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LIfe's Big Questions: How Can I Face This Financial Stress?

Who among us didn't wake up earlier this week with a pit in our stomach, worried about how the collapse of the financial market might affect us, our nest eggs, and all the hopes, dreams, and plans our investments represent?

The Checkup can't offer money-management advice. But, with the help of a pair of experts, we can share tips for maintaining some measure of calm, even as the stock market acts erratically:

- Seek Perspective: Mary Alvord, a psychologist with offices in Rockville and Silver Spring, jokes that if we want to avoid worry, "Don't ever read that stuff" -- news about financial crises. But seriously, she says, "It's not about 'Do not read...' the bad news. I think we need to be informed. But don't get sucked into too much of the doom and gloom," she counsels. "Understand it is a difficult time right now. But it's important for people to put it into perspective." Even with all the bad news out there, she notes, there are always glimmers of hope. Don't forget to include them in your overall assessment of how things are going.

- Try Not to Worry: In terms of stress management, Alvord says, ask yourself, "'How is it helping me to worry?' A little anxiety can help you decide to do something about [your situation], she says. "But beyond that, you just need to decide what you can act on and come up with a plan."

- Take Charge: "It's always best to face things head on," Alvord observes. "Deal with your fear and worry by having an action plan. Being proactive is one of the major factors in being resilient. Develop a sense of not being a victim by being able to make choices. We can't control every thing in life, but there are a lot of things we CAN control." Take stock of your financial situation, look at how you're being affected individually, and then prioritize your actions, she suggests.

- Control What You Can: Nancy Lossino, employee assistance program manager at Brookhaven National Laboratory in Long Island, recommends that you "Tweak as much as you possibly can" to improve your finances, cutting back on spending (including the amount you spend on kids' after-school activities and gas to drive them around) and being sure to pay your bills on time so you don't get trapped into high default interest rates. "Don't avoid and procrastinate until things spiral out of control," she adds. (To read Lossino's PowerPoint presentation about all of this, click on her name and scroll down to the link for "Managing Financial Stress.")

- Avoid Unhealthy Behaviors: Examine how you have typically handled stress, Alvord advises. "What has been your pattern in the past? Do you turn to unhealthy behaviors? Alcohol? Brooding? Worrying?" If so, see if you can break that pattern and take a more positive approach, she suggests.

- Recognize "Basic Immaturity": If you're feeling petulant or entitled to keep spending, you may be financially illiterate, Lossino says, or simply immature. If this is you, you need to grow up -- and get some professional advice about your finances.

- "Take a Deep Breath": "It's not pleasant," Lossino says, but you need to step back and figure out "how to be part of the solution." Take some time to identify your support system, whether it's your family, friends or colleagues at work, and draw on the strength they supply to get you through these rough times.

- Seek Help if You Need It: "Many people don't like to talk about things," Lossino says, but it's important to get professional psychological help if you find yourself thinking "desperate thoughts" or feeling depressed. "Be on the lookout," she suggests, "and get professional counseling so you can stop being afraid to open your mailbox" every day.

- Know You're Not Alone: Check out the results of this recent survey conducted by the American Psychological Association showing that money and the economy are leading sources of stress.

How are you faring during this financial rough patch? Care to share any tips of your own for keeping your cool while watching your 401K go down in flames?

By Jennifer LaRue Huget  |  September 17, 2008; 7:00 AM ET
Categories:  Life's Big Questions  
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The best way to deal with situations you can't control is to find something you CAN do. In this case, vote.

Posted by: wakeupamerica | September 17, 2008 9:34 AM | Report abuse

I remember after 9/11 the same advice was given and the only people who cut their losses were the ones who got out as soon as the markets opened. It took 2 years for the S&P 500 to return to the level of that day. Sell out of all stocks and wait for the bottom to show itself.

Posted by: Neal | September 17, 2008 9:48 AM | Report abuse

If you're talking about your 401(K), unless you're really close to retirement you should absolutely not sell out of stocks. Over the long term they are your best investment. Even if they take 2 years to climb back up this time, unless you need that money in the next two years, you're better off leaving them there. Even if we're not talking about your 401(K), unless you need that money in the next year or two, you're probably still better leaving them where they are. At this point you're selling low and by the time you recover confidence in the market, you'll be buying high. Best to ride it out unless you need the cash quickly.

Posted by: Kate | September 17, 2008 10:38 AM | Report abuse

Cut back on expenses, people. Do you need a $900,000 McMansion? Do you need a $45,000 SUV that guzzles $4.00 a gallon gasoline? Do you need foreign vacations twice a year? Cable televions? Cell phones? What did you do before you got your cell phones, huh? Make your kids to work to pay for their own expenses like college, clothes, cars, insurance. You'd be surprised how much you can out and not miss at all.

Posted by: South of the Beltway | September 17, 2008 11:05 AM | Report abuse

The only way I keep sane is to keep thinking that when stock prices go down, my automatic contributions to my 401K can buy more stocks at lower prices. Then when the market goes back up I'll be even richer. I also don't look at the account when stocks drop -- it makes me physically ill to see how much money I've lost. Furthermore I don't take anything out of my 401K. I'm within 3 years of retirement so it all stays there.

Posted by: NW DC | September 17, 2008 11:54 AM | Report abuse

The good news is that though the pie itself is smaller, everyone's relative share is still the same.

Except for those with no slice of pie at all: about 9/10 of the world's population...

Posted by: Anonymous | September 17, 2008 1:03 PM | Report abuse

Personally, I have found the "take charge" bit above to have by far the most impact -- changing my view from victim of forces beyond my control to choosing the best option in a tough situation completely changed my mindset. But there are no magic bullets. Cut everything you can, because not having debt feels fantastic when everything's going nuts. Focus on what you can control: I may not control what happens to my 401(k), but I do control how much I put in it; it's completely up to me whether my my paycheck goes to Uncle Visa or BOA.

The best way to avoid the mental freak-out out over stuff like this is perspective. We've been through a lot worse and lived to tell the tale, so this current little dip in my 401(k) hasn't even registered -- at least we're both employed, with minimal debt, and have the time and ability to build it back up. If you've been lucky enough to avoid a big hit like this before, go talk to folks who lived through the Depression, WWII, the '70s stagflation, etc. Use that as a basis for gratitude for how much you do have, for realizing how resilient and strong people can be when times are tough, and thus for building some confidence in yourself to rise to whatever the occasion demands.

Posted by: Laura | September 17, 2008 1:12 PM | Report abuse

Except for those with no slice of pie at all: about 9/10 of the world's population...

Posted by: Anonymous | September 17, 2008 1:03 PM

If they have no pie, let them eat cake.

Posted by: Anony | September 17, 2008 5:11 PM | Report abuse

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