What if the World Melts?
There's a lot of talk about the impending doom of America. Everyone has an opinion, and most people's opinions revolve around some notion of our economic system collapsing. Whether it's the housing market, our currency, the stock market, or some other piece of our economy, people think it's all going to melt.
Do I think our world is perfectly put together and predestined for a long and rosy path? Absolutely not. In fact, I think we have some pain ahead of us. Companies are starting to lay people off. Interest rates and stubbornly high house prices are limiting housing affordability. Rampant inflation (particularly for food and gas) is squeezing away families' remaining financial margin. Consumer debt has surpassed all-time highs. And to put a cherry on top, Federal student loan payments are set to resume on 10/1. All of this is a recipe for tough times.
So what do we do about it? First, I'll inventory the crappy advice I'm hearing all around me:
Sell all of your stock investments.
Buy gold.
Buy real estate (regardless of its price and affordability).
Apply for HELOCs, credit cards, and other forms of debt.
Buy crypto
All of this is advice being pedaled by so-called experts. Well, they are experts, actually. They are experts at what they are experts in (i.e., not finances), but then talk about these topics, and their credibility transfers with it. My wife regularly shares ideas she hears from very smart people she follows online and in the media. Brilliant people in their own right. They should be listened to when it comes to their areas of expertise. Then, however, they start spouting opinions about these other things....and people just blindly believe them.
I'm not suggesting you should listen to me, though. I'll let you decide for yourself. If you do decide to heed my advice, here are a few simple things we can each do to prepare for what's probably a rough road ahead:
Get intentional. Make a plan each month, then execute it. Know what you'll do, do it, and know you did it. Budgeting.....the dreaded b-word.
Make sure your investments are simple and straight-forward. Invest broadly and cheaply. I'm a big fan of total stock market index funds. With a few clicks of the mouse, you can own one fund, with 500-4,000 different companies, with almost zero fees.
Once your investments are locked in, don't touch them....ever. Don't let fear get the best of you. In the 155-year history of our stock market, there's never been a 15-year window where the market lost money....ever.
Make sure you have an emergency fund. Set some money aside in a savings account. Use it only for real emergencies.
Serve and give to people in need. Generosity always wins.
Surround yourself with encouraging people.
Live a meaningful life. If we let it, there's always something to scare us and keep us awake at night. Block it out and make the best of each day.
We'll get through it!