It must be something in the air, or perhaps it has something to do with all the doom and gloom stories about our economy, the price of oil, the failing housing market, the falling market. I don’t know, maybe I’m just crazy, but I’ve found myself thinking a lot more about doomsday scenarios when it comes to our finances. I’m going to be starting in a new position at my company, I just got a 7% raise, and we have finished the massive expenditures on our lake house so you’d think I’d feel warm and fuzzy all over, but I don’t.
I’m finding myself thinking, “What would I do if I lost my job?” Well, I’d fall back on my emergency fund for the first few months, but what if I couldn’t find another job for awhile? What if my wife lost her job too? How would we afford health insurance if we weren’t working for an extended period of time? What social programs would we be able to fall back on?
It’s easy to see how someone could go insane worrying about all the possible scenarios when the economy isn’t doing very well. When I start feeling stress about our finances I try to stop myself and think as rationally as possible. The reality is that I have a skill set that is in demand (IT) and have enough money saved that we could get by for quite some time. What I have to remind myself is that in a true financial crisis, we could do some fairly radical things. One thing we could do is withdraw some of our ROTH IRA contributions without facing a tax penalty. If things really got bad, we could withdraw some of our 401K and face the penalties of doing that. We could also borrow some money from our home equity line of credit. And if we were really in a pinch, we could even ask our parents for help, although that’s not something I’d really want to ever have to resort to. I guess the fact of the matter is, while we have many options that aren’t ideal and would drastically impact our long term goals, we do have a lot of options.
Are you worrying about your finances these days?
I know exactly how you feel. I’m doing pretty well right now but just do not feel like spending any money. I was walking around Walmart the other day and felt a general ‘air’ that people were strapped.
I think this feeling is a protection response to what we consciously and unconsciously feel about the economy. I feel it is a good thing to hunker down your finances right now, despite if everyone stopped spending money would make everything worse. Leave the frivolous spending to the ultra-rich…
Don’t worry, you are far from alone. In fact I just bought a house and I’m living through the “What Have We Done” panic which is only amplified by the “Economy Sucking” fear.
Fear isn’t reality, it’s just perception. Best thing to do is just take a deep breath and follow your plan of attack. That’s what I’m doing.
The way to look at it is that fear is the mind’s way of being devil’s advocate. As long as the foundations are set correctly, there shouldn’t be anything to worry about.