The news headlines from the past few days include:
- Citibank CEO resigns as Citibank posts $5.9 billion write-down and sharp drop in profits.
- Consumer Bankruptcy Filings Reach 2-Year High.
- Q3 Foreclosures 2 to 4 Times Above Previous Year.
- First Quarterly Loss For Countrywide Mortgage In 25 Years.
- The Price Of Oil Is At An All-Time High.
- The Value Of The US Dollar Continues To Plummet.
And on and on.
I think for a while now most of us have felt that things were not quite as rosy (financially, anyway) as people in the government and media wanted us to believe. You just had that uneasy feeling in your gut that our financial system was weezing and gasping, and it was just a matter of time before the system finally gave out and started to implode.
I think we’re there right now, quite frankly, and I believe this downward spiral is going to continue on for a while. And things might get even worse before they get better. But if you look at this honestly and objectively you understand that this financial meltdown was absolutely necessary to bring things back to a state of balance and sanity. There simply was no way that we could have sustained the previous pace.
So while we’re going through this period of instability and uncertainty, I believe that it will be wise to …
- Be conservative. Don’t be making stupid, frivolous purchases. Don’t worry about keeping up with the Jones’. You don’t need to follow them off the cliff like a lemming.
- Reduce your debt burden. If you lose your job or your hours at work get cut back, you don’t want to be a nervous wreck trying to figure out how you’re going to manage. Once you rid yourself of excessive debt you’ll find that you can live just fine with a reduced income.
- Remain calm and patient. I think we’ll be fine in the end, it’s just going to take some time (perhaps even a few years) to get through this. As financial problems intensify it might look as if the world has gone completely crazy. That’s when you just need to pull back from the madness, shut off the TV, take a deep breath and remind yourself that you’re going to be ok.