mainstream media should really do a much better job vetting people they are giving airtime to. Sure, sometimes a pundit gets something right in the short term, but what about their longer-term track record and how accurate or not that was?
Heeding misinformation and uninformed people on social media platforms and blogs: For example, in response to a 2008 news report about housing prices dropping significantly from the prior year, consider this online posting, “Even if there were mortgages to be had, people have learned a valuable lesson from this housing bubble. No one in their right mind is buying now unless they’re looking at at least a 50 percent discount … from today’s prices!” If you were already stressed about challenging economic times, reading such gibberish would just make you more anxious. The reality was that there were plenty of mortgages being done then, and real estate prices weren’t going to (and didn’t) fall 50 percent from those depressed levels.
Immersing yourself in excessive and negative short-term news: When a crisis is unfolding, of course you’re going to want to keep up with what’s happening. The problem, however, comes from the fact that news (and opinions) come at us 24/7 now and so much of it is geared toward sensationalism and raising your anxieties to keep you tuned in. The “news” almost always focuses on the very short term and fails to provide a long-term perspective. The more you consume, the more stressed and depressed you are likely to become and the more likely you are to make emotionally based moves that are detrimental to your long-term interests.
Listening to politicians. Even when there isn’t a crisis or major economic problem, many politicians make things sound dire, especially when the other party is in power/control or we’re coming out of an event for which they blame the other side. In the fall of 2011, more than two years into the recovery from the severe recession/financial crisis of 2008, President Obama said in a broadcast White House roundtable discussion with journalists, “Obviously we’re going through the worst financial crisis and recession since the Great Depression.” I had to do a double take to make sure that this was not recorded back in 2009 early in the president’s first year in office! While the economic environment in the United States in late 2011 was far from strong and robust, we had been in recovery and enjoying modest economic growth the prior two years. Millions of jobs had come back, and corporate profits and stock prices were bouncing back. Also, the recessions the United States suffered in the mid-1970s and early 1980s featured even higher unemployment rates and much, much higher inflation and interest rates (10+ percent) than the 2008 downturn.
Hold onto your long-term investments like stocks and real estate during downturns. It’s impossible to know how long and deep a downturn will be, and history has shown that prices can bounce back quickly, so you’re not going to be able to time buying back well if you try to exit and miss a part of the decline.
Read and review news and other sources that help you maintain balance and a long-term perspective. This likely means limiting your diet of daily news and choosing your resources carefully.
Consider using extra cash to take advantage of depressed investing prices to buy more at favorable prices.
Don’t beat yourself up for past mistakes. Everyone makes mistakes. Wise people learn from and grow from their mistakes.
Chapter 3
Coping with Personal Crises
IN THIS CHAPTER
In Chapter 2, I discuss bigger-picture crises that happen in the overall economy or country. Unfortunately, those don’t represent the totality of problematic events that can upset our lives. Personal crises happen too, and that’s the important subject of this chapter.
Some of life’s crises come unexpectedly, like earthquakes. Others you can see coming when they’re still far off, as sometimes happens with a serious illness or a big storm moving in off the horizon. Whether a life change is predictable or not, your ability to navigate successfully through its challenges and adjust to new circumstances depends largely on your degree of preparedness.
To those who have stored no emergency rations in their basement, the big storm with high winds, downed trees, and associated power outages during a hot spell that traps you in your home can lead to problems. But to the prepared person with plenty of food and water (and a good generator), that same storm may mean a break from work and some unexpected downtime.
When a Crisis Comes Calling
In my work as a personal financial counselor and now over many years interacting with many readers, I’ve heard and seen a lot. I can tell you with great confidence that you can get through a crisis and come out on the other side even more confident and strong with proper preparation.
In this section, I discuss some common personal crises that you should be prepared to deal with. For each, I highlight keys to your personal and financial resilience.
Losing your job or a significant source of income
During your adult life, you’ll almost surely change jobs, perhaps even several times a decade. I hope that most of the time you’ll be changing by your own choice. But let’s face it: Job security is not what it used to be. Downsizing has impacted even the most talented workers, and more industries are subjected to global competition.
In Chapter 2, I cover many economy-wide problems that lead to more widespread job losses. The government-mandated economic shutdowns in 2020 due to the COVID-19 pandemic is a recent example. Prior to that, millions of folks lost their jobs during the 2008 financial crises.
But even when the economy overall is doing really well, as it was for example in 2019 and into early 2020 when the unemployment rate fell to a 50-year low, more than 200,000 people each week in the United States were filing their initial claims for unemployment benefits. So, bad things can happen to good people even during good economic times.
Here then are my suggestions for dealing with the inevitable loss of your job someday or perhaps an unexpected reduction in income:
Always be prepared to lose your job. As the Boy/Girl Scout motto says, be prepared! Unless you’re incredibly fortunate or lucky or both, you will someday unexpectedly lose your job and/or face a significant reduction in your employment income. No matter how happy you are in your current job, knowing that your world won’t fall apart if you’re not working tomorrow can give you an added sense of security and encourage openness
