Economists, financial advisors, certified public accountants, politicians, reporters and co-workers all have opinions about what is going to happen next with our country's financial situation. Are we in a recession now? Are we headed into one or has the economy just slowed down? I don't know anything anyone else doesn't, but one thing is certain - we are all in this together and we all have to remember not to panic!
2008 is shaping up to be another year of financial ups and downs for Kansans. Before we do something rash, let's all first take a deep breath and remember that we have lived through similar or worse times. For instance in recent years, the October 1987 stock market crash, 2000-2002 bear market, and the market troubles immediately following the September 11 attacks.
The next step is to take action without over-reacting. Right now is a good time to review your master financial plan for your family. Study your investments. Kiplinger magazine reminds readers that retirement accounts are for buying and holding investments for years, if not decades, and not for day-trading. Make sure your retirement accounts are a diverse mix of stocks, bonds, money-market funds or even certificates of deposits that are appropriate for your risk tolerance (including length of time until your retirement).
Look at other opportunities that are out there. With the recent cuts of short-term interest rates by the Federal Reserve, banks will lower interest rates they charge to consumers on loans. Some suspect this is a good time, if you have been looking into it, to get a home equity line of credit, refinance your house or even buy a home.
Our federal government is working to help relieve the current situation of our financial markets. In a bi-partisan effort the President and Congress put together a stimulus package that will likely send tax rebate checks to millions of citizens. It would also provide temporary tax breaks for businesses.
If the package is approved and your check arrives in your mail box, consider carefully what you plan to do with the money. The American Institute of Certified Public Accountants encourages paying down high-interest loans such as credit cards and other debt. Congress hopes many of us will spend the rebates and thus stimulate the economy. While spending is good for the economy, make certain your personal spending is good for your long-term financial health. Carefully consider your options.
Whatever you choose to do during this uncertain time, remember first to take a deep breath and don't give in to the panic. Get good advice from respected financial professionals. Leaping from this roller coaster may help to relieve short-term fears and anxiety, but in the long-term you may regret acting hastily.
