I’ve been scratching my head about our “global economic crisis.” It’s not that I don’t believe there is one, or that people aren’t completely panicked about it. What strikes me is that if I weren’t keeping up with the news I wouldn’t know we are in a crisis. Signs in my part of the world are up, even today (I say that with the caveat that I vowed not to look at the 401K again until 2010). My peers and I are not experiencing the pain we keep hearing “main street” talk about on the news.
What I reason is that I (like most of my peers) am a person who acts rationally and behaves in a fiscally responsible manner regardless of the market conditions. I do not suddenly become an irrational and greedy individual when the market is up, and I do not freak out when the market is down. The people who do both of these things are the people who cause the market to swing so far up and down.
People who allow their financial decisions to be guided by emotions when times are good are slave to those emotions when times are bad. People who 1. do not spend more on a home than they can afford 2. do not consume more than their incomes allow and 3. understand that buying consumer goods on credit is unacceptable are far less likely to “experience” a financial crisis in any substantial way. (Unfortunately, it’s people like my peers that shoulder the financial burden of bailing out people who are not. But that’s another post.)
Live within your means. Don’t over-spend, over-extend or make purchase decisions based on what the emotional people around you are doing. Control your emotions, don’t let them control you. You’ll live comfortably in the upswing, and you’ll sleep very soundly in days like these.