 3000 Character Maximum

94 Comments

Filter by:
rona

With all this complaning, why don't some of you run for president. Lets see if you can do a better job, clean up this country, working with foreign governments and whning complaning people who are never happy or satisfy. Working with the media ,all they do is start trouble by not giving accurate information or reporting things that is not important without hyping people up. I always say that no one is qualified, as humans we make mistakes, not everyone is going to like you for what ever reason. There will be people who wants to see you fail, there are those who don't like your education, your looks, your family, your poltics , sex and your race. If you don't like what going on then vote and hold everyone, your mayor, senator , congreeman etc accountable and stop the complaing. We have the power but we used it in the wroung way.

June 25 2012 at 5:20 AM Report abuse rate up rate down Reply
tmqharley

i find it interesting that people still believe that the PRESIDENT - any president- in the white house has any control of the government. it is the CORPORATIONS and SPECIAL interest groups that make the rules. groups like PAC(Political congress Action Committee) solicit money from businesses, private citizens etc. to enable the party of their choice to acquire the votes needed to win the popular / electoral majority. then PAC invades congress (with lobbyists) to remind them who got them elected or re-elected, whichever the case, and laws start getting enacted in favor of those who contributed. it's called "you wash my back and i'll wash yours." or simply - vote buying.

it's been going on since the dawn of elections and will NOT change in my lifetime, my kids' lifetime or any lifetime that man exists on this planet. now THAT jack, is the facts.

June 24 2012 at 11:03 PM Report abuse rate up rate down Reply
1 reply to tmqharley's comment
Brek Randolph

I talk to lots of people and find a similar sentiment. There is a swell of discontent across this country. It is now gov vs the people as opposed to gov for, of and by the people. "The problem is not that the gov is corrupt, the problem is the people know the gov is corrupt."

June 25 2012 at 1:45 PM Report abuse +1 rate up rate down Reply
alucky1128f8@aol

They sure could use the rain out West, I pray God send them the rain. What is Obama doing about these fires ?

June 24 2012 at 9:43 PM Report abuse +1 rate up rate down Reply
1 reply to alucky1128f8@aol's comment
alucky1128f8@aol

Goodnight and God bless all my republican, conservative and independents friends. God bless our troops and God bless America !! nite looney libs !!

June 24 2012 at 9:51 PM Report abuse +1 rate up rate down Reply
olan5tops

So why dosen't our government do more of the same things recommended here for each person?

June 24 2012 at 8:19 PM Report abuse rate up rate down Reply
gblank1603

Do they mean the recession that ended over 5 years ago???

June 24 2012 at 6:22 PM Report abuse rate up rate down Reply
Artie

The problems with our economy and this country didn't start with the Obama administration and won't end with it's replacement, should the GOP win the November elections. Don't get me wrong,...I'm not totally defending the present administration. The Obama administration had some clear opportunities yet failed to bring about some much needed changes, particularly where it comes to dealing with Wall Street wise guys, "banksters" and the politicians in their pocket. However, in partial defense of Obama and Co., a lot of this failure has had to do with obstructionists on the GOP side of the political aisle along with special interests. These folks simply derail or totally water down much needed regulation in order to maintain their bonuses and the status quo. I'm still amazed by the number of imbeciles (actually calling some of you folks imbeciles would be an insult to imbeciles), who think that simply getting rid of Obama is the key to prosperity in the USA. This way of thinking is beyond inane. You folks are are totally delusional and frightening in your stupidity. The problems faced by this country are much bigger, more complex, ingrained and systemic. For starters, the entire political process and our two-party system needs to be overhauled. As it stands today, we continue to have the best Government money can buy. Special interests, "big money" and a bought and sold congress have allowed greedy bastards to continue to rule. The problems with our economy and government can't be summed up by some 3 minute sound bite on MSNBC or FOX news. Wake up America!!

June 24 2012 at 1:07 PM Report abuse +1 rate up rate down Reply
lifehub

Ohsuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuure!

June 24 2012 at 9:41 AM Report abuse rate up rate down Reply
Robert & Lisa

Our income took a big hit but we are recovering as well. Can't wait to vote this disaster out.

June 24 2012 at 1:06 AM Report abuse rate up rate down Reply
1 reply to Robert & Lisa's comment
Lillian-

You mean the Republican-run House of Representatives, right? The guys who said their main priority was not jobs or spending or anything else except doing everything possible to make sure that this president was a one-termer?

June 25 2012 at 8:10 AM Report abuse rate up rate down Reply
netexas121

So F---ing what! Many families have survived with even less. Does anyone have an idea how we can change journalism from its present day lack of intelligence.

June 23 2012 at 5:59 PM Report abuse +4 rate up rate down Reply
smsneds

Why is it that no matter what article you read it seems to contain comments bashing Obama and Bush? Yes, things are a mess. The mortgage debacle started long before either of these gentlemen came into office. Our congressmen and senators on both sides did nothing to prevent it. But this is an article about PERSONAL finance. Yes, this family may make more money than yours. They may live in an area where costs are lower than NYC. But it's all about personal choice and personal responsibility! To all you whiners out there, let me ask you this. Did you study in high school so that you could get a scholarship to a decent college or did you snooze through class? Did you at least go to a community college or vocational school to prepare yourself for the workforce? When you got a job, did you do everything you could to garner a good performance review and position yourself for a raise or a possible promotion or did you blame the boss for not 'liking' you when you came in late and were the first to leave? Do you live below your means so that you can put even a few dollars in savings every payday or do you 'have to have' the iphone and the air jordans? When you lost your job did you take what you could get or did you sit home and take a vacation until your 2 years were up? It seems we all love to blame someone else for our troubles. Yes, someone is always going to make more money than you do. My husband and I retired in 2009 and are living on social security and our savings. We can't take fancy vacations or go to expensive restaurants, but we're happy with our lives and glad for the freedom we have. In our 40 years we've both been through recessions and 'downsizings' many times. We picked ourselves up and started again. I was always able to find a new job within a few months at most. In fact, since I retired, even in this sluggish economy, I have been offered THREE jobs out of the blue because I was good at what I did! There are jobs out there if you have the right qualifications and references. Take what you can get and make the most of it!

June 23 2012 at 5:14 PM Report abuse +2 rate up rate down Reply
1 reply to smsneds's comment
lifehub

This is Obama's watch. He is accountable for the prevailing misery and desperation in this country. I, for one, will not let him forget that, this non-accountable blame-others character.

June 24 2012 at 9:43 AM Report abuse -2 rate up rate down Reply
2 replies to lifehub's comment
Artie

And you are delusiional and an example of the kind of stupidity and short sightedness that is so prevelent in the USA today. Here is a quarter, call your proctologist and have him retrieve your head.

June 24 2012 at 1:15 PM Report abuse +2 rate up rate down
Lillian-

No, he isn't. If you'd pull yourself away from Fox News and Rush Limbaugh and do some actual economic research instead of listening to conservative talking points, you'd see that the economy is BETTER now than it was 2008. It doesn't matter if you believe me or not - the truth is the truth, and the truth is that the economy is recovering. It may not be fast enough for your taste, but it is recovering.

June 25 2012 at 8:13 AM Report abuse rate up rate down