When will things get better? (And how bad are they now?)
Posted
Sep 29 2008, 10:54 AM
by
Donna Freedman
Rating:
I've been very nervous about money lately. Who hasn't? But my jitters aren't solely the result of the recent Wall Street turmoil and bailout babble. For me, and maybe for you, financial angst has been building for a while. Talk of a bailout is merely the insult that tops a series of injuries.
Here's my list: Last week my bank, Washington Mutual, failed. The apartment building I manage is about to be sold, so my job is up in the air. My monthly health insurance premium rose a startling $119 overnight. I had to write a check for quarterly income taxes. The alimony ends in six months. A credit card statement for almost $3,000 arrived in Friday's mail, and it's due three days before payday. The money left over from my educational grant was 75% lower than I'd expected.
Bills are showing up for my colonoscopy (can't skip this since there's a major family history of colon cancer) plus the three doctor visits and numerous tests it took to deal with a recent, unrelated health problem -- and I have a $1,500 deductible. Underlying it all is the fact that I'm almost 51 years old and I haven't had a "real" job since November 2002.
So that's why I've been as jumpy as a cat in a kennel, and why I've been wondering when things will get better.
I'm certainly not alone.
Keeping things in perspective
Yet even as I worry I know that my problems aren't insurmountable. The credit card bill usually is nowhere near that high. This one just happened to contain a lot of unusual or one-time expenses, like my new freezer, a campaign contribution, textbooks and school supplies, almost $500 worth of professional packing and shipping of artwork that I recently sold, a plane ticket to visit family and a number of those medical bills.
It's likely, though not guaranteed, that the building's new owners will keep me on as manager. Taxes are due every three months whether I'm ready or not, so I should just grin and pay them. The scholarship is good for another year, and any amount of living expenses is a bonus (although I pay taxes on that, too).
The alimony was for a specific time period, so I've budgeted accordingly. (Ironically, a chunk of it went to pay the divorce lawyer.) WaMu's failure really doesn't matter, since my deposit was insured; heaven knows I don't have anywhere near the $100,000 FDIC cap.
As for health care expenses, well, colonoscopies are cheaper than funerals. At least I have room in my budget for insurance. Plenty of people have no health care at all.
And plenty of people don't have the luxury of "angst." For them, the issues are much more visceral: low salaries, empty cupboards, not enough money for this month's rent.
Fighting our fears
My current fears arose in part from choices I made. I chose to go back to school, to work freelance rather than take a square job, and to live alone rather than share a house. Being frugal has allowed me to do those things.
Things aren't nearly as tight for me now as they were a couple of years ago. Back then I had debt and no savings. Now I'm debt-free and have been able to set some money aside. Yet I still have the occasional bag-lady nightmare -- which, according to a therapist I know, is fairly common among middle-aged divorcees.
I was reassured by an article called "Are you worried about today's economy?" over at partner blog Get Rich Slowly. Blogger J.D. Roth offered some very basic advice that I found unaccountably reassuring: Don't panic, remember your goals, focus on the fundamentals.
J.D. also referred to a post by another personal-finance blogger, Ramit Sethi at I Will Teach You To Be Rich. According to J.D., the post suggests that we refuse to worry about things we cannot control, "like macroeconomics and fiscal policy." Instead, we should focus on what we can control, namely our jobs and our savings, and on making smart financial choices.
I can't do anything about the building sale, the rising cost of health insurance, or my family's health history. I can only manage the way I respond to these things. Most important to me right now is careful use of available funds.
That's why I'm going to take a clear-eyed look at my monthly budget. I suggest you do the same. Determine which expenses could be pared down -- Pick a cheaper cable package? Use more leftovers instead of dining out? -- and look for bills you could stop paying if necessary.
Got credit card debt? Eliminate all unnecessary expenses and throw that money at your card balance. Do it now. Think about additional income sources, such as selling items on Craigslist or taking a temporary part-time job, and use the extra cash to pay down debt faster.
Don't have debt? Consider looking for extra income anyway so you can stock up your pantry, finance an all-cash holiday season or start an emergency fund.
This may sound alarmist. Try to think of it as positioning yourself to make the best of the economic downturn. It's not going to get better overnight. It may not get better for a long time. By thinking ahead and making those smarter choices, you're in a much better position no matter what happens.
And if you, like me, are worried but still making your bills? Don't forget to count your blessings. A whole lot of people would love to have what we consider to be an uneasy solvency. To them, it would look like riches.
